Strategic closed-loop facility location problem with carbon market trading

Ali Diabat, Tarek Abdallah, Abbas Al-Refaie, Davor Svetinovic, Kannan Govindan

Research output: Contribution to journalArticlepeer-review


The burgeoning environmental regulations are forcing companies to green their supply chains by integrating all of their business value-adding operations so as to minimize the impact on the environment. One dimension of greening the supply chain is extending the forward supply chain to collection and recovery of products in a closed-loop configuration. Remanufacturing is the basis of profit-oriented reverse logistics in which recovered products are restored to a marketable condition in order to be resold to the primary or secondary market. In this paper, we introduce a multiechelon multicommodity facility location problem with a trading price of carbon emissions and a cost of procurement. The company might either incur costs if the carbon cap, normally assigned by regulatory agencies, is lower than the total emissions, or gain profit if the carbon cap is higher than the total emissions. A numerical study is presented which studies the impact of different carbon prices on cost and configuration of supply chains.

Original languageEnglish (US)
Article number6303900
Pages (from-to)398-408
Number of pages11
JournalIEEE Transactions on Engineering Management
Issue number2
StatePublished - 2013


  • Carbon credits
  • closed-loop supply chain
  • disposal
  • flexible legislation
  • recycling
  • remanufacturing
  • reverse logistics

ASJC Scopus subject areas

  • Strategy and Management
  • Electrical and Electronic Engineering


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