Production and transportation outsourcing decisions in the supply chain under single and multiple carbon policies

Cap-and-trade and carbon tax are the two main policies to reduce carbon emissions. Different from the previous literature and practice, this paper examines the production and transportation outsourcing problems of a two-echelon supply chain under the cap-and-trade policy and joint cap-and-trade and carbon tax policy. Enterprise operations are divided into the order stage and transportation outsourcing decision stage. In the order stage, the retailer sets his order schedule for the manufacturing plant for fulfillment, and in the transportation outsourcing decision stage, the manufacturer decides the optimal freight volume based on energy consumption. Furthermore, we construct a basic model without a carbon policy and two extended models with carbon policies and the optimal solutions of the models are solved. Numerical examples are provided, and the three models are compared. The results indicate that the extended model with carbon policies is more beneficial for emissions reduction, and the effect of emissions reduction gradually becomes smooth as the carbon price increases; the joint cap-and-trade and carbon tax policy is more effective for emissions reduction, especially when the carbon price is lower. These findings will be helpful to policy makers and managers. (C) 2016 Elsevier Ltd. All rights reserved.