A hybrid carbon policy inventory model with emission source-based green investments

Tapan Kumar Datta (), Prasanta Nath and Karabi Dutta Choudhury
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Tapan Kumar Datta: BITS Pilani
Prasanta Nath: Assam University
Karabi Dutta Choudhury: Assam University

OPSEARCH, 2020, vol. 57, issue 1, No 11, 202-220

Abstract: Abstract The present study analyzes a production-inventory system with hybrid carbon regulation policy. This hybrid carbon policy is a combination of carbon tax and cap-and-trade policies. It considers a single item that can be produced in different qualities. Production cost, setup cost, amount of emissions and the demand rate depend on the quality. The demand rate for each quality is price sensitive. Emissions occur from three sources—setup, production process and stock holding. The firm can invest on green technologies in each emission source separately to reduce emissions. This model considers profit maximization policy. The managerial problem is to select the profit-maximizing quality for production, and to find the optimum values of the production run time, green investments and the selling price. An algorithm is provided to solve the model. The model is illustrated by a numerical example. Sensitivity analysis is also performed.

Keywords: Cap-and-trade; Carbon tax; Emission; Green investment; Inventory; Production (search for similar items in EconPapers)
Date: 2020
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Citations: View citations in EconPapers (2)

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DOI: 10.1007/s12597-019-00430-y

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