Inventory Model for Imperfect Quality Deteriorating Items with Carbon Tax Regulation

Abstract

Emissions of carbon are one of the primary causes of global warming. Several countries are currently working on reducing carbon emissions. For many countries, carbon taxes and cap policies are the key mechanisms used to accomplish this goal. To deal with this issue, a sustainable economic production quantity (SEPQ) carbon tax and cap model is considered in order to control carbon emissions. Based on carbon emissions and defective rate, we present an integrated single-vendor single-buyer inventory model for deteriorating items with imperfect quality. Screening has been done on the produced units to find the imperfect units, but the screening rate is below or equal to the production rate and greater than demand. A secondary market buys the defective products at a discount price. In order to reduce work-in-process inventory and carbon emissions, the study aims to increase throughput times. We also examine the effect of carbon tax regulation on the potential emission reduction from the developed deteriorating item model. Results from the application of a numerical example and sensitivity analysis confirm the impact of carbon tax regulation on reducing carbon emissions.