Abstract
Under environmental regulations, the government restricts the economic activities of polluting OEMs (Original Equipment Manufacturers) in order to improve ecological and economic efficiency. The most direct measure is to limit the production capacity of the companies. Under the condition of limited capacity, the order selection strategy of OEMs will be the direct determinant of the company’s own profits. In the foundry market, there are many low-profit orders, while the number of high-profit orders is limited and uncertain. Companies who choose to wait for high-profit orders must bear the waiting costs and the risk of losing a certain profit. Therefore, it is of great significance for the long-term development of the company to select orders to obtain the best profit under the condition of limited production capacity. This paper takes polluting OEMs as the research object and studies the optimal order selection problems of companies under environmental regulations by establishing order selection decision models for different foundry cycles under the condition of limited production capacity. The study found that in the single foundry cycle, there will be an optimal waiting-time threshold for high-profit orders. Based on this optimal waiting-time threshold, the corresponding order selection strategy can be effectively formulated. However, in the multi-foundation cycle, since the optimal waiting-time threshold of high-profit orders is affected by the long-term average profit, the company’s optimal order selection strategy is based on the long-term average profit maximization.
Highlights
Environmental regulation refers to the measures, policies, regulations and implementation processes that are restrictive to economic activities taken to improve ecological and economic efficiency with the goal of ecological civilization construction
We study the optimal order selection strategy of the polluting OEMs when their production capacity is limited in the context of environmental regulations
OEMs under environmental regulations, which helps both governments and OEMs solve the dilemma between environmental protection and economic development
Summary
Environmental regulation refers to the measures, policies, regulations and implementation processes that are restrictive to economic activities taken to improve ecological and economic efficiency with the goal of ecological civilization construction. Limiting the production capacity of polluting OEMs can reduce pollution emissions and improve the environment, it will damage corporate profits and affect economic development, which hinders the implementation of environmental regulatory policies. When enterprises are faced with capacity constraints brought about by environmental regulations, it is important for the long-term development of such OEMs and the construction of ecological civilization to formulate reasonable order selection strategies and maximize profits with limited capacity. The study is extended to multiple foundry cycles and the foundry cycles of the two orders cannot be considered the same, as the difference between the individual cycles of HPOs and LPOs will be cumulatively magnified in multiple foundry cycles This requires companies to focus more on the acquisition of longterm average profits, and the corresponding order selection strategy will change. This paper studies how the polluting OEMs adjust their own strategies to obtain the higher benefits under environmental regulation, which is conducive to polluting OEMs to adapt to the corresponding environmental regulation and promote sustainable development
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