Facility Location and Its Impact on the Environment: Using a Centralized and Decentralized Approach, a Case Study (Published)
There has been an increase in consumption of goods in the last century due to the rapid economic growth all over the world. Globalization has availed large streams of goods to meet this demand but the production, transportation, storage and consumption of these goods have caused environmental problems to emerge. Manufacturing companies are facing numerous pressures from the government and consumers to produce environmentally sustainable goods. The decision to set-up a plant is a strategic issue as the best facility location does not only ensure that the costs are minimized but also take care of the impacts on the environment. This paper presents a case of ABC Chinese steel manufacturing company operating in a centralized facility location approach and intends to evaluate the impact of a decentralized approach on the environment. A simulation of the two networks is run and the results reveal that the centralized approach is more suitable for this company as it is not only economical to them but it is also environmentally sustainable due to the lower carbon emissions produced by this model. The research concludes that facility location decisions greatly impacts the environment but the approach to adopt depends on the type of the product, mode of transportation and the choices of fuel.