Assessing the environmental benefits of horizontal cooperation using a location-inventory model

  • Thomas Hacardiaux
  • Jean-Sébastien Tancrez
Original Paper


As customers are aware of the climate change, eco-friendly strategies have become a competitive advantage for companies. In particular, they are aiming to reduce their carbon footprint along their supply chain. In this context, substantial \(\hbox {CO}_{2}\) emissions reductions can be reached by horizontal cooperation, i.e. the collaboration of companies that work at the same level of the supply chain. In this paper, we evaluate these reductions using a location-inventory model which minimizes facility opening, transportation, cycle inventory, ordering and safety stock costs. To understand the impact of different market and partners characteristics on the \(\hbox {CO}_{2}\) emissions reductions, we compute a large set of numerical experiments, varying several key parameters (vehicles capacity, facility opening cost, inventory holding cost, order cost, demand variability and distances). Results show that horizontal cooperation reduces \(\hbox {CO}_{2}\) emissions by 16% on average. Moreover, horizontal cooperation is more effective in decreasing the carbon footprint of companies with low facility opening costs and low order costs, carrying expensive products (high unit holding cost) on a market with a high demand variability and a vast market area.


\(\hbox {CO}_{2}\) emissions reductions Environmental benefits Horizontal cooperation Supply chain network design Location-inventory problem 



  1. Atamtürk A, Berenguer G, Shen ZJ (2012) A conic integer programming approach to stochastic joint location-inventory problems. Oper Res 60(2):366–381Google Scholar
  2. Ballot E, Fontane F (2010) Reducing transportation \(\text{ CO }_{2}\) emissions through pooling of supply networks: perspectives from a case study in french retail chains. Prod Plann Control 21(6):640–650Google Scholar
  3. Chaabane A, Ramudhin A, Paquet M (2012) Design of sustainable supply chains under the emission trading scheme. Int J Prod Econ 135(1):37–49Google Scholar
  4. Chen L, Olhager J, Tang O (2014) Manufacturing facility location and sustainability: a literature review and research agenda. Int J Prod Econ 149:154–163Google Scholar
  5. Christopher M (2016) Logistics and supply chain management. Pearson, LondonGoogle Scholar
  6. Comas Martí JM, Tancrez JS, Seifert RW (2015) Carbon footprint and responsiveness trade-offs in supply chain network design. Int J Prod Econ 166:129–142Google Scholar
  7. Creemers S, Woumans G, Boute R, Beliën J (2017) Tri-vizor uses an efficient algorithm to identify collaborative shipping opportunities. Interfaces 47(3):244–259Google Scholar
  8. Cruijssen F (2006) Horizontal cooperation in transport and logistics. Thesis, CentER, Tilburg UniversityGoogle Scholar
  9. Cruijssen F, Cools M, Dullaert W (2007) Horizontal cooperation in logistics: opportunities and impediments. Transp Res E Logist Transp Rev 43(2):129–142Google Scholar
  10. Cuervo DP, Vanovermeire C, Sörensen K (2016) Determining collaborative profits in coalitions formed by two partners with varying characteristics. Transp Res Part C Emerg Technol 70:171–184Google Scholar
  11. Danloup N, Mirzabeiki V, Allaoui H, Goncalves G, Julien D, Mena C (2015) Reducing transportation greenhouse gas emissions with collaborative distribution: a case study. Manag Res Rev 38(10):1049–1067Google Scholar
  12. Dekker R, Bloemhof J, Mallidis I (2012) Operations research for green logistics—an overview of aspects, issues, contributions and challenges. Eur J Oper Res 219(3):671–679Google Scholar
  13. Diabat A, Abdallah T, Al-Refaie A, Svetinovic D, Govindan K (2013) Strategic closed-loop facility location problem with carbon market trading. IEEE Trans Eng Manag 60(2):398–408Google Scholar
  14. Ergun O, Kuyzu G, Savelsbergh M (2007) Reducing truckload transportation costs through collaboration. Transp Sci 41(2):206–221Google Scholar
  15. Fahimnia B, Sarkis J, Eshragh A (2015) A tradeoff model for green supply chain planning: a leanness-versus-greenness analysis. Omega 54:173–190Google Scholar
  16. Farahani RZ, Rezapour S, Drezner T, Fallah S (2014) Competitive supply chain network design: an overview of classifications, models, solution techniques and applications. Omega 45:92–118Google Scholar
  17. Farahani RZ, Rashidi Bajgan H, Fahimnia B, Kaviani M (2015) Location-inventory problem in supply chains: a modelling review. Int J Prod Res 53(12):3769–3788Google Scholar
  18. Frisk M, Göthe-Lundgren M, Jörnsten K, Rönnqvist M (2010) Cost allocation in collaborative forest transportation. Eur J Oper Res 205(2):448–458Google Scholar
  19. Hacardiaux T, Tancrez JS (2018) Assessing the benefits of horizontal cooperation using a location-inventory model, cORE Discussion Paper 2018/14, Université catholique de LouvainGoogle Scholar
  20. Hageback C, Segerstedt A (2004) The need for co-distribution in rural areas: a study of Pajala in Sweden. Int J Prod Econ 89(2):153–163Google Scholar
  21. Harris I, Mumford C, Naim M (2009) The multi-objective uncapacitated facility location problem for green logistics. In: IEEE congress on evolutionary computation, 2009. CEC’09. IEEE, pp 2732–2739Google Scholar
  22. Harris I, Mumford CL, Naim MM (2011a) An evolutionary bi-objective approach to the capacitated facility location problem with cost and \(\text{ CO }_2\) emissions. In: Proceedings of the 13th annual conference on genetic and evolutionary computation, ACM, pp 697–704Google Scholar
  23. Harris I, Naim M, Palmer A, Potter A, Mumford C (2011b) Assessing the impact of cost optimization based on infrastructure modeling on \(\text{ CO }_{2}\) emissions. Int J Prod Econ 131(1):313–321Google Scholar
  24. Hickman J, Hassel D, Joumard R, Samaras Z, Sorenson S (1999) Methodology for calculating transport emissions and energy consumption. Transport Research Laboratory, Berkshire, United KingdomGoogle Scholar
  25. Juan AA, Faulin J, Pérez-Bernabeu E, Jozefowiez N (2014) Horizontal cooperation in vehicle routing problems with backhauling and environmental criteria. Proc Soc Behav Sci 111:1133–1141Google Scholar
  26. Kaviani M (2009) Location-inventory problem, chap 19. In: Farahani RZ, Hekmatfar M (eds) Facility location: concepts, models, algorithms and case studies. Springer, Heidelberg, pp 451–471Google Scholar
  27. Linton JD, Klassen R, Jayaraman V (2007) Sustainable supply chains: an introduction. J Oper Manag 25(6):1075–1082Google Scholar
  28. Melo MT, Nickel S, Saldanha-Da-Gama F (2009) Facility location and supply chain management—a review. Eur J Oper Res 196(2):401–412Google Scholar
  29. Moutaoukil A, Derrouiche R, Neubert G (2013) Modélisation d’une stratégie de mutualisation logistique en intégrant les objectifs de développement durable pour des PME agroalimentaires. In: 13e Congrès International de Génie Industriel (CIGI’13)Google Scholar
  30. Moutaoukil A, Neubert G, Derrouiche R (2015) Urban Freight Distribution: The impact of delivery time on sustainability. IFAC-PapersOnLine 48(3):2368–2373Google Scholar
  31. Nair KP (2016) The nutrient buffer power concept for sustainable agriculture. Notion Press, ChennaiGoogle Scholar
  32. Nozick LK, Turnquist MA (2001) A two-echelon inventory allocation and distribution center location analysis. Transp Res Part E Logist Transp Rev 37(6):425–441Google Scholar
  33. Ouhader H, El Kyal M (2017) The impact of horizontal collaboration on \(\text{ CO }_{2}\) emissions due to road transportation. In: Proceedings of the international conference on industrial engineering and operations managementGoogle Scholar
  34. Özceylan E, Paksoy T (2013) A mixed integer programming model for a closed-loop supply-chain network. Int J Prod Res 51(3):718–734Google Scholar
  35. Özceylan E, Paksoy T, Bektaş T (2014) Modeling and optimizing the integrated problem of closed-loop supply chain network design and disassembly line balancing. Transp Res Part E Logist Transp Rev 61:142–164Google Scholar
  36. Pagell M, Wu Z (2009) Building a more complete theory of sustainable supply chain management using case studies of 10 exemplars. J Supply Chain Manag 45(2):37–56Google Scholar
  37. Paksoy T, Özceylan E (2014) Environmentally conscious optimization of supply chain networks. J Oper Res Soc 65(6):855–872Google Scholar
  38. Paksoy T, Bektaş T, Özceylan E (2011) Operational and environmental performance measures in a multi-product closed-loop supply chain. Transp Res Part E Logist Transp Rev 47(4):532–546Google Scholar
  39. Paksoy T, Özceylan E, Weber GW (2013) Profit oriented supply chain network optimization. Central Eur J Oper Res 21(2):455–478Google Scholar
  40. Pan S, Ballot E, Fontane F (2013) The reduction of greenhouse gas emissions from freight transport by pooling supply chains. Int J Prod Econ 143(1):86–94Google Scholar
  41. Pérez-Bernabeu E, Juan AA, Faulin J, Barrios BB (2015) Horizontal cooperation in road transportation: a case illustrating savings in distances and greenhouse gas emissions. Int Trans Oper Res 22(3):585–606Google Scholar
  42. Plambeck EL (2007) The greening of wal-mart’s supply chain. Supply Chain Manag Rev 11(5):18–25Google Scholar
  43. Ramanathan V, Feng Y (2009) Air pollution, greenhouse gases and climate change: global and regional perspectives. Atmosp Environ 43(1):37–50Google Scholar
  44. Rezapour S, Zanjirani Farahani R, Drezner T (2011) Strategic design of competing supply chain networks for inelastic demand. J Oper Res Soc 62(10):1784–1795Google Scholar
  45. Rogelj J, Den Elzen M, Höhne N, Fransen T, Fekete H, Winkler H, Schaeffer R, Sha F, Riahi K, Meinshausen M (2016) Paris agreement climate proposals need a boost to keep warming well below \(2~^{\circ }C\). Nature 534(7609):631Google Scholar
  46. Schuster Puga M, Tancrez JS (2017) A heuristic algorithm for solving large location-inventory problems with demand uncertainty. Eur J Oper Res 259(2):413–423Google Scholar
  47. Seuring S (2013) A review of modeling approaches for sustainable supply chain management. Decis Support Syst 54(4):1513–1520Google Scholar
  48. Seuring S, Müller M (2008) From a literature review to a conceptual framework for sustainable supply chain management. J Clean Product 16(15):1699–1710Google Scholar
  49. Shen ZJM, Coullard C, Daskin MS (2003) A joint location-inventory model. Transp Sci 37(1):40–55Google Scholar
  50. Soysal M, Bloemhof-Ruwaard JM, Haijema R, van der Vorst JG (2018) Modeling a green inventory routing problem for perishable products with horizontal collaboration. Comput Oper Res 89:168–182Google Scholar
  51. Sundarakani B, De Souza R, Goh M, Wagner SM, Manikandan S (2010) Modeling carbon footprints across the supply chain. Int J Prod Econ 128(1):43–50Google Scholar
  52. Tancrez JS, Lange JC, Semal P (2012) A location-inventory model for large three-level supply chains. Transp Res Part E Logist Transp Rev 48(2):485–502Google Scholar
  53. UNFCCC (2015) Adoption of the Paris Agreement Report No. FCCC/CP/2015/L.9/Rev.1, Accessed 27 June 2018
  54. Verdonck L, Beullens P, Caris A, Ramaekers K, Janssens GK (2016) Analysis of collaborative savings and cost allocation techniques for the cooperative carrier facility location problem. J Oper Res Soc 67(6):853–871Google Scholar
  55. Zhang ZH, Unnikrishnan A (2016) A coordinated location-inventory problem in closed-loop supply chain. Transp Res Part B Methodol 89:127–148Google Scholar

Copyright information

© Springer-Verlag GmbH Germany, part of Springer Nature 2019

Authors and Affiliations

  1. 1.CORE - Center for Operations Research and EconometricsUniversité catholique de LouvainMonsBelgium

Personalised recommendations