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An Optimization Model for Green Supply Chain Management by Using a Big Data
Analytic Approach
PII: S0959-6526(16)30057-9
DOI: 10.1016/j.jclepro.2016.03.006
Reference: JCLP 6846
Please cite this article as: Zhao R, Liu Y, Zhang N, Huang T, An Optimization Model for Green Supply
Chain Management by Using a Big Data Analytic Approach, Journal of Cleaner Production (2016), doi:
10.1016/j.jclepro.2016.03.006.
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for High Speed Railway Safety, Southwest Jiaotong University, Chengdu 611756, China
c
Department of Economics; Institute of Resource, Environment and Sustainable
Development, College of Economics, Jinan University, Guangzhou, Guangdong 510632,
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China
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Abstract: This paper presents a multi-objective optimization model for a green
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supply chain management scheme that minimizes the inherent risk occurred by handling
hazardous materials, associated carbon emission and economic cost. The model related
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parameters are capitalized on big data analysis. Three scenarios are proposed to improve
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green supply chain management. The first scenario divides optimization into three
options: the first involves minimizing risk and then dealing with carbon emissions (and
thus economic cost); the second minimizes both risk and carbon emissions first, with
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the ultimate goal of minimizing overall cost; and the third option attempts to minimize
risk, carbon emissions, and economic cost simultaneously. This paper provides a case
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study to verify the optimization model. Finally, the limitations of this research and
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1. Introduction
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and Chandrakar, 2012; Gotschol et al., 2014). Furthermore, the GSCM acts on waste
reduction by encouraging the returns of products to reduce consumption of raw
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materials and energy and to prevent waste streams from flowing into the environment
(Guide et al., 2006; Zhao et al., 2012a; Pan et al., 2015). Due to unprecedented volume,
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variety, and velocity of data generated every day within the supply chain systems, ideas
emerging from areas such as data science, predictive analytics, and big data (DPB) that
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encompass mathematical, computer and statistical analysis have deep implications in
the field of supply chain management, and in particular, of green supply chain
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management (Waller and Fawcett, 2013; Hazen et al., 2014; Schoenherr and Speier‐
Pero, 2015). For example, big data models in the field of process control can be applied
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to pollution control and sustainable management of natural resources, and can thus help
to develop optimal strategies for improving the eco-efficiency of green supply chain
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management (Hampton et al., 2013; Huang et al., 2014; Bin et al., 2015; Reis et al.,
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decrease the use of toxic materials and the quantity of waste, and to ultimately mitigate
the adverse impact of the whole supply chain (Zhu et al., 2005; Testa and Iraldo, 2010;
Madanhire et al., 2015). However, many of the materials currently used in the
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manufacture of products could be considered hazardous at any stage of their life cycle
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(i.e., from the time of extraction to the ultimate disposal); this may pose a potential risk
to human health or to the environment, because of the quantity, concentration, or
physical or chemical characteristics of the material in question (Zhao, 2012a;
Pradhananga et al., 2014). The inherent risk of managing or disposing of hazardous
materials inappropriately may have a substantial impact on the operations of the supply
chain, may cause business loss and environmental pollution, and may even result in
casualties (He et al., 2011; Wang et al., 2012; Mangla et al., 2014). In such cases, we
must consider decreasing the inherent risk associated with a supply chain that involves
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hazardous materials in order to enhance the social performance of green supply chain
management.
Climate change has been identified as a critical factor that strongly influences the
performance of green supply chain management, and it may result in great uncertainty
in terms of the public’s acceptance of various products (Lee, 2011; Singh et al., 2015).
For instance, consumer purchasing preferences may be affected by the emissions
information provided on a product label, especially as they become more aware of
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climate change (Abdallah et al., 2012; Zhao et al., 2012a; Zhao and Zhong, 2015).
Carbon management has thus received more and more attentions from a number of
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upstream and downstream enterprises on the supply chain, which are working to reduce
their life cycle based carbon emissions and move toward a low-carbon business model
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(Sundarakani et al., 2010; Acquaye et al., 2011; Benjaafar et al., 2013; Singh et al.,
2015).
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But in the case of supply chain management, the enterprises involved may still be
driven by profitability, rather than taking risk control and carbon emissions reduction as
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a priority, because of the additional expenditure and high financial cost of such efforts
to protect the environment (Mollenkopf et al., 2010; Zhao et al., 2013; Govindan et al.,
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2014). Thus, understanding how to reduce environmental risk and carbon emissions
without affecting commercial sustainability is a critical challenge faced by proponents
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the use of hazardous materials, carbon emissions and economic costs. The model and its
related parameters are capitalized on big data analysis. Moreover, the parameters related
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raw data are derived from multi-sources, such as the enterprises’ financial statement to
obtain the data related to the business operation, empirical emission factors from IPCC
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database to measure the carbon emissions, accident probability from the internal
environmental information system (EIS) to measure the environmental impact. In order
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to ensure the quality of our data, we use a statistical process control (SPC) chart to
remove abnormal data from the data set and extract the most representative data to use
as the parameters of the model (Hazen et al., 2014).
Since the green supply chain management attempts to increase economic returns
by reducing environmental impact, the extent to which environmental risk and carbon
emissions reduction should be incorporated into management practice has been rarely
discussed (Zhao et al., 2012a; Zhang et al., 2014). The study aims at filling this gap by
proposing an optimization model to optimize safety, green and economic performance
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of the supply chain operation by using the scenario analysis. The first scenario divides
this optimization into three stages that first minimize environmental risk, and then
carbon emissions and thus economic cost. The second minimizes both environmental
risk and carbon emissions first, and then seeks to minimize economic cost. The last
minimizes environmental risk, carbon emissions and economic cost simultaneously.
Additionally, most of the previous studies mainly focused on the process of
optimization, to obtain optimal values of variables corresponding to the predefined
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objectives. The MODM and MADM approaches are combined in this study to solve the
model and rank the priority of each scenario, in which the optimal scenario is
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determined to help improve the management practice of green supply chain. It is
expected that the multi-optimization model can improve risk control and carbon
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emissions reduction in the context of green supply chain management, and also inform
decision-making by involved stakeholders on supply chain design, and thus promote
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sustainable development. AN
2. Literature review
Since the 1990s, the optimization of the supply chain management to take
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environmental issues into account has been paid increasing attention, including the issue
of environmental investment recovery, internal re-design of the supply chain network,
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green coordination among upstream and downstream enterprises, and green initiatives
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an attitude of reuse and recycle by means of reverse logistics and remanufacture (Zhu
and Sarkis, 2004). Sheu et al., (2005), proposed a linear multi-objective programming
model to maximize the net profit of integrated logistics and the corresponding
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used-product reverse logistics. Results indicated that the aggregate net profits increased
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optimize environmental investment decisions using mixed-integer programming. With
the goal of minimizing economic cost and carbon emissions, the best hierarchy of
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environmental protection was identified. A similar study was conducted by Abdallah et
al., (2012), who developed a mixed integer programming model to minimize carbon
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emissions in the supply chain by means of green procurement. Mallidis et al., (2012),
built a strategic-tactical decision support model to optimize the design of the port of
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entry and transportation modes. This model indicated that the shared use of
transportation operations was effective in reducing the generation of carbon dioxide and
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particulate matters. Tseng and Hung (2014) proposed a strategic decision-making model
by taking into account both operational and social costs caused by the reduction of
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carbon emissions. This approach indicated that the social cost rate was negatively
correlated with carbon emissions.
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et al., 2012a, used game theory to select the optimal strategies for manufacturers on the
supply chain to reduce their inherent risk and carbon emissions. Cost and benefit were
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identified as the major factors that affected the implementation of the selected strategy.
Xie (2015) proposed a model to examine how the energy saving level set by a local
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policy maker influenced a manufacturer’s energy saving and a retailer’s sale price.
Xie’s work also argued that the decentralized chain should be given a threshold value
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for the energy saving level, while also taking the manufacturer's profit into account. Wu
and Barnes (2015) established a model integrated ANP (Analytic Network Process)
with MOP (Multi-objective Programming) to select appropriate partners to develop a
green supply chain, while four clusters of ANP network (cost, pollution control, quality,
resource consumption) were considered as the criteria needed to evaluate the
eco-efficiency of the partners.
With regard to the green initiatives of the consumers, Liu et al., (2012), focused on
the relationship between consumers’ environmental awareness and the intensity of
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competition among green supply chain members. A two-stage Stackelberg game model
was employed to investigate the interactions among the various chain players in order to
determine different structures for the supply chain network. In this effort, retailers and
manufacturers involved in eco-friendly operations were intended to benefit from
consumers’ increased environmental awareness. Coskun et al., (2015), proposed a goal
programming model to re-design supply chain network based on consumers' green
expectation. When the segment of green consumers is expanded, the retailer was in
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cooperation with suppliers to re-design the supply chain to fit the consumers’ expected
greenness level. A similar study was implemented by Ghosh et al., (2015), who further
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verified that green consumer markets provided better opportunities for supply chain
stakeholders to launch green initiatives. Additionally, a cost-sharing contract might give
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rise to a higher greening of the supply chain network.
Most of the previous studies developed optimization models mainly based on the
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maximization of eco-efficiency and sought to maximize economic benefits while having
minimal environmental impact on the supply chain network (Eltayeb et al., 2011;
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Parkand and Behera, 2014; Veleva et al.,2015). However, most manufactured materials
in the supply chain would be considered hazardous to some degree if they are badly
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important, the safety and potential risks posed by the supply chain network are also
important (Mangla et al., 2014). Apart from that, most of the previous studies rarely
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discussed the extent to which risk control and carbon emissions reduction should be
incorporated into management practice. This study considers the inherent risk of
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hazardous materials, their associated carbon emissions, and total economic cost as it
proposes methods that could be implemented to improve the risk control and carbon
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products.
4) The suppliers are considered as an entity without differences, e.g., the possible
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market competition, variance of product quality, the possible coordination etc.
Insert Fig. 1
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3.2 Parameter notations and definitions
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In this section, a number of parameter notations and definitions are introduced. The
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corresponding indices of the proposed supply chain network are given as follows:
s: set of suppliers
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k: key manufacturer
d: set of distribution centres
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i: incineration plant
la: municipal landfill
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The input parameters to cover the above indices include the following:
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EMl emission factor when the emission level is l , kgCO2/kg
EMf emission factor of facility f , kgCO2/kg
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EMff ' transportation emission factor from f to f’, kgCO2/kg
η waste generation rate
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ξ incineration ratio of unrecyclable waste
ω landfilling ratio
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The decision variables related to the above indices are given as follows:
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1,if supplier s is selected
xs =
0, otherwise
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0, otherwise
1,if carbon emissions level l is selected when taking emissions reduction measures
zl =
0, otherwise
xkd the amount of products flowing from the key manufacturer to distribution
centre d
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xdc the amount of products flowing from distribution centre d to customer c
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The optimization model is complied with three objectives, i.e., minimization of
inherent risk by ‘hazardous materials’, carbon emissions, and total economic cost,
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which are presented as follows.
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3.3.1 Minimizing inherent risk
The inherent risk of the supply chain ‘hazardous materials’ is comprised of three
sub-risks, i.e. risk of casualties, risk of environmental pollution and risk of property loss,
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which is deemed as the possible consequence multiplying by the associated probability
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in a hazard scenario (Okabe and Ohtani, 2009; Zhao et al., 2012b; Mangla et al.,2014).
More specifically, risk of casualties, environmental pollution and property loss are
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defined as the casualties, water, air and soil pollution, direct economic loss, respectively,
caused by emergency accident in the process of supply chain operation, given as follows
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(1)
p =1
where Ri indicates the risk in facility i, Pr obi the probability of the failure events in
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facility i, N ip the consequence of risk type p, including the casualties, property loss and
environmental pollution.
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Where Pr obij represents the probability of risk from facility i to j, Lij the path-length,
Qij the amount of transported products, Arij the accident rate of vehicle transport.
3 3
Rt = ∑ xsk ⋅ Arsk ⋅ Lsk ∑ N skp + ∑ xkd ⋅ Arkd ⋅ Lkd ∑ N kdp +
s p =1 d p =1
3 3
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d c p =1 c p =1
3 3
∑x c
ci ⋅ Arci ⋅ Lci ∑ N cip + ∑ xcla ⋅ Arcla ⋅ Lcla ∑ N cla
p =1 c p =1
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Where Rf measures the risk in all the facilities, from the upstream suppliers to the
disposal centre, whilst Rt measures the transportation risk based on the flow of products
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from different nodes.
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3.3.2 Minimizing carbon emissions
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The life cycle based carbon emissions of supply chain can be calculated as follows:
CE = ∑ Qi ⋅ EM i (7)
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Where Qi indicates the ith activity contributing carbon emissions, e.g. production,
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transportation, disposal etc., EMi the emission factor of the ith activity.
Thus, the objective function of minimizing carbon emission is given as follows:
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where:
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c c
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where CEf denotes the carbon emissions in all the facilities on the supply chain, CE t
the carbon emissions of transportation, based on the transportation distances.
where:
FC = ∑ fcs . xs + ∑ fcd . xd + fcr . xr + fci . xi + fcla . xla (12)
s d
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RC = ∑ xsk .crs (13)
s
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MC = ∑ xsk .cps + ∑ xkd .cpd (14)
s d
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(15)
c c c
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(16)
+ ∑ xcr .ccr .Lcr + ∑ xci .cci .Lci + ∑ xcla .ccla .Lcla
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c c c
Where FC indicates the fixed cost based on operation of the involved facilities, RC
the purchasing cost of raw materials, MC the cost of raw materials extraction and
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products manufacturing, DC the cost of waste disposal, TC the transportation cost, the
∑ Inv m ⋅ ym the investment of risk control and ∑ Inv ⋅ z l l the investment of carbon
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m l
emissions reduction.
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3.4 Constraints
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Some generic constraints are considered in the optimization model based on the
decision variables we propose, including balance constraints of materials, the capacity
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limit constraint, and the constraints of decision variables, which are presented below.
3.4.1. Mass balance constraints
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∑x s
sk = demk (17)
∑x
d
kd = ∑ demc
c
(18)
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3.4.2. Capacity limit constraints
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xsk ≤ cas ⋅ xs ∀s (24)
∑x ≤ cak (25)
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kd
d
∑x
d
dc ≤ cad ⋅ xd ∀d (26)
∑ dem c
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⋅η ⋅ µ ≤ car ⋅ xr (27)
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c
where constraints from (24) to (27)ensure the capacity limits in each facility, which are
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less than the designed capacity, whilst constraint (28) ensures that the transported
products cannot exceed the transportation capacity.
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xd ≤ ∑ xdc ∀d (30)
c
xr ≤ ∑ demc ⋅η ⋅ µ (31)
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xs , xd , xr , xi , xla ∈{0,1}
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(32)
x ff ' ≥ 0 (33)
µ ∈ [0.1] (35)
where constraints from (29) to (31) define the lower production capacity limits,
constraints from (32) to (33) define the decision variables xs , xd , xr , xi , xla are binary
integer variables, which are non-negative. Constraint (34) defines ym , zl are binary
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integer variables, where m and 1 are integers within the interval [1, a] , [1, b] respectively,
which represents the different level of risk and carbon emissions reduction while taking
the corresponding control measures. Constraint (35) defines that the recycling rate µ is
within the interval [0,1] .
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A local supply chain network of a sanitary product in Sichuan Province, China, is taken
as an illustrative case example to verify the proposed optimization model, as shown in
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Fig. 2a. There is a key manufacturer (A) on the supply chain network, located in
Jianyang City, which is the largest enterprise in Sichuan Province to produce sanitary
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appliances using acrylic materials (e.g., water closets, bathtubs, shower cubicles, etc.)
Three potential suppliers are located in Jianyang City, Longquanyi District and Ziyang
City, indicated in Fig. 2a as B, C, D, respectively. These suppliers can provide acrylic
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board for A and other sanitary product factories in Sichuan province. The sanitary
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products from the key manufacturer A are transported to the distribution centers located
in Chongqing and Chengdu, denoted as E and F, respectively. Once the products are
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used, waste disposal is taken into account, some of which is recycled in the recycling
center of manufacturer A and used for remanufacture. Others waste that is unrecyclable
D
Insert Fig.2
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The data related to the parameters of economic cost is derived from field investigation,
which focused especially on the financial statement of the enterprises involved in the
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supply chain network. The raw data of various costs over the period from 2010 to 2014
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were collected from each facility, and the scatter diagrams were generated by using
SPSS 19.0 to investigate the upper control limit (UCL) and lower control limit (LCL).
The data that deviated from the UCL and LCL was eliminated, and the mean values
were input into the model. In order to show how to use this big data analytic approach
to extract the meaningful data and help reader easily understand its application, the
demand of raw materials from the key manufacturer is taken as an example to
demonstrate the data processing by using a schematic diagram, as shown in Fig.3. The
data from financial statement of key manufacturer from the year 2010 to 2014 was
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imported into the SPSS 19.0 to generate a control chart. The UCL and LCL were set as
±3 times of the standard deviation according to the Hypothesis Test (Montgomery, 2013;
Hazen et al., 2014). The data deviated from the LCL, shown in Fig.3, are deemed as the
abnormal data, which are intended to be removed. Moreover, the mean of the dataset, as
3652 kg/d is determined as the representative data, to be input into the optimization
model as the parameter. Similarly, other parameters can be derived by the same way,
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which are shown in Table 1.
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Insert Fig. 3
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Insert Table 1
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are converted by energy consumption, e.g. electricity, coal, and diesel. Data regarding
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energy consumption was derived from the audit report of cleaner production of the
investigated enterprises on the supply chain. We focused in particular on data about the
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different energy consumption of the key manufacturer, which were sourced from the
internal plan of energy saving and emissions reduction.
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Regarding waste disposal, the carbon emissions of landfill disposal are converted
by methane emission, given as follows (IPCC, 2006):
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MCF is the methane correction factor, DOC is the degradable organic carbon,
DOC F is the fraction of the degradable organic carbon dissimilated, and F is the
fraction of methane by volume the occurs in landfill gas.
The CO2 emission of the incineration can be calculated by (IPCC, 2006):
CO2 emission = ∑ SWi × dmi × CFi × FCFi × OFi × 44 / 12 (38)
i
where SWi represents amount of the ith type of waste incinerated or open-burned,
dmi is the dry matter content in the waste that is incinerated or open-burned, CF i is
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the fraction of carbon in the dry matter, FCFi is the fraction of fossil carbon in the
total carbon, and OFi is the oxidation factor.
All empirical values related to the disposal stage ( DOC , DOC F , CF i , FCFi and
OFi ) are derived from the IPCC guidelines, while others are derived from the work of
Yang et al., 2013, and Liu (2014). The carbon emissions for each facility are shown in
Table 2.
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Insert Table 2
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The risk is quantified by multiplying the hazard probability with the possible
consequences (Zhao et al., 2012b; Ayoub et al., 2015). The acceptable risk level is used
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to measure the hazard probability (Hu, 2009). To understand what the level of risk
ought to be, the principle of “Tolerability of Risk” provides a benchmark to determine
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acceptability level (HSE, 1988; Zhao et al., 2012a). The risk is deliberately divided into
three levels: intolerable, tolerable and acceptable, as shown in Fig.4.
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Insert Fig. 4
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Analogous to the HSE guideline, the maximum risk (i.e., the accident rate in any
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facility in the supply chain network) to any member of the public that should be
tolerated is set as 1 in 104 per year. For transportation, the tolerable traffic accident rate
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The consequences of risk are mainly divided into three categories: casualties,
environmental pollution and property loss. According to field investigation, major risk
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may happen in the stage of raw materials supply and waste disposal. Suppliers B, C and
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D may encounter explosion accidents in the process of the preparation of acrylic plates,
due to the volatility and inflammability of the raw materials Methl-Methacrylate
(MMA). For waste disposal, the risk comes from landfilling and incineration, and
mostly involves substances such as waste leachate and landfill gas (Zhao et al., 2012c).
In order to quantify casualties and property loss that occur in facilities in the
supply chain network, the ‘Regulation of Production Safety Accident Report and
Investigation of China’ (The Central People’s Government of the People’s Republic of
China, 2007) was implemented. This document is calibrated using statistical analysis of
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the risks inherent in the investigated enterprise. The corresponding results are shown in
Table 3.
Insert Table 3
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example, a water pollution accident resulted in the need for adsorption treatment using
activated carbon, and the unit cost was 0.04 Yuan per cubic meter in terms of the dosage
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of activated carbon. In the disposal stage, the environmental impact of a municipal
landfill and incineration plant can be quantified by the expenditure of in-situ
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remediation required if waste leachate permeates the groundwater. The environmental
impact of the supply chain network using a monetary measurement is shown in Table 4.
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Insert Table 4
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5. Results and discussions
The model aims at improvement of the existing risk control and reduction of carbon
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emissions to promote sustainable development of the green supply chain network. Three
scenarios are proposed to solve the optimization model. In the first scenario, the
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optimization seeks to minimize risk first, and then carbon emission and thus economic
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cost. The second scenario seeks to minimize both risk and carbon emission first, and
then seeks to minimize economic cost, while the third scenario attempts to minimize
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In this scenario, the minimum solution of risk was taken as a constraint to obtain
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the minimum carbon emission, which was substituted into the objective function of total
economic cost to calculate the minimal cost. In addition, Lingo programming is applied
to solve the proposed model. The process of the solution and the corresponding results
are shown in Fig. 5, in which the supplier D and distribution centre F are selected as the
operating facilities. The recycling rate of the recycling centre is predefined above 50%.
The level of risk control and carbon emissions reduction are set as the third level, which
indicates that the highest standard is implemented by the involved stakeholders. The
numerical flow of raw materials and products on the supply chain network are listed
accompanied with the arrows.
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Insert Fig. 5
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Insert Fig. 6
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5.3 Scenario three
In the third scenario, the ‘ideal point method’ was proposed to solve the
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optimization model. The authors herein define the proximity used to measure the
difference between the ith objective function and its ideal point as follows:
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OBJ i
di = (39)
OBJ i∗
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where OBJ i represents the Pareto-solution of the ith objective, and OBJ i∗ is the
optimal solution under the constraint of a single objective function, indicated as the
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‘ideal point’.
If the di is equal to 1, then the optimal solution of the objective function is the
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ideal solution. Thus, multi-objective functions are transformed into a single objective
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function as below:
OBJ cos t OBTCF OBJ risk
min f = + + (40)
OBJ cos t ∗ OBJ CF ∗ OBJ risk ∗
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The process of the solution and the corresponding results are shown in Fig. 7.
Insert Fig. 7
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5.4 Discussions
The optimal solutions of risk, carbon emission and total economic cost in the three
pre-defined scenarios are shown in Table 5, in which it can be seen that each scenario
has its own advantages and disadvantages in terms of its impact on the sustainability of
the supply chain network. For instance, risk in Scenario one is the lowest, but the total
cost is the highest. In Scenario two, carbon emissions are the lowest, but the risk is the
highest. Choosing which Scenario may provide the best help to involved stakeholders as
they attempt to improve supply chain management is difficult. The authors propose
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using a multi-attributive decision making (MADM) approach to fill this gap. This
approach employs a performance assessment that multiplies the weight of each
objective by the corresponding attributive value, thus discovering the optimal Scenario
to use for future supply chain management practices.
Insert Table 5
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three objectives (risk, carbon emissions and economic cost). This is a subjective
weighting approach that lists all the criteria on both the vertical and horizontal axes of a
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matrix, and assigns a value of 1, 0.5 or 0 to each box generated by the axes intersection,
according to the relative importance of a pair of indicators relative to each other (Wang
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et al., 2009; Zhao et al., 2012b). To ensure the arithmetic validity of this approach, each
row of the matrix should add up to 1 when all the indicators are scored. The scores and
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their weights corresponding to the three Scenarios are shown in Table 6.
Insert Table 6
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Due to the different dimensions, normalization is conducted to ensure a common
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OBJij is the actual value of objective i in scenario j, OBJ i min is the minimum value of
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objective i among the three scenarios, and OBJ i max is the maximum value of objective
i among the three scenarios. The normalized attributive values of three Scenarios are
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shown in Table 7.
Insert Table 7
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(Stewart et al., 2003; Smith, 2007; Kane, 2010; Wang and Gupta, 2011; Amah, 2012;
Zhao et al., 2015). The basic role of an organization involved in the supply chain is to
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promote their individual firm’s economic stability whilst acting in accordance with
policy and norms of behavior (Smith, 2007; Amah, 2012). Even for green supply chain
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management, which considers potential savings or profits as a driving force, economic
issues play a dominant role in business operations (Mezher and Ajam, 2006; Zhao et al.,
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2012d; Dubey et al., 2015). With the sense of corporate social responsibility gradually
emerging in the green supply chain management, business entities should take a
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longer-term perspective when they evaluate performance in terms of sustainability
concerns; such an outlook would encourage a positive attitude among involved
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‘environmentally friendly products’(Porter and Kramer, 2006; Kane, 2010; Scott and
Vigar-Ellis, 2014; Longoni and Cagliano, 2015).
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Such up-front investment may promote green innovation and market competition and
thus promote long-term commercial success (Chen, 2008; Wang and Gupta, 2011;
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Filieri, 2015). It is further expected that the sales revenue of perceived ‘green’ products
may totally cover the cost of risk control and carbon emissions reduction (Zhao et al.,
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2013; Zhao et al., 2015). In addition to the internal driving force from the self-interest
of enterprises, the external factors, i.e., governmental policy instruments are important
to drive green transitions of supply chain (Zhu et al., 2007a; Zhao et al., 2015). The
policy instruments are usually divided into the incentive and punitive mechanism (Zhao
et al., 2012a; Mukhopadhyay and Goswami, 2014; Wang et al., 2015). The incentive
mechanism is comprised of subsidy, tax preference, price regulation etc., which has
been identified as effective to reduce externality of negative consequences while
implementing green strategy, decrease financial risk of related stakeholders, and
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encourage them to take more corporate social responsibilities (CSR) to improve their
social performance, ultimately to seek sustainability on commercial success (Santos,
2012; Tian et al., 2014; Montmartin and Herrera, 2015). With regard to the punitive
mechanism, such as economic sanction, legal supervision and so on, it is a compulsive
measure to drive innovation, research and design for products’ sustainability, to reduce
lifecycle environmental impact, thus to enhance eco-efficiency of supply chain network
(Bostic et al., 2008; Cason and Gangadharan, 2014; Gualandris et al., 2015).
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In order to help the involved enterprises to choose Scenario 1 for their green
transition, governmental incentives are suggested giving to cover part of the total
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economic cost in the initial stage. When their inherent risk and carbon emissions will
have been decreased, it is further suggested that government imposes supervision
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gradually to ensure the sustainability of the supply chain.
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6. Conclusions
This study offers a multi-objective optimization model to provide insight into
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green supply chain management while minimizing the inherent risks involved in the
handling of hazardous materials; such risk is generally associated with carbon emissions
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and economic cost. Three Scenarios are proposed to solve the optimization model, in
which Scenario 1 minimizes risk first, then carbon emissions and finally economic cost.
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Scenario 2 seeks to minimize economic cost by minimizing both risk and carbon
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emissions, while Scenario 3 attempts to minimize risk, carbon emissions and economic
cost at the same time. A case study of the sanitary appliance supply chain network is
given to demonstrate the application of the optimization model. This study shows that
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Scenario 1 is superior to Scenarios 2 and 3 for reducing risk and carbon emissions,
promoting improvements in green supply chain management, and achieving long-term
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commercial success. It is expected that the best strategy of risk control and carbon
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carbon emissions, on the economic costs incurred by the various stakeholders as they
employ green supply chain management practices. With regard to the application of big
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data approach, it is expected that more big data analytic models, such as panel data
models and others can be better incorporated into the green supply chain management in
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the further study.
Acknowledgements
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This study is sponsored by National Natural Science Foundation of China (No.41301639;
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14-045-24-12), the Fundamental Research Funds for the Central Universities (No.
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List of tables
Table 3 Measurement of possible casualties and property loss using monetary value
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Table 5 Optimal objective results related to different scenarios
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Table 6 Weight determination of different scenarios using binary dominance matrix
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Table 7 Attributive values of each objective related to different scenarios
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Facility FC MC DC RC TC
12330 5500 Yuan × 1960 Yuan ×
Supplier B
Yuan /d /t /t
12300 5000 Yuan × 1900 Yuan ×
Supplier C
Yuan/d /t /t
12300 5000 Yuan × 1900 Yuan ×
Supplier D
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Yuan /d /t /t
Distribution 950 Yuan × × ×
300 Yuan /t
centre E /d
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Distribution 1000 Yuan × × ×
300 Yuan /t
centre F /d
× -100 Yuan × ×
Recycling centre ×
/ta
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Landfill × × 50 Yuan /t × ×
Incineration × × × ×
100 Yuan /t
plant
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Transportation × × × × 10Yuan/t•km
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the -100 Yuan/t indicates the cost saving while the recycling strategy is incorporated into the green
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supply chain management.
plan)
246.21 (High cost plan)
Recycling center 523.51 KgCO2 per tonne of waste
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Table 3 Measurement of possible casualties and property loss using monetary value
Key
Recycl Incinera
Suppl Suppl Suppl manufact Land Transport
ing tion
ier B ier C ier D urer fill ation
center plant
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Consequ
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5.50 4.89 4.89 10.00 3.00 0.20 1.00 1.50
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(Billion
Yuan)
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Table 4 Measurement of environmental impact by using monetary value
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Key
Recycl Incinera
Suppl Suppl Suppl manufact Land Transport
ing tion
ier B ier C ier D urer fill ation
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center plant
A
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Consequ
ence
5.00 0.91 0.24 0.55 3.16 10.00 9.00 0.60
(Billion
Yuan)
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(a) Scenario 1
Indicators Inherent Carbon Total Cost Scores Weights
risk emissions
Inherent risk × 1 1 3 0.5
Carbon 0 × 1 2 0.33
emissions
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Total Cost 0 0 × 1 0.17
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(b)Scenario 2
Indicators Inherent Carbon Total Cost Scores Weights
risk emissions
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Inherent × 0.5 1 2.5 0.42
risk
Carbon 0.5 × 1 2.5 0.42
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emissions
Total Cost 0 0 × 1 0.17
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(c) Scenario 3
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risk
Carbon 0.5 × 0.5 2 0.33
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emissions
Total Cost 0.5 0.5 × 2 0.33
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Scenario 2 1 0 0.22
Scenario 3 0.996 1 0
Figure Captions
Fig.2. The proposed green supply chain network in the case example
Fig.3. Statistical process control chart for the parameter of the demand of the key
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manufacturer
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Fig.5. Solution of the scenario 1
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Fig.6. Solution of the scenario 2
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Fig. 1 The proposed green supply chain network
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Fig. 2 The proposed green supply chain network in the case example
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Fig. 4 The adjusted framework of risk tolerability
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Fig. 6 Solution of Scenario 2
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