Supply Chain Coordination Based On Price Discount And Carbon Emission Permits Transfer

Long-term excessive utilization of natural resources has damaged the environment.Climate change is affecting the survival of human beings.Thus more and more countriespay attention to the problems caused by climate change. Global warming is one of themand is mainly caused by the increasing amount of carbon dioxide emission. To solve theproblem agreements on controlling the emission has been reached among countries. Alsomany countries are making efforts to lead to a low carbon economy.Carbon cap and trademechanism is widely used. This paper focuses on the supply chain operation andcoordination under the mechanism.In this paper operational optimization models in supply chain decentralized decisionmaking mode and joint decision making mode are given respectively for a two-levelsupply chain that consists of a vendor and a buyer under cap and trading mechanism, Theimpacts of carbon permission price and carbon cap on optimal order quantity, productionquantity, total cost and carbon emissions of supply chain are studied by analytic method.The conditions under which supply chain may reduce total operational costs and carbonemissions simultaneously are also analyzed. The derived propositions are illustrated bynumerical examples.Then a coordination model of supply chain consisting of a vender and a buyer undercap and trading mechanism is built. Based on price discount, the means of carbonemissions permit transfer is introduced to achieve supply chain coordination. Theconditions and steps to reach coordination are given. The method to allocate the supplychain benefits under cap and trading mechanism is introduced. Finally numericalexamples are given.