High demand variability can produce several inefficiencies in the supply chain, increasing cost and decreasing service level. This research focuses on the environmental impact of demand variability on supply chains especially in the beverage industry by investigating the relationship between demand variability and the emissions of carbon dioxide. The analysis was based on a beverage industry case, considering a two-stage supply chain. A simulation model was developed to represent the supply chain. The experimental factors demand variability, demand level, forecast method, system size, and truck fleet configuration were manipulated in order to represent different scenarios. A statistical Design of Experiment (DOE) model was used to understand the impact of these factors in relation to the emissions of carbon dioxide, cost and service level. The findings suggest that increments in demand variability result in an increment in carbon dioxide emissions due to the distribution of product. It was also observed that an increment in demand variability results in an increment in cost and a decrease in service level. The study also suggests that the factors that influence demand level and truck fleet configuration have a significant impact on the amount of carbon dioxide emissions. A significant interaction between demand variability and demand level was also identified in relation to carbon dioxide emissions, cost, and service level. Trade-offs were identified between carbon dioxide emissions and service level as well as between cost and service level.
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