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2802. The impact of carbon tax on last-mile retail supply chain
Invited abstract in session TB-24: Sustainable Logistics, stream Sustainable Supply Chains.
Tuesday, 10:30-12:00Room: 83 (building: 116)
Authors (first author is the speaker)
| 1. | Chuanwen Dong
|
| ESCP Business School |
Abstract
This study proposes and analyzes a last-mile retail supply chain model. Consumers follow an Economic Order Quantity model to decide their quantity and frequency of shopping from the closest retail store. The retailer determines its store density to minimize the total logistics costs per unit of goods sold. In anticipation of the decisions from consumers and the retailer, the government imposes a carbon tax to reduce emissions. In contrast to the literature, we find that the impact of the carbon tax on the last-mile supply chain is not monotone. Depending on the parameters, a carbon tax may lead to a sparser or denser retail network. Surprisingly, there may even be a win-win scenario where a carbon tax incentivizes the retailer, who is primarily focused on cost minimization, to adopt a supply chain design that simultaneously minimizes costs and emissions (the win-win). Through numerical analysis using data from the United States and Germany, we find that denser last-mile retail networks are currently necessary to reduce emissions in both countries. The win-win scenario could potentially be achieved through, e.g., innovations in electrification.
Keywords
- OR in Sustainability
- Supply Chain Management
- Practice of OR
Status: accepted
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