Stochastic Pricing and Order Model with Transportation Mode Selection for Low-Carbon Retailers

Yi Zheng, Huchang Liao and Xue Yang
Additional contact information
Yi Zheng: School of Management and Economics, University of Electronic Science and Technology of China, Chengdu 611731, China
Huchang Liao: Business School, Sichuan University, Chengdu 610065, China
Xue Yang: Business School, Sichuan University, Chengdu 610065, China

Sustainability, 2016, vol. 8, issue 1, 1-19

Abstract: More and more enterprises have begun to pay attention to their carbon footprint in the supply chain, of which transportation has become the second major source of carbon emissions. This paper aims to study both optimum pricing and order quantities, considering consumer demand and the selection of transportation modes by retailers, in terms of carbon emissions sensitivity and price sensitivity under the conditions of a cap-and-trade policy and uncertain market demand. Firstly, we analyze the effects of transportation mode (including transportation costs and transportation-induced carbon emissions), initial emissions allowances, carbon emissions trading price and consumer sensitivity to carbon emissions on the optimum decisions and profits of retailers. The results demonstrate that when consumers are less sensitive to price, the optimum retail price and the optimum order quantity of products are proportional to the transportation cost and transportation-induced carbon emissions of retailers per unit product, the carbon emissions trading price as well as consumer sensitivity to carbon emissions. However, when consumers are highly sensitive to price, the optimum order quantity of products is inversely proportional to the transportation costs and transportation-induced carbon emissions of retailers per unit product, the carbon emissions trading price and consumer sensitivity to carbon emissions. In addition, the optimum retail price of products is inversely proportional to consumer sensitivity to carbon emissions. We also find that retailers prefer a low-carbon transportation mode when the carbon emissions trading price is high. Meanwhile, the carbon emissions trading price influences the carbon emissions trading volume of retailers. These theoretical findings are further validated by some numerical analysis.

Keywords: stochastic demand; transportation mode; low-carbon retailers; pricing; order (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 (6)

Downloads: (external link)
https://www.mdpi.com/2071-1050/8/1/48/pdf (application/pdf)
https://www.mdpi.com/2071-1050/8/1/48/ (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:gam:jsusta:v:8:y:2016:i:1:p:48-:d:61811

Access Statistics for this article

Sustainability is currently edited by Ms. Alexandra Wu

More articles in Sustainability from MDPI
Bibliographic data for series maintained by MDPI Indexing Manager ().