Optimization of a three-echelon cold chain considering freshness-keeping efforts under cap-and-trade regulation in Industry 4.0

Eco-friendliness was suggested as a consistent key performance indicator in Industry 4.0. In addition to recommendations on technology support for ecology, Industry 4.0 also suggested decentralization and self-regulation coordination mechanisms. In this paper, a coordination mechanism was examined by focusing on the freshness-keeping effort of third-party logistics service providers (TPLSPs) in a three-echelon cold supply chain. Optimal decisions concerning a carbon trading mechanism were examined based on a comparison of two decision systems: a decentralized system and a centralized system. An incentive scheme was proposed to motivate all three parties in a decentralized system to adopt the coordinated mechanism with self-regulation. The results of numerous experiments show that although an increased eco-friendliness effort would reduce market demand, total carbon emissions, and the supplier's profit, a reasonable revenue-and-cost-sharing contract can improve sales volume and balance the supply chain members' profit. With a coordination model, all members in the supply chain can benefit from Pareto improvement. Other proposals were also examined in the scheme. The results can be implemented into decision making on cold and green supply chain and proved a tool to realize Industry 4.0 from the viewpoint of smart logistics.