Journal of Environmental Management 133 (2014) 315e322

Contents lists available at ScienceDirect

Journal of Environmental Management

journal homepage: www.elsevier.com/locate/jenvman

A strategic decision-making model considering the social costs of

carbon dioxide emissions for sustainable supply chain management
Shih-Chang Tseng a, Shiu-Wan Hung b, *
a
Liberal Education Center, National Ilan University, No. 1, Shen-long Road, Sec. 1, Ilan 260, Taiwan
b
Department of Business Administration, National Central University, No. 300, Jung-Da Road, Jung-Li, Tao-Yuan 320, Taiwan

a r t i c l e i n f o a b s t r a c t

Article history: Incorporating sustainability into supply chain management has become a critical issue driven by pres-
Received 30 September 2012 sures from governments, customers, and various stakeholder groups over the past decade. This study
Received in revised form proposes a strategic decision-making model considering both the operational costs and social costs
16 June 2013
caused by the carbon dioxide emissions from operating such a supply chain network for sustainable
Accepted 15 November 2013
Available online 8 January 2014
supply chain management. This model was used to evaluate carbon dioxide emissions and operational
costs under different scenarios in an apparel manufacturing supply chain network. The results showed
that the higher the social cost rate of carbon dioxide emissions, the lower the amount of the emission of
Keywords:
Carbon dioxide emissions
carbon dioxide. The results also suggested that a legislation that forces the enterprises to bear the social
Social costs costs of carbon dioxide emissions resulting from their economic activities is an effective approach to
Sustainable supply chain management reducing carbon dioxide emissions.

2013 Elsevier Ltd. All rights reserved.

1. Introduction been observed for addressing sustainability issues in supply chain

management, including green design (Lin, 2013), green purchasing
In the past decade, supply chain management (SCM) has received (Bai and Sarkis, 2010), green manufacturing (Lin, 2013; Shang et al.,
a great deal of attention from practitioners and scholars because of 2010), reverse logistics (Eltayeb et al., 2011), etc.
globalization. Mentzer et al. (2001) have defined SCM as the sys- Nevertheless, what previous studies have neglected to consider
temic, strategic coordination of traditional business functions with are the environmental, social, and economic threats resulting from
the tactics across these business functions within a particular com- climate changes (Marchant, 2010). The direct effects of climate
pany and across businesses within the supply chain, for the purposes changes include changes in temperature, precipitation, soil mois-
of improving the long-term performance of the individual com- ture, and sea level. The main cause of climate changes is global
panies and the supply chain as a whole. Usually, studies of SCM have warming, which is mainly brought on by greenhouse gas emissions,
concentrated on economic issues (Goetschalcks and Fleischmann, with carbon dioxide (CO2) as the main man-made greenhouse gas
2008), such as finding ways to minimize the operational costs (Karl and Trenberth, 2003; Lashof and Ahuja, 1990). Damages
(Nagurney, 2010a) or to maximize profits (Nagurney, 2010b). caused by the CO2 emissions are spread across time and space
However, with increasing awareness of the need for environ- (Anthoff et al., 2009a). Thus, the reduction of CO2 emissions has
mental protection and sustainability, companies are urged to become an urgent global issue in the last decade for mitigating
effectively incorporate sustainability issues into their SCM global warming (Morath, 2010). Several approaches, such as
schemes, prompted by the pressures from governments, customers, emission trading scheme, agreed emissions targets, and carbon tax
and various stakeholder groups (Gold et al., 2010). Carter and have been proposed for reducing CO2 emissions (Forster et al.,
Rogers (2008) defined sustainable supply chain management 2006; Zhang and Folmer, 1998). Emission trading scheme has
(SSCM) as the strategic, transparent integration and achievement of been applied in the European Union, but have failed because of the
an organization’s social, environmental, and economic goals in the unequal access to information and market inefficiency (Andrew,
systemic coordination of key inter-organizational business pro- 2008). The Kyoto Protocol provided for agreed emissions targets,
cesses for improving the long-term economic performance of an but the evidence available to date indicates that most countries will
individual company and its supply chain. Many approaches have not meet its targets. This is because of the need to sustain and grow
economic activities (Andrew, 2008). Compared to emission trading
scheme and agreed emissions targets, carbon tax is considered to
* Corresponding author.
E-mail address: shiuwan@mgt.ncu.edu.tw (S.-W. Hung). be more transparent and visible, and hence harder to evade or

0301-4797/$ e see front matter
2013 Elsevier Ltd. All rights reserved.
http://dx.doi.org/10.1016/j.jenvman.2013.11.023
316 S.-C. Tseng, S.-W. Hung / Journal of Environmental Management 133 (2014) 315e322

avoid (Andrew, 2008). The carbon tax levy has been considered as (2012) used the MIPS (Material Input per Service Unit) methodol-
one of the most common market-based approaches from the aspect ogy to assess the sustainability along the supply chains of three
of economic incentives in carbon emission regulation (Oreskes, Italian foodstuffs. Liu et al. (2012) proposed a new hub-and-spoke
2011). The optimal carbon tax is the tax on carbon emissions that integration model to integrate green marketing and sustainable
balances the incremental costs of reducing carbon emissions with supply chain management from six dimensions: product, promo-
the incremental benefits of reducing climate damages. In an tion, planning, process, people, and project. Gold et al. (2013) used
optimal regime, the carbon tax could equal the social costs resulting three case studies to address the question of how sustainable
from carbon emissions (Nordhaus, 2007). supply chain management (SSCM) applied to BoP (Base of the
As mentioned above, many unrecoverable damages caused by Pyramid) projects can help multinational corporations achieve
CO2 emissions could result in tremendous social costs. Yet, most their sustainability goals. Caniato et al. (2012) used a multiple case
producers of CO2 emissions do not pay attention to these social study methodology to analyze different kinds of companies tack-
costs while societies pay for them. CO2 emissions adversely affect ling the environmental sustainability issue. Shaverdi et al. (2013)
everyone, regardless of their location and source, whether or not applied the fuzzy AHP approach for evaluating supply chain man-
people are willing to pay to avoid the resulting costs. To mitigate agement sustainability in the publishing industry. Srivastava (2007)
the damages caused by CO2 emissions, it is necessary to take the made a much wider attempt to address SSCM, including product
social costs of CO2 emissions into consideration for all economic design, material source and selection, manufacturing process, de-
activities. In this study, the authors propose a model considering livery of the final product to the consumer, and end-of-life man-
both the operational costs and social costs of CO2 emissions in SCM. agement of the product after its useful life.
The objective of this study is to provide a useful model for decision- In recent years, several studies addressed the CO2 emission issue
makers of SCM for planning a sustainable supply chain. This study in SCM. For example, Sundarakani et al. (2010) employed the
was organized as follows: first, a literature review regarding SSCM, Eulerian and Lagrangian transport models to estimate carbon
as well as the estimation of the social costs caused by CO2 emis- emissions across the supply chain, including emissions from mate-
sions, was offered. Second, the research problem of this study was rial processing, manufacturing, warehousing, inbound logistics, and
provided. Third, a mathematical model with an illustrative case was outbound logistics. They suggested that carbon emissions across
developed. Finally, the conclusion, discussion, recommendations, stages in a supply chain can constitute a significant threat that re-
and limitations for this study were presented. quires careful attention in the design phase of supply chains. Lee
(2011) integrated carbon emission as an indicator for automobile
2. Literature review supply chain management. Chaabane et al. (2012) proposed a model
to design a sustainable supply chain under the carbon emission
In this section, the authors of the present study review past trading scheme. However, the carbon emission trading scheme has
literature related to SSCM and the estimation of the social costs of been applied in the European Union, but has failed because of its
CO2 emissions. The authors also aim to demonstrate the signifi- serious shortcomings in design (Andrew, 2008; Sovacool, 2011).
cance of incorporating the social costs of CO2 emissions into SSCM. Emissions credits were distributed for free as a rough function of
past emissions, yet such a concession provided enterprises an
2.1. Sustainable supply chain management (SSCM) incentive to emit more during the early years of the program to
receive a larger allocation in the future (Hepburn, 2007). Further-
The literature about SCM has increasingly focused on issues more, most European countries allow their enterprises to determine
relating to sustainability, driven by governments and both profit their own baselines and to set their own abatement cost curves, so
and nonprofit organizations in the past decades (Ageron et al., most enterprises have a tendency to revise their estimates upward
2012). SSCM is seen as the integration of environmental, social, to obtain more generous allowances (Sovacool, 2011).
and economic goals in the systematic coordination of key inter- Compared to the emission trading scheme, carbon tax is
organizational business processes for improving the long-term considered to be more transparent and visible, and thus harder to
economic performance of the individual company and its chains evade or avoid (Andrew, 2008). The optimal carbon tax is equal to
for sustainable development (Carter and Rogers, 2008). Previous the social costs of carbon emissions (Nordhaus, 2007). Thus, in this
studies have addressed sustainability in supply chain management study, the authors developed a mathematical model through inte-
from various perspectives, including product design, materials grating social costs of CO2 emissions into supply chain management
purchasing, supplier selection, manufacturing, remanufacturing, to reduce CO2 emissions for sustainability.
reverse logistics, waste management, etc.
For example, Alves et al. (2009) developed a sustainable design 2.2. The social costs of CO2 emission
procedure for employing green materials in product design pro-
cedure. Zsidisin and Siferd (2001) concentrated on green purchas- Kapp (1963) defined social costs as all direct and indirect losses
ing for addressing the sustainability issue in SCM. Bai and Sarkis sustained by third persons or the general public as a result of un-
(2010) introduced a multi-stage, multi-method approach consid- restrained economic activities. These social losses may take the
ering economic, environmental, and social factors for selecting form of damages to human health, the destruction of property
sustainable suppliers. Govindan et al. (2013) applied a fuzzy multi values, and the premature depletion of ecosystems. The social costs
criteria approach for measuring sustainability performance of a of CO2 emissions might be defined as the monetary value of the
supplier based on the triple bottom line approach. Manzini and damage made by the emission of one extra ton of CO2 at some point
Accorsi (2013) proposed an integrated approach to control qual- of time (Etchart et al., 2012; Guo et al., 2006; Pearce, 2003).
ity, safety, sustainability, and logistics efficiency of food products Owing to a great number of negative impacts in physical, bio-
and processes along the whole food supply chain, from farm to fork logical, and human systems caused by CO2 emissions, many studies
simultaneously. Michelsen et al. (2006) applied eco-efficiency as an have tried to estimate the social costs of CO2 emissions. Existing
instrument to measure sustainability of furniture production sup- studies that have attempted to place a value on the social costs of
ply chains. Zhu et al. (2010) used empirical research to examine if emitting CO2 have employed one of two alternative approaches.
different types of manufacturing enterprises with environmental- They are the cost-benefit analysis (CBA) approach and the marginal
oriented supply chain cooperation (ESCC) exist. Mancini et al. cost (MC) approach (Clarkson and Deyes, 2002).
 S.-C. Tseng, S.-W. Hung / Journal of Environmental Management 133 (2014) 315e322 317

Fig. 1. Illustration of a supply chain management problem.

Under the CBA approach, the social costs of CO2 emissions are Table 3
expressed as the level of carbon tax necessary to achieve the opti- Production capacity, product cost, and CO2 emissions of each plant.

mum level of emissions. In the cost-benefit framework, emissions Plant Production capacity Production cost CO2 equivalents emission
are at their optimal level where the incremental social costs of (garments/month) ($/garment) of production process
reducing emissions by one ton are equal to the additional social (kg/Garment)

benefits of avoided damages (Clarkson and Deyes, 2002). The CBA PL1 84,000 1.908 18
would set the optimal amount of CO2 emissions reduction at the PL2 72,000 2.755 14
PL3 66,000 2.41 16
point where these social costs exactly equal the incremental costs of
controlling emissions. The higher the value for the social costs of CO2 Retrieved from Benchmarking the Competitiveness of Nicaragua’s Apparel Industry
(O’Rourke Group Partners, LLC, 2011) and Levi Strauss & Co. Life Cycle Approach to
emissions, the more control is needed (Pearce, 2003). The larger the
Examine the Environmental Performance of its Products (Levi Strauss & Co.).
social costs of CO2 emissions, the more attractive the investment in
CO2 emissions reductions is (Guo et al., 2006). In contrast, the MC
approach is to estimate marginal damage costs of CO2 emissions, the Table 4
damage done by emitting an additional ton of CO2 emissions, or the Materials supply capacity of each supplier.

Supplier Supply capacity (garment/month)

Table 1 S1 (China) 78,000

Demand requirements of each distribution center. S2 (USA) 72,000
S3 (Mexico) 60,000
Distribution center Location Requirements

DC1 New York 90,000

DC2 Los Angeles 90,000 Table 5
Transportation distance between suppliers and plants (miles).

Material supplier Transportation type Plant

Table 2 PL1 PL2 PL3
Materials purchasing cost of plants from suppliers ($/garment).
S1 Ship 3949 7179 7855
Plant Supplier Truck 450 400 350
S2 Ship 10,621 5644 4916
S1 (China) S2 (USA) S3 (Mexico)
Truck 350 300 250
PL1 4.5 5.1 4.9 S3 Ship 10,653 0 789
PL2 4.67 4.85 4.62 Truck 350 300 250
PL3 4.68 4.9 4.77
Transportation distance of cargo ship is retrieved from http://www.searates.com/
Retrieved from Benchmarking the Competitiveness of Nicaragua’s Apparel Industry reference/portdistance/.
(O’Rourke Group Partners, LLC, 2011) Transportation distance of truck is assumed by the authors.
318 S.-C. Tseng, S.-W. Hung / Journal of Environmental Management 133 (2014) 315e322

damage avoided by reducing emissions by one ton of CO2 emissions indices: j ˛ J, a set of candidate suppliers; k ˛ K, a set of potential
(Anthoff et al., 2009b; Clarkson and Deyes, 2002; Tol, 2011). plants; l ˛ L, a set of possible distribution centers; m ˛ M, a set of
Many studies have applied either the CBA or MC approach to materials needed for production, and, i ˛ I, a set of products. The
estimate the social costs of CO2 emissions. For example, Cline problem parameters and decision variables are defined as follows:
(1992) used the CBA approach to estimate the social costs of CO2
emissions and had results ranging from $3.6 to $68.5.2/tCO2 4.1.1. Parameters
emission in 2011e2020 prices (Clarkson and Deyes, 2002). In 1996,
the IPCC (Intergovernmental Panel on Climate Change) Working MCmjk unit cost of material m ordered from supplier j to plant k
Group III published a review and reported that the social costs of SCmj capacity limit of material m of supplier j
CO2 ranged from $1.6 to $43.6/tCO2 in 2000 prices (Guo et al., CPk capacity limit of plant k
2006). Stern (2007) has reported marginal damage costs of CO2 PCik unit production cost of product i in plant k
emissions and a result about $85/tCO2. TCikl unit transportation cost of product i shipped from plant k to
Recently, Tol (2011) reviewed previous studies and calculated DC l
the social costs of carbon emissions and found the average cost to LCik, UCik lower, and upper production capacity limits of product
be $31/tCO2. Hope (2011) applied the PAGE09 Model to estimate i in plant k
the social costs of CO2 emissions and found the average cost of CO2 CO2ik unit CO2 emission of product i produced in plant k
emissions to be $100/tCO2. Etchart et al. (2012) also reviewed CO2r CO2 emission of unit weight, unit distance using trans-
previous studies and found that the social costs of CO2 emissions portation mode r
ranged from $5/tCO2 to $200/tCO2. Wm unit weight of material m
The broad ranges of estimated results for the social costs of CO2 Wi unit weight of product i
emissions could be because of the sheer size of the uncertainties of
future climate changes, future socioeconomic variables, particular 4.1.2. Decision variables
ethical parameters adopted in each model, different representa-
tions of the carbon cycle, different estimates of the rate of warming, Gmjk total units of material m purchased from supplier j to plant
etc. (Guo et al., 2006; Tol, 2011) The present authors also found that k
the estimated results of social costs rates of CO2 emissions tended Hikl total units of product i transported from plant k to DC l
to increase gradually through literature reviews. TDmr material m transportation distance of mode r
TDir product i transportation distance of mode r
3. Problem description SCRCO2 social cost rate of CO2 emission

This study emphasized the optimal operations of global produc- 4.2. The objective function
tion and distribution supply chain networks, considering both the
operational costs and social costs of CO2 emissions caused by oper- The total costs of the objective function include the operational
ating such networks for minimizing the total costs. The network costs and social costs of CO2 emissions. The operational costs of the
consists of a number of materials suppliers, manufacturing plants, supply chain include purchasing costs, production costs, and
and distribution centers (DCs). In this study, the authors assumed transportation costs. The social costs of carbon emissions of the
that the materials suppliers and DCs locations are given in advance, supply chain include the carbon emissions caused by the process of
and the potential plants, as well as their capacities, are also identi- products production and transportation of products. Therefore, the
fied. In addition, the authors assumed that the production of one unit objective function to be minimized is given by:
of a product requires one unit of production capacity, regardless of 2
type of product. For each materials supplier and plant and distri- X X X
bution center (DC), decisions must be made on the amount of ma- Min Z ¼ Min4 MCmjk Gmjk þ PCik Hikl þ TCikl Hikl
terials purchased from each supplier for each plant, the total units of m;j;k i;k;l i;k;l
0
products that need to be produced in each plant, and the amounts of X X
products shipping from each plant to each DC. þ@ CO2ik Hikl þ CO2r Wm Gmjk TDmr (1)
Operational costs include those costs associated with materials i;k;l m;j;k;r
purchasing, production, and transportation. CO2 emissions include 1 3
X
the emissions resulting from the production process and trans- þ CO2r Wi Hikl TDir ASCRCO2 5
portation. The decisions to be determined include the demand i;k;l;r
requirement of every DC. The objective is to minimize the total
costs by taking both operational costs and social costs of CO2 The first term in the objective function is the total purchasing
emissions into account. cost of materials from all suppliers (including transportation costs
of materials). The second term is the total production costs in all
4. The sustainable supply chain management model and plants. The third term is the total transportation costs of all prod-
model formation ucts. The last term is the total social costs of CO2 emissions
(including emissions caused by products production, materials
The authors developed a mixed integer, nonlinear optimization transportation, and products transportation).
model to provide decision makers of enterprises a guideline for
SSCM, with consideration of the operational costs, as well as the 4.3. Constraints
social costs of CO2 emissions.
For a supply chain management model, there are many generic
4.1. Parameter notations and definitions constraints to be considered, including balance constraints of ma-
terials and products, the capacity limit constraint, and the
Before the model is formulated, the basic parameter notations and throughput limit constraints. These constraints are discussed
definitions are introduced. In this study, the authors use the following below.
 S.-C. Tseng, S.-W. Hung / Journal of Environmental Management 133 (2014) 315e322 319

Table 6 X
Transportation distance between plants and DCs (miles).
LCik  Hikl  UCik for all I (4)
l
Plant Transportation type Distribution center

DC1 DC2 4.3.4. The throughput limit constraints

PL1 Ship 9654 9232
For plant k, the throughput limit is
Truck 150 230 X
PL2 Ship 3440 1488 Hikl  CPk (5)
Truck 200 180 i;l
PL3 Ship 2692 2272
Truck 150 130 P
(Note: In each plant, we must have UCik ¼ CPk)
Transportation distance of cargo ship is retrieved from http://www.searates.com/
reference/portdistance/.
5. An illustrative case
Transportation distance of truck is assumed by the authors.

Table 7 The proposed mathematical model has been developed, vali-

CO2 emission of transportation. dated, and used in a preliminary study of a supply chain from the
Transportation type CO2 emission (kg ton1 mile1) apparel manufacturing industry to illustrate the potential applica-
tion as a decision making tool for SSCM under different social cost
Ship 0.04374
Truck 0.08217 rates of CO2 emissions.
Retrieved from an environmental impact assessment of exported wood pellets from
Canada to Europe (Magelli et al., 2009).
5.1. Data

The potential management of a supply chain network being

4.3.1. Material requirements
considered by a textile company of Taiwan is illustrated in Fig. 1,
which includes three cotton fabrics suppliers, three jeans produc-
Rmi: Units of material m required to produce one unit of product i.
tion plants, and two DCs. These three cotton fabric suppliers are
located in China, U.S.A., and Mexico, respectively. The three jeans
The materials balance constraint is
production plants are located in Bangladesh, Mexico, and
P P Nicaragua, respectively. The two DCs are located in New York and
Hikl Rmi  Gmjk for all k; m (2)
i;l j Los Angeles.
The objective of our SCM model is to decide the optimal amount
4.3.2. Supplier’s capacity limits of cotton fabrics purchased from different suppliers to each plant,
The capacity limits, for supplier j, can be formulated as jeans production in different plants, and jeans shipping from each
P plant to each DC under different social cost rates of CO2 emissions,
Gmjk  SCmj for all m (3) to consider both the operational costs and the socials costs of CO2
k emissions to minimize the total costs.
The authors assumed that the total demand requirements are
4.3.3. Production capacity limits of plants 180,000 pairs of men’s basic 100% cotton, 5 pocket denim jeans or-
There are lower and upper production capacity limits of product dered from two DCs. The demand requirements of each DC are
i in plant k. So, for each plant k, the production capacity limits shown in Table 1. The raw material of denim jeans is cotton fabric
constraints are and provided by three potential suppliers. The unit purchasing costs

Fig. 2. Results of scenario 1 (Taking only operational costs into consideration).

320 S.-C. Tseng, S.-W. Hung / Journal of Environmental Management 133 (2014) 315e322

Fig. 3. Results of scenario 5 (The social costs of CO2 emissions ¼ $ 100/ton CO2 eq).

(including transportation costs of raw materials) of raw materials 5.2. Results and discussion
from each supplier to each plant is shown in Table 2. The production
capacity, unit production costs (including trimming costs, packing Nine scenarios were considered and used to analyze the results.
costs, labor costs, and so on), and the amount of CO2 emissions In scenario one, the authors take only the operational costs into
throughout the production process of a pair of jeans produced in consideration. From scenario two to scenario nine, eight different
each plant are shown in Table 3. The materials supply capacity of social cost rates were considered: $25/tCO2, $50/tCO2, $75/tCO2,
each supplier is shown Table 4. The transportation distances of raw $100/tCO2, $125/tCO2, $150/tCO2, $175/tCO2, and $200/tCO2 of CO2
materials shipped from suppliers to plants and products shipped emissions, respectively, to decide the optimal material purchasing
from plants to DCs are shown in Tables 5 and 6, respectively, while size from each supplier, the optimal product production size in each
CO2 emissions caused by transportation are shown in Table 7 plant, and the optimal amount of products shipping from each
(Magelli et al., 2009). A pair of men’s basic 100% cotton, 5 pocket plant to each DC. In addition, the LINGO was applied to solve the
denim jeans weighs about 0.6 kg, which requires about 0.75 kg of proposed model of this study.
cotton fabric. The authors assume the sipping weight of a pair of The amounts of cotton fabrics purchased from each supplier to
men’s basic 100% cotton, 5 pocket denim jeans is 0.75 kg (including each plant, jeans produced in each plant, and jeans shipping from
packaging). It is assumed that raw material purchasing lot size, each plant to each DC of some scenarios are shown in Figs. 2 to 4.
garment production lot size, and garment transportation lot size are For instance, in scenario 5, plant 3 purchased 48,000 garments’
6000 garments based on the 20 feet container capacity of jeans. cotton fabrics from supplier 2 and 18,000 garments’ cotton fabrics

Fig. 4. Results of scenario 9 (The social costs of CO2 emissions ¼ $ 200/ton CO2 eq).
 S.-C. Tseng, S.-W. Hung / Journal of Environmental Management 133 (2014) 315e322 321

Table 8 emissions. This would cause enterprises to invest money in

Comparison of different scenarios. reducing CO2 emissions.
Scenario Unit cost of CO2 Amount of CO2 Social costs Operation Total
emissions emissions of CO2 costs ($) costs ($)
($/ton) (tons) emissions ($) 5.3. Sensitivity analysis under different social cost rates of CO2
emissions
1 0 3049.687 0 1,368,687 1,368,687
2 25 3049.687 76242.2 1,368,687 1,444,929
3 50 3049.284 152464.2 1,368,997 1,521,461 We investigate the change in total CO2 emissions based on
4 75 3047.632 228572.4 1,366,547 1,595,119 different social cost rates of CO2 emissions. Thus, a sensitivity
5 100 3021.430 302143.0 1,368,814 1,670,957 analysis considering social cost rate of CO2 was carried out. We
6 125 2984.351 373043.9 1,372,294 1,745,338
observed the change of total CO2 emissions and total costs by
7 150 2969.646 445446.9 1,366,414 1,811,861
8 175 2919.165 510853.9 1,374,518 1,885,372 varying the social cost rate of CO2 emissions. The results are given
9 200 2882.374 576474.8 1,400,056 1,976,531 as graphs in Figs. 5 and 6 for the total CO2 emissions, and total costs,
respectively. The social cost of CO2 emissions varies from 0 to $ 200/
ton. In these two figures, we can see how the social cost rate of CO2
emissions impacts total CO2 emissions and total costs under
different social cost rates of CO2 emissions. Also, we can see that as
the social cost rate of CO2 emissions increases, the total CO2
emissions decreases and total costs increases, respectively.

6. Conclusion

The reduction of CO2 emissions to mitigate the impacts of global

warming has become an urgent issue globally. Bearing this in mind,
the authors of this study have highlighted the significance of taking
social costs of CO2 emissions into consideration in supply chain
management, and have presented a generic mathematical model
considering both operational costs and social costs of CO2 emis-
sions to assist decision makers in supply chain management.
The inclusion of social costs in supply chain management could
Fig. 5. Total CO2 emissions versus social cost rate of CO2 emissions.
allow decision-makers of enterprises to estimate more practical
costs in the operations of supply chain networks. The proposed
from supplier 3 for producing 66,000 garments’ jeans; and shipping model has the potential to become a useful tool that facilitates the
66,000 garments’ jeans to DC 1. understanding of optimal supply chain strategies with consider-
Table 8 was used to compare the results obtained from the four ation for social costs of CO2 and other wastes emissions resulting
scenarios. It was found that total CO2 emissions decrease as the from operating such a supply chain network. In addition, the pro-
social costs rates of CO2 emissions increase. The results showed that posed model could serve as a useful reference for legislators in
if enterprises have to pay the social costs of CO 2 emissions caused estimating the monetary loss resulting from CO2 emissions in the
by their operations of supply chain networks, the decision makers operations of supply chain networks. Furthermore, the legislators
of these enterprises will make optimal strategies to make tradeoffs could refer this model to propose legislations to enforce the en-
between the operational costs and CO2 emissions. Therefore, the terprises to pay for the social costs of CO2 emissions. Therefore, the
decision-makers of enterprises would choose plants that emit less enterprises must invest money in reducing CO2 emissions from the
CO2 gas, even though those plants have higher costs for production. operations of such supply chain networks.
This is because the overall amount of costs would be less than those Although the proposed mathematical model has made a note-
of plants that do not take CO2 emissions into serious account. Thus, worthy contribution to current studies on SSCM, it also has its
the authors of this study suggest that governments should impose limitations. First, the estimation that we did regarding the calcu-
rules to force enterprises to pay for the social costs of CO2 lation of the social costs of CO2 emissions in supply chain man-
agement can only be seen as tentative at this preliminary stage.
Second, as showed in our illustrative case where we took an apparel
manufacturing supply chain network as an example, further studies
can apply this model to other industries. Third, the proposed model
is particularly suitable for the multinational enterprises that own
many manufacturing plants located in different countries. Last, the
social costs of other wastes emissions caused by the operations of
supply chain network could be considered in further studies.

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