The paper seeks to develop an analytical decision model that is used to investigate the performance of a supply chain when product, process, and environmental quality characteristics are considered.
Environmental performance measures and methods to quantify quality are reviewed and then used to develop a method to measure environmental quality and its associated costs. This was translated into a two‐level supply chain coordination model that captures most aspects of green supply chains. Numerical examples are provided and solved using Excel Solver enhanced with VBA codes.
The results confirmed some findings in the literature that investing to reduce environmental costs improves environmental performance and increases total profits.
The environmental quality cost function that was used was of a form that guarantees a global optimal solution. A limitation is that the function may take more complex forms where different analytical and solution methods would be needed.
The model fills a gap in the literature where there is a lack of models to help managers implement environmentally acceptable coordinated two‐level supply chains.
