Integrated economic and environmental two-stage supply chain model under vendor managed consignment inventory partnership

In this paper, we study the impact of carbon tax regulation on a two-stage supply chain operating under vendor managed consignment inventory (VMCI) partnership. We formulate simple models for the VMCI-type supply chain to determine the vendor's production lot size and the quantity to be shipped to the buyer that minimize the sum of the system-wide operational costs and carbon tax penalty. We present some structural properties for the optimal operating policies and show numerically that significant cost savings and carbon reduction can be achieved by adjusting the production and shipping quantities.