An inventory model of a deteriorating product considering carbon emissions

Abstract

This paper studies an inventory optimization problem involving perishable products under carbon policy. It considers that the market demand for perishable products is deterministic and it is related to selling price and stock level and that the ordering and storing of perishable products can create carbon emissions. Additionally, preservation technology can change perishable item’s deterioration rate is also taken into account. For maximizing the retailer’s profit in the finite planning period, inventory models under a carbon tax policy and under a carbon cap-and-trade policy are developed. Firstly properties of the optimal solutions of two inventory models are analysed. Next algorithms are designed to solve the two inventory models and the optimal solutions of the inventory models without carbon constraint, under the two carbon policies are compared. Finally, the theoretical properties of the models are demonstrated by numerical examples, sensitivity analysis of the main model parameters is carried out, and the influence of the parameters on the retailer’s inventory policy is discussed.