Sustainable production model with advertisement and market price dependent demand under salvage option for defectives

Amrina Kausar (), Ahmad Hasan (), Sumit Maheshwari (), Prerna Gautam () and Chandra K. Jaggi ()
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Amrina Kausar: University of Delhi
Ahmad Hasan: University of Delhi
Sumit Maheshwari: University of Delhi
Prerna Gautam: University of Delhi
Chandra K. Jaggi: University of Delhi

OPSEARCH, 2024, vol. 61, issue 1, No 15, 315-333

Abstract: Abstract Recently, environmental sustainability has emerged as a crucial component for every organization. Companies now are not only conscious about their profit but also the effect of their business on the environment. In order to achieve sustainability, companies must ensure that their production process follows green practices and should not have any adverse effect on the environment. To do so, companies must address issues like carbon emission, energy consumption, imperfect production etc. As everyone knows, no production process can be defect free. The defective items produced not only reduce the net profit and goodwill of the company but also affect the environment as the raw material used while manufacturing the product go to waste which put additional pressure on the environment. In order to minimize the loss of adverse effects of the defective production, here it is considered that the defective items are sold in the secondary market at low-price. Also, in the present competitive environment, companies use advertainment as a tool to capture more demand. In line with this, the present paper constructs an inventory model for an imperfect production system with demand being dependent on the market price of the item and the frequency of advertisements. The model also contemplates the consumption of energy and the emissions of harmful gases during the manufacturing run and inventory holding. To show the robustness and rationality of the proposed solution algorithm a numerical investigation is performed, and further, sensitivity analysis on various model parameters is conducted to impart key features of the model. To result indicates that by selling imperfect items at a low-price companies profit increases as compared to the situation when the items are disposed off. Also, the effect of the frequency of advertisements on demand is highly noticeable.

Keywords: Inventory; Imperfect Items; EPQ; Carbon-emissions; Price and Advertisement Demand (search for similar items in EconPapers)
Date: 2024
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DOI: 10.1007/s12597-023-00688-3

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