The effect of investment in green technology in a two echelon supply chain under strict carbon-cap policy

Abstract

PurposeStrict carbon-cap policy is one of the basic policies proposed by the regulatory bodies to reduce the anthropogenic greenhouse gas emission. The purpose of this paper is to examine whether it is beneficial for a company to invest in green technology or not under the strict carbon-cap policy and for that a two echelon supply chain model is developed. This paper gives insight about judicious decision about investment on green technology.Design/methodology/approachMathematical modeling approach has been adopted to understand the effect of investment on green technology. All the cost and emissions parameters have been derived and the total cost (TC) and total emission equations have been formulated mathematically. Two constrained mixed-integer nonlinear programming (MINLP) problems have been formulated and solved considering with or without green investment. Further, supply chain cost is optimized without carbon constraint to understand the effect of carbon constraint.FindingsThe investment in green technology can reduce the total supply chain cost. The study reveals that handling different parameters optimally can reduce both cost and emissions.Originality/valueThis paper tries to assess the effectiveness of green investment on technology under strict carbon-cap policy on a supply chain and, thereby, added value to the existing work. It examines the role played by various parameters under strict carbon-cap policy to draw insights, which will be beneficial for the academic community and managers.