Developing Inventory model for deteriorating items in green supply chain

Abstract

Green Supply Chain has gained a lot of attention in recent times due to environmental concerns. By employing green practices e.g. green procurement, green production, green transportation, green packaging, and reverse logistics, a lot of these concerns can be addressed. However, the industry hasn t paid enough attention to this area. The main reason being the risk of higher costs involved and the potential of lower profitability. Though there is good amount of research in this area, most focus is on building environmentally beneficial supply chains while not giving enough thought to profitability. This has led many industries vary of the implications of utilizing green supply chains in handling inventory. newline Environmental degradation is a serious concern and is extremely hazardous to human life. Not only the government but also customers have understood the implication and are looking for ways to diminish the effect. This has led to customers preferring products with lower carbon emissions. The government has also laid out various guidelines for industries to minimize environmental degradation and various incentives for companies that utilize green concepts in their supply chain. It is also seen that while developed countries are more interested in the green supply chain, developing countries have shown lesser interest due to concerns around higher costs. newline Green supply chain can be very beneficial to the organization. This can provide higher profitability if used properly and can help enhance brand value for the organization. Along with this, an organization can benefit from various government schemes. However, there is a lack of research in this area, particularly with focus on building an optimal and profitable model. In the present research, we develop optimal inventory models for deteriorating inventory. Since almost every product goes through deterioration at some point, it makes sense to consider deterioration to develop realistic models. Deterioration can be instantaneous where deterioration starts instantaneously or can be non-instantaneous where deterioration starts only after a certain point of time. newline A supply chain is affected by various parameters depending on business to business. In some industries, shortage can play a major role and customers wouldn t be ready to wait while in other industries customers may be ok to wait for some time. Similarly, learning effect can be large in some areas while in others the effect may not be that high. Another parameter that can make a high impact is inflation. In our study, we develop models considering the impact of these parameters. Many times the effect of these parameters cannot be accurately determined. To account for this, fuzzy models are developed considering parameters as imprecise. newline There are a couple of concerns with green supply chain. One of which is remanufactured product cost can be higher. This can lead to lower profitability. To analyze this, we consider remanufactured products are sold at lower prices than that of original products and develop an optimal model minimizing total average cost throughout the manufacturing and remanufacturing cycle and thus higher profitability. Another concern is that refurbished products can cannibalize the sale of new products. In this study, the impact of cannibalization is studied and an optimal model is developed assuming the cannibalization parameter is of imprecise nature. newline