Transportation Costs and Carbon Emissions in a Vendor Managed Inventory Situation

Recently, there has been much focus on carbon emissions and fuel consumption from road transport. In this paper, we consider a vendor deciding on the degree to which deliveries to geographically dispersed retailers should be consolidated. The vendor can consolidate shipments over time and deliver infrequently or deliver to many retailers simultaneously. We adapt models for determining the vendor's cost minimizing strategy and for computing emissions. We find that if the per km transportation costs increase, the vendor mainly selects smaller zones to avoid transportation, resulting in lower carbon emissions.