Optimizing inventory level and technology investment under a carbon tax, cap-and-trade and strict carbon limit regulations

Abstract

Abstract In this study, three models are developed to optimize the inventory level and technology investment under a carbon tax, cap-and-trade, and strict carbon limit regulations. The study considers warehouse operations and transportation logistic systems as the sources of emissions. Several examples are presented, followed by sensitivity analysis for different scenarios. The result shows that under the carbon regulations, profit and carbon emission reduction is proportional to the green technology investment, while demand increase with the green technology promotion. Further analysis has shown that for the carbon tax system policy, the carbon price has influenced the total profit significantly. The decreasing emission level results in a higher profit, while the carbon cap and the carbon limit do not affect the total profit significantly.