Login | Register

The Impact of Green Metrics on Inventory Transshipment


The Impact of Green Metrics on Inventory Transshipment

Oyegunle, Omotayo (2023) The Impact of Green Metrics on Inventory Transshipment. Masters thesis, Concordia University.

[thumbnail of Oyegunle_MSCM_F2023.pdf]
Text (application/pdf)
Oyegunle_MSCM_F2023.pdf - Accepted Version
Available under License Spectrum Terms of Access.


Green is associated with life and is becoming increasingly engrained in not just life, but the way people do business as well. In recent years, a growing number of business operations have adopted various green metrics to limit their carbon footprints and environmental pollution, drive sustainable operations, contribute more to sustainability projects, and appear more socially responsible within the industry and host communities. While these initiatives target reducing carbon footprints, their impact on daily operations in a sharing economy is yet to be explored. In this thesis, I performed a thorough review of green supply chains, recent green practices, and metrics adopted in various organizations, followed by a comparative study to analyze the impact of operational decisions in inventory and transshipment when green metrics are considered. I extended the classical inventory transshipment model with two newsvendors’ retailers by allowing the retailers to incorporate direct or indirect green metrics as part of the objective function. In this setting, I explored three central research questions: 1) How would the adoption of green metrics impact the expected profit and equilibrium order quantities under inventory transshipment? 2) Would green metrics negatively or positively impact the coordinating transshipment prices? 3) What is the impact of direct vs. indirect green metrics on expected profit and equilibrium order quantities? Based on extensive numerical simulation, I find that when the profit margin is high, the impact of green metrics is limited—there is almost no change to a slight decrease in expected profit and the equilibrium order quantity when green metrics are considered. However, when the profit margin is low, the green metrics may improve the expected profits while reducing equilibrium order quantities. Interestingly, introducing green metrics does not affect coordinating transshipment prices, irrespective of profit margins. Direct versus indirect metrics have a limited impact on equilibrium order quantity and expected profit. My study contributes to the research by identifying the operational benefits of adopting green metrics. As an extension, this work may create a foundation for further work to determine the cost and benefits of implementing green metrics in practice and the key trade-offs in sustainability or social responsibility.

Divisions:Concordia University > John Molson School of Business > Supply Chain and Business Technology Management
Item Type:Thesis (Masters)
Authors:Oyegunle, Omotayo
Institution:Concordia University
Degree Name:M.S.C.M.
Program:Supply Chain Management
Date:22 August 2023
Thesis Supervisor(s):Huang, Xiao
Keywords:Green metrics, green practices, sustainability, green supply chain, inventory transshipment, newsvendor, supply chain coordination
ID Code:992668
Deposited By: Omotayo Oyegunle
Deposited On:17 Nov 2023 15:00
Last Modified:17 Nov 2023 15:00


Abdul Rehman Khan, S. (2019). Introductory Chapter: Introduction of Green Supply Chain Management. IntechOpen.

Amazon. (2022). Building a Better Future Together. 2022 Amazon Sustainability Report. https://sustainability.aboutamazon.com/2022-sustainability-report.pdf

Anupindi, R., Bassok, Y., & Zemel, E. (2001). A General Framework for the Study of Decentralized Distribution Systems. Manufacturing & Service Operations Management, 3(4), 349–368.

Apple Inc. (2021). Environmental Progress Report for 2020. https://www.apple.com/environment/pdf/Apple_Environmental_Progress_Report_2020.pdf

Arikan, E. (2011). A Review of the Newsvendor Model. In Single Period Inventory Control and Pricing: An Empirical and Analytical Study of a Generalized Model. NED-New edition, 21–32. Peter Lang AG. http://www.jstor.org/stable/j.ctv9hj6j2.4

Altiparmak, F., Gen, M., Lin, L., & Paksoy, T. (2018). A Sustainable Inventory Model with Trade-Offs between Cost and Environmental Impact. European Journal of Operational Research, 264(1), 268–279.

Axsäter, S. (2003). A New Decision Rule for Lateral Transshipments in Inventory Systems. Management Science, 49, 1168–1179.

BNP Media. (2021). Carbon Pricing vs. Carbon Tax: Understanding the Difference. Engineered System magazine. https://www.esmagazine.com/articles/101384-carbon-pricing-vs-carbon-tax-understanding-the-difference

Boer, L., Brouwer, F., & Essen, H. (2011). Comparison of Various Transport Modes on an EU Scale with the STREAM Database. STREAM International Freight 2011 Report CE, 11(4377), 53.

Brown, M., Jackson, R., & White, T. (2017). Evaluating the Economic and Environmental Trade-offs of Inventory Transshipment Strategies. Transportation Research Part E: Logistics and Transportation Review, 28(6), 782–798.

Buhaug, Ø., Corbett, J., Endresen, Ø., Eyring, V., Faber, J., Hanayama, S., Lee, D., Lindstad, H., Markowska, A.Z., Mjelde, A., Nelissen, D., Nilsen, J., Pålsson, C., Winebrake, J.J., Wu, W., & Yoshida, K. (2009). Second IMO Green House Gases Study 2009. International Maritime Organisation document, 59(10). https://wwwcdn.imo.org/localresources/en/OurWork/Environment/Documents/SecondIMOGHGStudy2009.pdf

Chen, J., Huang, Z., & Zhu, L. (2020). Green Inventory Transshipment Strategy Considering the Use of Green Vehicles. International Journal of Production Economics, 221, 107475.

Chen, X., Wang, L., & Li, Z. (2019). Optimal Green Inventory Transshipment Policies Under Carbon Emission Regulations. Journal of Operations Management, 50(5), 742–757.

Chopra, S. (2017). Supply Chain Management: Strategy, Planning, and Operation (7th ed.). Pearson Education.

Cohen, S., Satyajit B., Dong G., Miller, A., DeFrancia K., Berger. O., Filiatraut B., Loman M., Qiu W., & Zhang C. (2014). The Growth of Sustainability Metrics. Sustainability Metrics White Paper Series: 1 of 3.

Comez, N., Stecke, K. E., & Cakanyildirim, M. (2012). In-Season Transshipments Among Competitive Retailers. Manufacturing & Service Operations Management, 14, 290–300.

Dekker, R., Bloemhof, J., & Mallidis, I. (2012). Operations Research for Green Logistics – An overview of aspects, issues, contributions, and challenges. European Journal of Operational Research, 219(3), 671–679.

Dong, L., & Rudi, N. (2004). Who Benefits from Transshipment? Exogenous vs. Endogenous Wholesale Prices. Management Science, 50(5), 645–657.

European Commission. (2011). White Paper on Transport - Roadmap to a Single European Transport Area: Towards a Competitive and Resource Efficient Transport System. https://data.europa.eu/doi/10.2832/30955

Garber, W. (1986). Environmental Laws and Environmental Improvement. Water Science Technology, 18(11), 205–218.

Garcia, R., Hernandez, P., & Martinez, J. (2016). Green Inventory Transshipment Model for Multi-Echelon Supply Chains. International Journal of Production Economics, 22(4), 540–556.

Gopalakrishnan, S., Granot, D., Granot, F., Sošić, G., & Cui, H. (2020). Incentives and Emission Responsibility Allocation in Supply Chains. Management Science, 67(7), 4172–4190.

Grahovac, J., & Chakravarty, A. (2001). Sharing and Lateral Transshipment of Inventory in a Supply Chain with Expensive Low-Demand Items. Management Science, 47, 579–594.

Herer, Y. T., & Tzur, M. (2001). The Dynamic Transshipment Problem. Naval Research Logistics, 48, 386–408.

Hervani, A., Helms M., & Joseph S. (2005). Performance Measurement for Green Supply Chain Management. Benchmarking: An International Journal, 12(4), 330–353.

Hezarkhani, B., & Kubiak, W. (2010). A Coordinating Contract for Transshipment in a Two-company supply chain. European Journal of Operational Research, 207, 232–237.
Hu, X., Duenyas, I., & Kapuscinski, R. (2007). Existence of Coordinating Transshipment Prices in a two-location inventory model. Management Science, 53(8), 1289–1302.

Hu, X., Duenyas, I., & Kapuscinski, R. (2008). Optimal Joint Inventory and Transshipment Control Under Uncertain Capacity. Operations Research, 56, 881–897.

Huang, H., Narayanan, S., & Swaminathan, J. (2020). Carrot or stick? Supplier diversity and its impact on carbon emission reduction strategies. Working Paper. Kenan-Flager Business School, University of North Carolina Chapel Hill. https://doi.org/10.2139/ssrn.3559770.

Huang, X., & Sosic, G. (2010). Transshipment of Inventories: Dual Allocations vs. Transshipment Prices. Manufacturing & Service Operations Management, 12, 299–318.

Huang, X., & Sošic, G. (2010). Repeated Newsvendor Game with Transshipments under Dual Allocations. European Journal of Operational Research, 204, 247–284.

Huang, X. (2013). A Review of Policies and Supply Chain Relationships under Inventory Transshipment. Bulletin of Statistics and Operations Research, 29(1), 21–42.

Jones, A., Smith, C., & Green, E. (2018). Greening the Supply Chain: Assessing the Environmental Impact of Inventory Transshipment. International Journal of Logistics Management, 45(3), 267–285.

Liu, Y., Xu, J., & Huang, W. (2017). Coordinated Transshipment between Two Retailers with Different Inventory Policies. International Journal of Production Economics, 183, 462–473.

Lowe’s Canada. (2020). Sustainability report. www.lowescanada.ca

Luo, D., Fu, Q., & Xu, X. (2021). Joint Pricing and Sustainability Strategies in Green Retailer-Oriented Supply Chain Considering Green Inventory Transshipment. Journal of Cleaner Production, 305, 127140.

Mahmoud, T. (2017). Impact of Green Marketing Mix on Purchase Intention. International Journal of Advanced and Applied Science, 5(2), 127–135.

Panagakos, G. (2016). Green Corridors Basics. In H.N Psaraftis (Ed.), Green Transportation Logistics – The Quest for Win-Win Solutions. International Series in Operations Research and Management Science, Vol 226. Springer.

Rudi, N., Kapur, S., & Pyke, D. (2001). A Two-Location Inventory Model with Transshipment and Local Decision Making. Management Science, 47(12), 1668–1680.
U.S. Environmental Protection Agency. (2018). Inventory of U.S. Greenhouse Gas Emissions and Sinks of 1990-2016. https://www.epa.gov/ghgemissions/overview-greenhouse-gases

Saada, R. (2020). Green Transportation in Green Supply Chain Management. IntechOpen.
Schrope, M. (2001). Environmental Laws Face Military Maneuvers. Nature, 413, 7.

Shao, J., Krishnan, H., & McCormick, S. T. (2011). Incentives for Transshipment in a Supply Chain with Decentralized Retailers. Manufacturing & Service Operations Management, 13, 361–372.

Slikker, M., Fransoo, J., & Wouters, M. (2005). Cooperation between Multiple Newsvendors with Transshipments. European Journal of Operational Research, 167, 370–380.

Sosic, G. (2006). Transshipment of inventories among Retailers: Myopic vs. Farsighted Stability. Management Science.

Srinivasan, M., Stathopoulos, A., & Zhao, X. (2019). A Performance Measurement Framework for Sustainable Freight Transportation Operations. Transportation Research Part D: Transport and Environment, 70, 31–49.

Van Hoek, R., Fugate, B., Davletshin, M., & Waller, M. (2019). Integrating Blockchain into Supply Chain Management: A Toolkit for Practical Implementation. Kogan Page, London.

Walmart. (2023). Product Supply Chain Sustainability https://corporate.walmart.com/esgreport/environmental/product-supply-chains-sustainability-overview.

Wee, K. E., & Dada, M. (2005). Optimal Policies for Transshipping Inventory in a Retail Network. Management Science, 51(10), 1519–1533.

Wiedmann, T., & Minx J. (2007). Ecological Economics Research Trends. Nova Science Publishers, 1–11.

Wu, W., Wu, J., & Chen, J. (2015). Coordinating Inventory Replenishment and Transshipment in a Distribution System. European Journal of Operational Research, 244(1), 194–205.

Zhang, J. (2005). Transshipment and Its Impact on Supply Chain Members’ Performance. Management Science, 51(10), 1534–1539
All items in Spectrum are protected by copyright, with all rights reserved. The use of items is governed by Spectrum's terms of access.

Repository Staff Only: item control page

Downloads per month over past year

Research related to the current document (at the CORE website)
- Research related to the current document (at the CORE website)
Back to top Back to top