This paper applies multiobjective optimization to show how the efficient tradeoffs between cost and carbon emissions may be obtained in the context of socially responsible operations. We thus formulate a model where transportation mode selection and lot sizing decisions are considered jointly. We derive structural properties of the model and develop several insights that remain hidden under single-objective optimization. First, we show that switching to a socially responsible mode of transportation while continuing to optimize the total logistics costs function may lead to a dominated solution. Second, we prove that the modal shift occurs only under strong carbon emissions reduction requirements. Third, we show that the efficient frontier is non-convex. Two classical ways of taking carbon emissions into account in the decision making process are also compared and the results are illustrated through an example of a French retailer.
|Place of Publication||Eindhoven|
|Publisher||Technische Universiteit Eindhoven|
|Number of pages||33|
|Publication status||Published - 2013|
|Name||BETA Working Paper Series|