Multi-product Production-Inventory Model and Analysis within the Context of Environmental Sensitivity

In recent years, accounting of carbon (CO2) emissions in the modeling of supply chains has become as important as achieving an effective coordination between supplier(s) and buyer(s). Because, carbon emissions are a measure of the sensitivity to the environment. In this study, a multi-product inventory problem containing defective products is considered under the assumptions of environmental sensitivity and limited storage space, and mathematical models are developed. The total cost of the problem comprise of cost of setup, cost of production, cost of screening, cost of disposal, cost of holding, cost of carbon emission and carbon emission tax. The optimal production cycle time and production quantities that minimize the expected total cost are obtained with the help of a developed algorithm. All calculations in the developed algorithm are performed using Microsoft Excel program. Two numerical examples with sensitivity analysis are provided to illustrate the results.