Tactical supply chain planning under a carbon tax policy scheme: A case study

Behnam Fahimnia*, Joseph Sarkis, Alok Choudhary, Ali Eshragh

*Corresponding author for this work

Research output: Contribution to journalArticleScientificpeer-review

133 Citations (Scopus)


Greenhouse gas emissions are receiving greater scrutiny in many countries due to international forces to reduce anthropogenic global climate change. Industry and their supply chains represent a major source of these emissions. This paper presents a tactical supply chain planning model that integrates economic and carbon emission objectives under a carbon tax policy scheme. A modified Cross-Entropy solution method is adopted to solve the proposed nonlinear supply chain planning model. Numerical experiments are completed utilizing data from an actual organization in Australia where a carbon tax is in operation. The analyses of the numerical results provide important organizational and policy insights on (1) the financial and emissions reduction impacts of a carbon tax at the tactical planning level, (2) the use of cost/emission tradeoff analysis for making informed decisions on investments, (3) the way to price carbon for maximum environmental returns per dollar increase in supply chain cost.

Original languageEnglish
Peer-reviewed scientific journalInternational Journal of Production Economics
Issue numberJune
Pages (from-to)206-215
Number of pages10
Publication statusPublished - 18.12.2014
MoE publication typeA1 Journal article - refereed


  • 512 Business and Management
  • Green supply chain
  • Environmental sustainability
  • Carbon tax policy scheme
  • Carbon pricing
  • Cap-and-trade market
  • Carbon trading
  • Nested
  • Integrated Cross-Entropy


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