Investing in Transportation Emission Cost Reduction on Environmentally Sustainable EOQ Models with Partial Backordering

Hsien-Jen Lin

doi:10.6180/jase.201809_21(3).0001

Investing in Transportation Emission Cost Reduction on Environmentally Sustainable EOQ Models with Partial Backordering

Hsien-Jen Lin This email address is being protected from spambots. You need JavaScript enabled to view it.¹

¹Department of Applied Mathematics, Department of Finance and Actuarial Science, Aletheia University, Tamsui, Taiwan 251, R.O.C.

Received: October 25, 2017
Accepted: March 5, 2018
Publication Date: September 1, 2018

Download Citation: ||https://doi.org/10.6180/jase.201809_21(3).0001

ABSTRACT

In this paper, we incorporate sustainability concept in the traditional inventory system by integrating economic and environmental objectives. We apply a direct accounting approach to converting all emission types of the inventory cycle to economic metrics and then establish an environmentally sustainable EOQ model with partial backordering, in which the fill rate, the length of an order cycle, and the average carbon emission cost of a product unit transportation are treated as decision variables. Furthermore, we investigate the effects of increasing investment to reduce the emission cost of transportation. By framing the model, we observe that a significant amount of savings can be achieved toincreasethecompetitiveness.Theobjectiveistoderivetheoptimalinventorypolicyandinvestment decision for the proposed model. Finally, we run a couple of numerical examples to illustrate the results and perform the sensitivity analysis of system parameters for decision making.

Keywords: EOQ Model, Sustainability, Partial Backordering, Carbon Emissions, Investment

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