Carbon tax applied in a multi-period closed-loop supply chain with remanufacturing

Closed loop supply chains with remanufacturing have been used in previous studies with the assumption that it is environmentally beneficial. While this has truth in terms of waste reduction, the process of remanufacturing can add to the emissions in the supply chain. To enable the supply chain to address the present issues regarding controlling emissions, a carbon tax policy was integrated in the system. Carbon tax has been implemented in Europe, North America, and Japan, while more proposals on carbon tax are being studied. The inclusion of carbon tax would help the supply chain see the effects of emissions in the profit of the supply chain.The carbon tax policy used translates emissions into discount or penalties in a system. The system\u27s objective is to maximize the operating income after tax. Decisions included transportation assignments, the use of remanufactured or virgin materials, and the amount of units to produce and transport between echelons. The study deals with a multi-period multi-echelon closed loop supply chain model with remanufacturing for a single product type. A deterministic model was developed and then translated to the General Algebraic Modeling Systems (GAMS) language.Design of Experiments (DOE) was used to determine which factors significantly affect the system response. Response Surface Methodology (RSM) was used to analyze and observe the relationship among all significant factors.From the results of the sensitivity analysis, it could be said that the inclusion of carbon tax would indeed control the emissions of the system. Virgin and remanufactured materials were both used to find a balance between lowering emissions and maximizing revenue