Optimizing a Sustainable Inventory Model Under Limited Recovery Rates and Demand Sensitivity to Price, Carbon Emissions, and Stock Conditions

Xi-Bin Lin, Jonas Chao-Pen Yu () and Jen-Ming Chen
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Xi-Bin Lin: Department of Distribution Management, Takming University of Science and Technology, Taipei 114, Taiwan
Jonas Chao-Pen Yu: Department of Distribution Management, Takming University of Science and Technology, Taipei 114, Taiwan
Jen-Ming Chen: Institute of Industrial Management, National Central University, 300 Zhongda Road, Zhongli District, Taoyuan City 32001, Taiwan

Mathematics, 2025, vol. 13, issue 18, 1-24

Abstract: The recovery, rework, or remanufacturing of returned products has received significant attention, leading to considerable advancements in green supply chain management. However, the impact of recovery mechanisms under demand sensitivity remains understudied. This study develops a sustainability model that incorporates limited recovery rates and demand sensitivity to price, carbon emissions, and stock conditions. The analysis investigates the difference in profit when considering recovery and proposes a procedure for deriving optimal solutions using two key decision variables: unit sales price and cycle time, within a nonlinear profit model. The findings show that (i) the increase in total profit is significant and (ii) both sellers and consumers benefit from this mechanism. In addition, total profit is 15% higher, while the total cost is 22% lower than in the case without recovery. Consumers can purchase products at lower prices (−12%), and sellers can sell more products (+4%), thereby earning higher profit (+15%). Such a win–win policy aligns with environmental, social, and governance (ESG) regulations and supports a healthy, long-term supply chain relationship. Numerical examples and sensitivity analysis illustrate the characteristics of the proposed model. The results also provide managerial insights into enterprises’ limited recovery capacity.

Keywords: carbon emission; environmental; social and government (ESG); recovery operations; sustainability (search for similar items in EconPapers)
JEL-codes: C (search for similar items in EconPapers)
Date: 2025
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