Supply chain operations optimization with considering carbon footprint is a new research field. For a two-level supply chain system which consists of a manufacturer and a supplier, supply chain replenishment models subject to carbon emission regulatory policies are proposed in the paper. In the models several carbon emission regulatory policies include carbon cap, fixed carbon tax rate, progressive carbon tax rate, carbon offset, carbon cap and trade are considered. Based on the models numerical examples are given to illustrate the effects of different carbon emission regulatory policies on cost and carbon emissions of the supply chain operations. The study shows that it is possible for the supply chain to significantly reduce carbon emissions without significantly increasing cost under carbon emission regulatory policies.
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