Green Investment Cost Optimization Model in the Supply Chain
- 1 Center for Defense Acquisition, Korea Institute for Defense Analyses, Seoul, Republic of Korea
- 2 Graduate School of Logistics, Inha University, Incheon, Republic of Korea
Abstract
The objective of this study is to develop a model that determines the optimal points for investment in green manage ment by defining a mathematical relationship between carbon trading profits and investments in green management using a company’s supply chain information. To formulate this model, we first define and analyze a green supply chain in a multi-dimensional and quantitative manner. The green investment alternatives considering in our model are as fol lows: 1) purchasing eco-friendly raw materials that cost more than conventional raw materials but whose use in produc tion results in lower CO 2 emissions ; 2) replacing current facilities with new eco-friendly facilities that have the capabil ity to reduce CO 2 emissions ; and 3) changing modes of transport from less eco-friendly to more eco-friendly modes. We propose a green investment cost optimization (GICO) model that enables us to determine the optimal investment points. The proposed GICO model can support decision-making processes in green supply chain management environments.
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