Abstract Carbon emissions from supply chain operations are extensively contributing
to the global warming. Sustainable supply chain management literature
has seen more emphasis on greening of production operations and designing of
greener supply networks, considering transportation emissions as “necessary evil”.
This chapter aims to investigate the economic and environmental consequences of
transport routing decisions in a supply chain with vertical collaboration, for instance
through Vendor Managed Inventory. An optimization model and solution method is
presented for an Inventory Pollution-Routing Problem (IPRP) in which inventory
and transportation costs and emissions as well as demand uncertainty concerns are
explicitly incorporated. The proposed model can be used to explore possible
tradeoffs between emissions costs and operational costs for green inventory routing
decision making. A set of computational tests are designed for performance
benchmark of the proposed model and solution method.