Skip to main content

Advertisement

SpringerLink
Log in

Facility location decisions with environmental considerations: a case study from the petrochemical industry

  • Original Paper
  • Published:
Journal of Business Economics Aims and scope Submit manuscript

Abstract

The recently growing concerns of customers and governments about environmental protection and greenhouse gas reduction have forced companies to integrate the topic of environmental sustainability into their decision making. Facility location decisions are of special relevance in this respect because of their strategic nature. Furthermore, many different trade-offs must be considered, for example between operational costs and customer service. But as soon as environmental issues are concerned, other critical issues must be considered as well. Based on a case study from the petrochemical industry, this paper extends two basic facility location models and shows the impact of distribution network-design decisions on the economic and environmental performance of the company. The results show a trade-off between total (distribution) costs and transport carbon emissions.

This is a preview of subscription content, log in via an institution to check access.

Access this article

Log in via an institution

Price excludes VAT (USA)
Tax calculation will be finalised during checkout.

Instant access to the full article PDF.

Institutional subscriptions

Fig. 1
Fig. 2
Fig. 3
Fig. 4
Fig. 5
Fig. 6
Fig. 7
Fig. 8

Similar content being viewed by others

References

  • Abdallah T, Diabat A, Simchi-Levi D (2010) A carbon sensitive supply chain network problem with green procurement. In: Proceedings of the 40th International Conference on Computers and Industrial Engineering, Awaji City, pp 1–6

  • Aronsson H, Huge-Brodin M (2006) The environmental impact of changing logistics structures. Intern J Logistics Manag 17(3):394–415

    Article  Google Scholar 

  • Azarmand Z, Jami EN (2009) Location allocation problem. In: Farahani RZ, Hekmatfar M (eds) Facility location: concepts, models, algorithms and case studies. Physica-Verlag, Germany, pp 93–109

    Chapter  Google Scholar 

  • Bauer J, Bektas T, Crainic TG (2010) Minimizing greenhouse gas emissions in intermodal freight transport: an application to rail service design. J Oper Res Soc 61(3):530–542

    Article  Google Scholar 

  • Bauer G, Beullens P, Dueh J, Günther HO, Helmreich S, Jammernegg W, Judl J, Kannegiesser M, Koskela S, Mattila T, Ries J, Rosic H, Treitl S (2011) Deliverable 4: economic and environmental sustainability of new logistics and manufacturing systems. Funded by the European Commission 7th RTD Programme, Vienna

  • Benjafaar S, Li Y, Daskin M (2010) Carbon footprint and the management of supply chains: Insights from simple models. Working Paper, University of Minnesota, USA

    Google Scholar 

  • Bérubé JF, Gendreau M, Potvin JY (2009) An exact ε-constraint method for bi-objective combinatorial optimization problems: application to the traveling salesman problem with profits. Eur J Oper Res 194(1):39–50

    Article  Google Scholar 

  • Bojarksi AD, Laínez JM, Enspuna A, Puigjaner L (2009) Incorporating environmental impacts and regulations in a holistic supply chains modeling: an LCA approach. Comput Chem Eng 33(10):1747–1759

    Article  Google Scholar 

  • Bonney M, Jaber MY (2010) Environmentally responsible inventory models: non-classical models for a non-classical era. Int J Prod Econ 133(1):43–53

    Article  Google Scholar 

  • Braithwaite A (2005) Maximising performance––the power of supply chain collaboration. EPCA, Cefic. http://www.epca.eu/content/Publications/ThinkTank-Reports-/docs/SCTT-%20RAPPORT%202005.pdf. [Accessed May 24 2012]

  • Caramira M, Dell’Olmo P (2008) Multi-objective management in freight logistics––increasing capacity, service level and safety with optimization algorithms. Springer, London

    Google Scholar 

  • Chopra S, Meindl P (2010) Supply chain management––strategy, planning, and operation, 4th edn. Pearson, Upper Saddle River

    Google Scholar 

  • Daskin MS, Snyder LV, Berger RT (2005) Facility location in supply chain design. In: Langevin A, Riopel D (eds) Logistics systems: design and optimization. Springer, New York, pp 39–65

    Google Scholar 

  • Deb K (2001) Multi-objective optimization. In: Burke EK, Kendall G (eds) Search methodologies––introductory tutorials in optimization and decision support techniques. Springer, New York, pp 273–316

    Google Scholar 

  • Diabat A, Simchi-Levi D (2009) A carbon-capped supply chain network problem. In: Proceedings of the 2009 IEEE IEEM, pp 523–527

  • EEA (2009) Greenhouse gas emission trends and projections in Europe 2009. European Environment Agency

  • Ehrgott M (2005) Multicriteria optimization, 2nd edn. Springer, Berlin

    Google Scholar 

  • Ehrgott M (2008) Multiobjective optimization. AI Mag 29(4):47–57

    Google Scholar 

  • European Commission (2009) A sustainable future for transport–towards an integrated, technology-led and user-friendly system. Publications Office of the European Union, Luxembourg

  • European Commission (2011) Roadmap to a single European transport area––towards a competitive and resource efficient transport system. White paper, Brussels

  • Golicic SL, Boerstler CN, Ellram LM (2010) “Greening” transportation in the supply chain. MIT Sloan Manag Rev 51(2):47–55

    Google Scholar 

  • Guillén-Gosálbez G, Grossmann IE (2009) Optimal design and planning of sustainable chemical supply chains under uncertainty. Amer Instit Chem Eng J 55(1):99–121

    Article  Google Scholar 

  • Harris I, Naim M, Palmer A, Potter A, Mumford C (2011) Assessing the impact of cost optimization based on infrastructure modelling on CO2 emissions. Int J Prod Econ 131(1):313–321

    Article  Google Scholar 

  • Hoen K, Tan T, Fransoo J, van Houtum G (2010) Effect of carbon emission regulations on transport mode selection in supply chains. Flexible Serv Manufact J. doi:10.1007/s10696-012-9151-6

    Google Scholar 

  • Holmgren K, Belhaj M, Gode J, Särnholm E, Zetterberg L, Ahman M (2006) Greenhouse Gas Emissions Trading for the Transport Sector. Technical report, Swedish Environmental Research Institute, Sweden

  • Hugo A, Pistikopoulos EN (2005) Environmentally conscious long-range planning and design of supply chain networks. J Clean Prod 13(15):1471–1491

    Article  Google Scholar 

  • Kok R, Gille J (2009) Towards EU emissions cap for all transport modes, In: Proceedings of the European Transport Conference. Leiden, Netherlands

  • Langella IM, Zanoni S (2010) Eco-efficiency in logistics: a case study on distribution network design. Intern J Sustain Eng 4(2):1–12

    Google Scholar 

  • McKinnon A (2004) Supply chain excellence in the European chemical industry. Heriot-Watt University, Edinburgh

    Google Scholar 

  • McKinnon A (2005) European chemical supply-chain: threats and opportunities. Logistics Trans Focus 7(3):30–35

    Google Scholar 

  • McKinnon A, Piecyk MI (2010) Measuring and managing CO2 emissions in European chemical transport. Heriot-Watt University, Edinburgh

    Google Scholar 

  • Melo MT, Nickel S, Saldanha-da-Gama F (2009) Facility location and supply chain management––a review. Eur J Oper Res 196(2):401–412

    Article  Google Scholar 

  • OECD (2006) Decoupling the Environmental Impacts of Transport from Economic Growth, http://www.oecd.org/dataoecd/3/52/37722729.pdf. [Accessed 24 May 2012]

  • Piecyk MI, McKinnon A (2007) Internalizing the external costs of road freight transport in the UK. Logistics Research Centre: Heriot-Watt University, Edinburgh

  • Piecyk MI, McKinnon A (2010) Forecasting the carbon footprint of road freight transport in 2020. Int J Prod Econ 128(1):31–42

    Article  Google Scholar 

  • Quariguasi Frota Neto J, Bloemhof J, van Nunen J, van Heck E (2008) Designing and evaluating sustainable logistics networks. Intern J Prod Econ 111(2):195–208

    Article  Google Scholar 

  • Quariguasi Frota Neto J, Walther G, Bloemhof J, van Nunen J, Spengler T (2009) From closed-loop to sustainable supply chains: The WEEE case. Intern J Prod Res 48(5):4463–4481

    Google Scholar 

  • Scaparra MP, Scutella MG (2001) Facilities locations, customers: building blocks of location models. A Survey. Technical report. University of Pisa, Italy

    Google Scholar 

  • Seuring S, Müller M (2008) From a literature review to a conceptual framework for sustainable supply chain management. J Clean Prod 16(15):1699–1710

    Article  Google Scholar 

  • Simchi-Levi D (2010) Operations rules––delivering customer value through flexible operations. The MIT Press, Cambridge

    Google Scholar 

  • Simchi-Levi D, Kaminsky P, Simchi-Levi E (2008) Designing and managing the supply chain, 3rd edn. McGraw-Hill/Irwin, New York

    Google Scholar 

  • Uherek E, Halenka T, Borken-Kleefeld J, Balkanski Y, Berntsen T, Borrego C, Gauss M, Hoor P, Juda-Rezler K, Lelieveld J, Melas D, Rypdal K, Schmid S (2010) Transport impacts on atmosphere and climate: land transport. Atmos Environ 44(37):4772–4816

    Article  Google Scholar 

  • Wang F, Lai X, Shi N (2011) A multi-objective optimization for green supply chain network design. Decis Support Syst 51(2):262–269

    Article  Google Scholar 

  • Wu HJ, Dunn SC (1995) Environmentally responsible logistics systems. Intern J Phys Distrib Logistics 25(2):20–38

    Article  Google Scholar 

Download references

Author information

Authors and Affiliations

  1. Institute for Production Management, WU Vienna University of Economics and Business, Welthandelsplatz 1, 1020, Vienna, Austria

    Stefan Treitl & Werner Jammernegg

Authors
  1. Stefan Treitl
    View author publications

    You can also search for this author in PubMed Google Scholar

  2. Werner Jammernegg
    View author publications

    You can also search for this author in PubMed Google Scholar

Corresponding author

Correspondence to Stefan Treitl.

Rights and permissions

Reprints and permissions

About this article

Check for updates. Verify currency and authenticity via CrossMark

Cite this article

Treitl, S., Jammernegg, W. Facility location decisions with environmental considerations: a case study from the petrochemical industry. J Bus Econ 84, 639–664 (2014). https://doi.org/10.1007/s11573-014-0730-8

Download citation

  • Published:

  • Issue Date:

  • DOI: https://doi.org/10.1007/s11573-014-0730-8

Keywords

JEL Classification

Search

Navigation