Integrating Lot-sizing Environmental Factors Estimation for a Green Reorder-level Inventory Control Policy

With the aim of reducing pollution as firms start to consider environmental issues, this work focuses on the modeling and optimization of a sustainable reorder-level lot-sizing policy that integrates a tailored estimation of environmental factors for comprehensive green inventory control. In particular, the goal is to minimize total greenhouse gas emissions by modeling the impact of warehousing and resupply of each order quantity. Other than operational aspects that include energy usage for lighting, and thermal control inside a warehouse, building characterization and the related embodied carbon are other often-neglected significant sources of greenhouse gas emissions. This integrated approach allows, in a lost-sales setting constrained by minimal service level, for quantitatively addressing the direct relation between emission components and the environmental impact of managing the inventory of a product, which carries clear valuable managerial insights.