Facility location decisions with environmental considerations

The recently growing concerns of customers and governments about environmental protection and greenhouse gas reduction have forced companies to integrate the topic of environmental sustainability into their decision making. Facility location decisions are of special relevance in this respect because of their strategic nature. Furthermore, many different trade-offs must be considered, for example between operational costs and customer service. But as soon as environmental issues are concerned, other critical issues must be considered as well. Based on a case study from the petrochemical industry, this paper extends two basic facility location models and shows the impact of distribution network-design decisions on the economic and environmental performance of the company. The results show a trade-off between total (distribution) costs and transport carbon emissions.