A sustainable managerial decision-making problem for a substitutable product in a dual-channel under carbon tax policy

Abstract

Industries nowadays face difficulties due to different environmental policies for the well-being of society and competitive scenarios. Similar categorized products always give tough competition to each other as those are substitutable in nature and this study deals with a single type of substitutable product. The effectiveness of a variable production system under emissions control policies is observed for this type of product. Carbon tax, cap-and-trade policy, and green technology are used to make the variable production system emission-controlled. A dual-channel policy is utilized to find the most profitable managerial decisions. This is a fully emission-controlled variable production system covered by green technology investment. Every stage of the variable production system i.e., setup, production, and holding of products emit less carbon than the projected carbon cap. This helps to receive the subsidy from the government. That means an emission-controlled variable production system with dual-channel for substitutable products is established under green technology. The classical optimization procedure helps to find the global optimum solution of the cycle time, green technology, the selling price of products, and the production rate. Numerical study proves that the proposed system provides 8.76% more profit than the traditional production system. Finally, a sensitivity analysis is carried out for the managerial implications of cost parameters on the optimal total profit.