Effectiveness of carbon policies and multi-period delay in payments in a global supply chain under remanufacturing consideration

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Carbon emission regulation is one of the most important priorities for the business sector. The rate of carbon generation increases tremendously due to several issues like transportation, repair, or remanufacture. The generation of faulty or imperfect items increases during transportation. Instead of returning them, the retailer can remanufacture/repair those faulty products in their repair shop and sell them to customers as the new product. Carbon dioxide is emitted from this repair shop continuously. In this study, the retailer remanufacturers faulty items under different carbon emission reduction policies and multi-period trade credit financing to control the shortage. Shortages arise due to imperfect products. Three carbon emission reduction policies are reviewed and compared in the context of different credit financing and investments to find the maximum profit. The adaptation of investment is beneficial to reduce carbon emissions and increase the profit of the system. Nine models are built based on long-term credit financing and carbon regulation policies. Analytical approaches are used to find solutions for complex nonlinear profit functions. Numerical illustrations prove that if cycle time is less than the permitted delay period, the system’s profit is 2.58% and 56.76% higher than the other two cases. Limited carbon regulation provides 0.23% and 0.16% better profit than the other two carbon reduction policies. Green investment increases the system profit by 0.063% and reduces emissions by 112 kg per cycle. Adaptation of trade credit policy increases the profit up to 1.55%. Finally, it is noticeable that limited carbon regulation is the best policy when the permissible delay in payment period is greater than the cycle time with remanufacturing under-investment.