Inventory Model for Single Manufacturer - Two Competing Retailers with Carbon Tax and Product Selling Price

Abstract

This paper discusses how a manufacturer and two competing retailers interact to develop an inventory model considering a carbon tax, green investment, and product selling price under stochastic demand to maximize the profitability of the supply chain. It is assumed that the manufacturer replenishes all the retailers at the same time and period. Since there are two competing retailers, the product selling price at each retailer impacts not only its demand but also the other retailer’s demand. This paper also considers the implementation of green technology since there is a carbon tax for activities that produce carbon emissions such as production, transportation, and holding activities in the supply chain. The validity of the inventory model will be tested through sensitivity analysis and numerical examples.