Sustainability Concept in Decision-Making: Carbon Tax Consideration for Joint Product Mix Decision

Wen-Hsien Tsai, Jui-Chu Chang, Chu-Lun Hsieh, Tsen-Shu Tsaur and Chung-Wei Wang
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Wen-Hsien Tsai: Department of Business Administration, National Central University, No. 300, Jhongda Rd., Jhongli, Taoyuan 32001, Taiwan
Jui-Chu Chang: Department of Business Administration, National Central University, No. 300, Jhongda Rd., Jhongli, Taoyuan 32001, Taiwan
Chu-Lun Hsieh: Department of Business Administration, National Central University, No. 300, Jhongda Rd., Jhongli, Taoyuan 32001, Taiwan
Tsen-Shu Tsaur: Department of Business Administration, Fuzhou University of International Studies and Trade, Fuzhou 350202, Fujian, China
Chung-Wei Wang: Department of Business Administration, National Central University, No. 300, Jhongda Rd., Jhongli, Taoyuan 32001, Taiwan

Sustainability, 2016, vol. 8, issue 12, 1-22

Abstract: Carbon emissions are receiving greater scrutiny in many countries due to international forces to reduce anthropogenic global climate change. Carbon taxation is one of the most common carbon emission regulation policies, and companies must incorporate it into their production and pricing decisions. Activity-based costing (ABC) and the theory of constraints (TOC) have been applied to solve product mix problems; however, a challenging aspect of the product mix problem involves evaluating joint manufactured products, while reducing carbon emissions and environmental pollution to fulfill social responsibility. The aim of this paper is to apply ABC and TOC to analyze green product mix decision-making for joint products using a mathematical programming model and the joint production data of pharmaceutical industry companies for the processing of active pharmaceutical ingredients (APIs) in drugs for medical use. This paper illustrates that the time-driven ABC model leads to optimal joint product mix decisions and performs sensitivity analysis to study how the optimal solution will change with the carbon tax. Our findings provide insight into ‘sustainability decisions’ and are beneficial in terms of environmental management in a competitive pharmaceutical industry.

Keywords: carbon tax; time-driven activity-based costing (TDABC); mathematical programming; joint product mix; theory of constraints (TOC); sustainability decision-making (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2016
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

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