Local sourcing and fashion quick response system: The impacts of carbon footprint tax

Quick response (QR) system is a well-established industrial practice in fashion apparel. It aims at enhancing inventory management by reducing lead time. In addition to employing a faster delivery mode, QR can be achieved by local sourcing (instead of offshore sourcing). This paper analytically studies how a properly designed carbon footprint taxation scheme can be imposed on a QR system to enhance environmental sustainability via employing a local manufacturer by offsetting the probable higher total logistics and production costs. By examining both the single-ordering and the dual-ordering QR systems, the authors illustrate how the carbon footprint taxation scheme affects the optimal choice of sourcing decision. The authors' analytical findings reveal that a properly designed carbon footprint taxation scheme by governing body not only can successfully entice the fashion retailer to source from a local manufacturer, but it can also lead to a lower level of risk for the fashion retailer. A mean-risk improving scenario hence results and it provides a significant incentive to convince the fashion retailer to support the idea of joining QR when the carbon footprint tax is in place.

Language

  • English

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Filing Info

  • Accession Number: 01487429
  • Record Type: Publication
  • Files: TRIS
  • Created Date: Jul 2 2013 11:41AM