EXERGY ANALYSIS FOR SUSTAINABLE INVENTORY AND LOGISTICS SYSTEMS by Hussam K. Jawad Master of Science in Mechanical Mechanical and Industrial Engineering, Ryerson University, Toronto, Canada, 2012 Bachelor of Science in Mechanical Engineering, University of Baghdad, Baghdad, Iraq, 1988 A dissertation presented to Ryerson University in partial fulfillment of the requirement for the degree of Doctor of Philosophy in the Program of Mechanical and Industrial Engineering Toronto, Ontario, Canada, 2017 © Hussam Jawad 2017 AUTHOR’S DECLARATION FOR ELECTRONIC SUBMISSION OF A DISSERTATION I hereby declare that I am the sole author of this dissertation. This is a true copy of the dissertation, including any required final revisions, as accepted by my examiners. I authorize Ryerson University to lend this dissertation to other institutions or individuals for the purpose of scholarly research. I further authorize Ryerson University to reproduce this dissertation by photocopying or by other means, in total or in part, at the request of other institutions or individuals for the purpose of scholarly research. I understand that my dissertation may be made electronically available to the public. ii EXERGY ANALYSIS FOR SUSTAINABLE INVENTORY AND LOGISTICS SYSTEMS Doctor of Philosophy, 2017 Hussam K. Jawad Mechanical and Industrial Engineering Ryerson University ABSTRACT Inventory systems may be modelled analogously to thermal systems involving multiple flows of capital, labour, energy, and materials among the members of a supply chain. The laws of thermodynamics can be employed to analyze the efficiency of such physical systems by implementing “Exergy Analysis,” a powerful technique which can be used to assess and improve the efficiency of a process, device, and system and to enhance their environmental and economic performance. Traditional exergy analysis methods may not be sufficient for the analysis of certain systems because they do not account for the non-energetic factors such as capital, labour, and environment protection. Extended exergy analysis assigns exergetic equivalents to such non-energetic externalities. Sustainable development is about securing the requirements of today while guarding the needs of future generations. Its target is the improvement of the living styles of humans by protecting their health and environment, and the efficient resources’ consumption while advancing long-term economic growth. In other words, it is the integration of social, environmental, and economic aspects into regulations and policies, which requires actions from everyone on this planet. The production, inventory and logistics of goods have contributed, among other things, towards making our world less sustainable. This thesis, therefore, aims to provide iii models, methods and decision support tools that can assist in achieving a better level of sustainability through the whole processes of inventory systems. The overall objectives are to analyze the importance of the wise consumptions of physical and human resources in inventory systems. The results of this thesis have significant implications in shifting the “classical” paradigm of inventory systems that are based on the economic performance, which can be measured with financial criteria, such as total costs and profit, to the “non-classical” paradigm that considers the three pillars of sustainable development. The results showed the importance of accounting for the consumed exergy rather than just considering the values in term of monetary units. Computing the exergetic costs can provide more flexibility for managers of supply chains to compute the quantity based on the available resources and not confining this to the capital only. iv ACKNOWLEDGMENT This thesis would not have been possible without the guidance and the help of several individuals who in one way or another contributed and extended their valuable assistance in the preparation and completion of this study. It is a pleasure to convey my gratitude to them all in my humble acknowledgment. First and foremost, I would like to express my sincere gratitude to my supervisor Prof. Mohamad Y. Jaber for the continuous support of my Ph.D. study and research, for his patience, motivation, enthusiasm, and immense knowledge. His guidance helped me in all the time of research and writing of this thesis. Many thanks go in particular to Dr. Maurice Bonney (Nottingham University Business School, University of Nottingham), Dr. Marc A. Rosen (Faculty of Engineering and Applied Science, University of Ontario Institute of Technology) and Dr. R.Y. Nuwayhid (Department of Mechanical Engineering, Rafik Hariri University) for their valuable advices and comments on the work in this thesis. I gratefully acknowledge the funding sources that made my Ph.D. work possible. I was funded by the Natural Sciences and Engineering Research Council of Canada (NSERC). Ryerson University also supported my work. I also wish to thank the chair and all the staff members of the Department of Mechanical and Industrial Engineering at Ryerson University for their continuous support and assistance. A special thank for all of my colleagues and friends at Ryerson University for their support and advice during my study with them. Lastly, I would like to thank my family for all their love and encouragement. For my parents, who raised me with a love of science and supported me in all my pursuits. v This dissertation is dedicated to my beloved father (in memorian) and mother, my family and faithful friends, and all teachers in my life. vi Table of Contents Author’s Declaration ……………………………………………………………… ii Abstract …………………………………………………………………………… iii Acknowledgment …………………………………………………………………. v List of Tables ……………………………………………………………………... xx List of Figures …………………………………………………………………….. xxi Nomenclature ……………………………………………………………………... xxii Chapter (1) - Introduction to supply chain management …………………………. 1 1.1 Green Supply Chain Management Paradigm ……………………………….. 4 1.2 Sustainable Supply Chain Management Paradigm …………………………. 11 1.2.1 How to achieve a sustainable supply chain? ………………………….. 17 1.3 Review of the Literature ……………………………………………………... 19 1.3.1 Literature Review on Green Supply Chain ……………………………. 19 1.3.2 Literature Review on Sustainable Supply Chain ……………………… 23 1.4 Research Gaps ……………………………………………………………….. 31 1.5 Research Limitations ………………………………………………………… 34 1.6 Research Questions ………………………………………………………….. 35 1.7 Objectives of The Research ………………………………………………….. 36 1.8 Thesis Organization and Scholarly Output …………………………………... 37 Chapter (2) -Thermodynamics and sustainability ………………………………… 40 2.1 Could Thermodynamics Solve The Problem Of Sustainability? …………….. 40 2.2 What is Exergy? ……………………………………………………………… 45 2.2.1 What are the Most Important Features of Exergy? …………………… 47 2.2.2 Why is Exergy Important? ……………………………………………. 48 2.2.3 How can Exergy be linked to sustainability? …………………………. 50 2.2.4 How can Exergy be linked to inventory management? ………………. 54 2.2.5 Extended Exergy Accounting (EEA) …………………………………. 58 2.2.6 How to Compute the Extended ……………………………………….. 60 2.2.7 Exergy of Capital …………………………………………………….. 61 2.2.8 Exergy of Labour …………………………………………………….. 63 2.2.9 Exergy of Environmental Remediation ……………………………… 66 2.2.10 Limitations and obstacles of EEA ……………………………………. 67 Chapter (3) - Exergy analysis: a new paradigm for modelling inventory systems 69 3.1 Introduction …………………………………………………………………... 69 3.2 Exergo-Economics and Inventory Systems ………………………………….. 71 3.3 Application of the Exergetic Model …………………………………………. 73 3.4 Summary ……………………………………………………………………... 79 vii Chapter (4) - The economic order quantity model revisited: an extended exergy accounting approach ……………………………………………………………… 81 4.1 Introduction ………………………………………………………………….. 81 4.2 Inventory Theory Under The EOQ Model …………………………………… 83 4.3 The Exergetic EOQ Model …………………………………………………... 88 4.3.1 Mass and Energy Balances and Exergy Flow in an Inventory System 89 4.3.2 The Exergetic Model ………………………………………………….. 90 4.4 A Numerical Example ……………………………………………………….. 91 4.5 Results and Discussion ………………………………………………………. 95 Summary and Conclusions ……………………………………………………….. 98 Chapter (5) - deriving an exergetic economic production quantity model for better sustainability ………………………………………………………………. 102 5.1 Introduction ………………………………………………………………….. 102 5.2 Exergy, Thermodynamics Laws, and Their Applications …………………… 104 5.3 Thermal EPQ Model …………………………………………………………. 107 5.4 Exergetic Inventory Approach ……………………………………………….. 108 5.4.1 Main Assumptions ……………………………………………………. 113 5.4.2 Model Development ………………………………………………….. 113 5.4.3 Entropic Inventory Approach ………………………………………… 118 5.5 Sustainability Index ………………………………………………………….. 122 5.6 Results and Discussion ………………………………………………………. 126 5.7 Economic Manufacture Quantity (EMQ) Vs. Just-In-Time (JIT) …………… 138 5.8 Summary and Conclusions …………………………………………………... 139 Chapter (6) - Improving supply chain sustainability using exergy analysis ……… 142 6.1 Introduction …………………………………………………………………... 142 6.2 Analogy ………………………………………………………………………. 147 6.2.1 Entropy generation and exergy destruction of a heat pump system ….. 147 6.2.2 A heat pump system as a supply chain ……………………………….. 150 6.3 An Exergetic Supply Chain Model …………………………………………... 154 6.3.1 Entropy model assumptions and decision variables …………………… 154 6.3.2 The mathematical model ………………………………………………. 155 6.4 Domestic Vs. Global Supply Chains ………………………………………… 158 6.5 Consignment Stock Policy in an Integrated Supply Chain ………………….. 161 6.6