Abstract
Carbon emissions play the central role in global warming. Manufacturing firms are significant contributors to carbon emissions. In many countries, regulatory authorities are taking actions to reduce emissions. Carbon taxation and cap-and-trade schemes are two mechanisms implemented in many countries. In the present paper, the author analyzes a production-inventory model under a carbon tax system. The production rate is assumed to be a decision variable and can be set at any level within machine limits. A proportion of items produced are defective, and this proportion depends on the production rate. Demand depends on the selling price. Unit price is a decreasing function of the production rate. Emissions can be reduced to some extent by capital investment on green technology, and this capital investment amount is a decision variable. Customers are categorized as retail customers and wholesale customers. A discount is offered to the wholesale customers on the regular selling price. The results are illustrated by a numerical example and a sensitivity analysis is performed.
Highlights
Global warming is a major threat to our planet
Since the world economy depends upon the fossil fuel for industrial activities, the greenhouse gases (GHGs) emissions cannot be stopped completely
Manna et al [13] developed a model with imperfect production system and production rate dependent unit cost
Summary
Global warming is a major threat to our planet. It poses severe risk to the nature, human health, and well-being. Regulatory boards in many industrialized countries are taking initiatives to control emission of GHGs. Carbon tax and cap-and-trade system are two main mechanisms adopted by many countries to reduce the amount of emission. The cap-and-trade mechanism is another sensible regulation policy to reduce GHG emissions In this policy, the regulatory body first sets a maximum allowable emission limit (cap) from all possible sources, which is lowered over time, and this amount is distributed or auctioned among the polluting entities as permits/allowances. The Regional Greenhouse Gas Initiative (RGGI) was the first mandatory cap-and-trade program in the United States to limit carbon dioxide (CO2) from the power sector. It is being implemented in Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New York, Rhode Island, and Vermont [4]. A firm can reduce emission significantly by investing on greener projects such as environment friendly production process (Liu et al [5]) and greener warehousing (Ilic et al [6])
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