IDEAS home Printed from https://ideas.repec.org/a/spr/endesu/v23y2021i12d10.1007_s10668-021-01411-2.html
   My bibliography  Save this article

Newsvendor’s optimal decisions under stochastic demand and cap-and-trade regulation

Author

Listed:
  • Shaojian Qu

    (Nanjing University of Information Science and Technology)

  • Guoqing Jiang

    (University of Shanghai for Science and Technology)

  • Ying Ji

    (University of Shanghai for Science and Technology)

  • Guangming Zhang

    (Hankou University)

  • Nabe Mohamed

    (University of Shanghai for Science and Technology)

Abstract

Cap-and-trade regulation (CTR) is universally considered as one of the most environmentally friendly approaches to reducing carbon emission. In this paper, the newsvendor with a warranty service is regarded as the benchmark model firstly. Then, we study extended models about the newsvendor’s carbon footprint under CTR in the carbon trading market. Specifically, the carbon footprint exists in the four stages: production, sale, residual disposal, and return warranty service. And we adopt low-carbon technologies to improve the carbon footprint. Thirdly, we derive the newsvendor’s optimal production quantity, emission abatement level, and the expected profit. Interestingly, improving the carbon footprint in the sale and return warranty stages leads to a sharply higher profit in the carbon trading market. Finally, results and discussion are addressed in detail by numerical examples. We discover that optimal production quantity with an improved carbon footprint is larger than that with an original carbon footprint and earns more. Besides, the warranty service cost is negatively related to both the newsvendor’s optimal production quantity and profit. In the carbon trading market, the newsvendor is supposed to improve carbon footprint by carbon reduction investment. Besides, carbon quotas provided by the government do no affect the optimal production quantity but affects the profit of carbon trade.

Suggested Citation

  • Shaojian Qu & Guoqing Jiang & Ying Ji & Guangming Zhang & Nabe Mohamed, 2021. "Newsvendor’s optimal decisions under stochastic demand and cap-and-trade regulation," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 23(12), pages 17764-17787, December.
    • Handle: RePEc:spr:endesu:v:23:y:2021:i:12:d:10.1007_s10668-021-01411-2
    DOI: 10.1007/s10668-021-01411-2
    as

    Download full text from publisher

    File URL: http://link.springer.com/10.1007/s10668-021-01411-2
    File Function: Abstract
    Download Restriction: Access to the full text of the articles in this series is restricted.
    File URL: https://libkey.io/10.1007/s10668-021-01411-2?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Nicholas C. Petruzzi & Maqbool Dada, 1999. "Pricing and the Newsvendor Problem: A Review with Extensions," Operations Research, INFORMS, vol. 47(2), pages 183-194, April.
    2. Song, Shuang & Govindan, Kannan & Xu, Lei & Du, Peng & Qiao, Xiaojiao, 2017. "Capacity and production planning with carbon emission constraints," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 97(C), pages 132-150.
    3. Hua, Guowei & Cheng, T.C.E. & Wang, Shouyang, 2011. "Managing carbon footprints in inventory management," International Journal of Production Economics, Elsevier, vol. 132(2), pages 178-185, August.
    4. Tamer Y. A. Fahmy & Yehia Fahmy & Fardous Mobarak & Mohamed El-Sakhawy & Ragab E. Abou-Zeid, 2020. "Biomass pyrolysis: past, present, and future," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 22(1), pages 17-32, January.
    5. Zhang, Bin & Xu, Liang, 2013. "Multi-item production planning with carbon cap and trade mechanism," International Journal of Production Economics, Elsevier, vol. 144(1), pages 118-127.
    6. David F. Drake & Paul R. Kleindorfer & Luk N. Van Wassenhove, 2016. "Technology Choice and Capacity Portfolios under Emissions Regulation," Production and Operations Management, Production and Operations Management Society, vol. 25(6), pages 1006-1025, June.
    7. Zied Jemai & Y Bouchery & Asma Ghaffari & Yves Dallery, 2012. "Including sustainability criteria into inventory models," Post-Print hal-01672398, HAL.
    8. Zhang, Qinhong & Dong, Ming & Luo, Jianwen & Segerstedt, Anders, 2014. "Supply chain coordination with trade credit and quantity discount incorporating default risk," International Journal of Production Economics, Elsevier, vol. 153(C), pages 352-360.
    9. Du, Shaofu & Zhu, Lili & Liang, Liang & Ma, Fang, 2013. "Emission-dependent supply chain and environment-policy-making in the ‘cap-and-trade’ system," Energy Policy, Elsevier, vol. 57(C), pages 61-67.
    10. Rosič, Heidrun & Jammernegg, Werner, 2013. "The economic and environmental performance of dual sourcing: A newsvendor approach," International Journal of Production Economics, Elsevier, vol. 143(1), pages 109-119.
    11. Bouchery, Yann & Ghaffari, Asma & Jemai, Zied & Dallery, Yves, 2012. "Including sustainability criteria into inventory models," European Journal of Operational Research, Elsevier, vol. 222(2), pages 229-240.
    12. Chaabane, A. & Ramudhin, A. & Paquet, M., 2012. "Design of sustainable supply chains under the emission trading scheme," International Journal of Production Economics, Elsevier, vol. 135(1), pages 37-49.
    13. Wittneben, Bettina B.F., 2009. "Exxon is right: Let us re-examine our choice for a cap-and-trade system over a carbon tax," Energy Policy, Elsevier, vol. 37(6), pages 2462-2464, June.
    14. Xu, Xiaoping & He, Ping & Xu, Hao & Zhang, Quanpeng, 2017. "Supply chain coordination with green technology under cap-and-trade regulation," International Journal of Production Economics, Elsevier, vol. 183(PB), pages 433-442.
    15. Chai, Qiangfei & Xiao, Zhongdong & Lai, Kee-hung & Zhou, Guanghui, 2018. "Can carbon cap and trade mechanism be beneficial for remanufacturing?," International Journal of Production Economics, Elsevier, vol. 203(C), pages 311-321.
    16. Zhao, Xin-gang & Wu, Lei & Li, Ang, 2017. "Research on the efficiency of carbon trading market in China," Renewable and Sustainable Energy Reviews, Elsevier, vol. 79(C), pages 1-8.
    17. Plambeck, Erica L., 2012. "Reducing greenhouse gas emissions through operations and supply chain management," Energy Economics, Elsevier, vol. 34(S1), pages 64-74.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Rung-Hung Su & Tse-Min Tseng & Chun Lin, 2024. "Integrated Profitability Evaluation for a Newsboy-Type Product in Own Brand Manufacturers," Mathematics, MDPI, vol. 12(4), pages 1-23, February.
    2. Jianteng Xu & Peng Wang & Qi Xu, 2022. "Impact of Information Asymmetry on the Operation of Green Closed-Loop Supply Chain under Government Regulation," Sustainability, MDPI, vol. 14(13), pages 1-18, June.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Shoufeng Ji & Dan Zhao & Xiaoshuai Peng, 2018. "Joint Decisions on Emission Reduction and Inventory Replenishment with Overconfidence and Low-Carbon Preference," Sustainability, MDPI, vol. 10(4), pages 1-21, April.
    2. Palak, Gökçe & Ekşioğlu, Sandra Duni & Geunes, Joseph, 2014. "Analyzing the impacts of carbon regulatory mechanisms on supplier and mode selection decisions: An application to a biofuel supply chain," International Journal of Production Economics, Elsevier, vol. 154(C), pages 198-216.
    3. Schaefer, Brian & Konur, Dinçer, 2015. "Economic and environmental considerations in a continuous review inventory control system with integrated transportation decisions," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 80(C), pages 142-165.
    4. Konur, Dinçer & Campbell, James F. & Monfared, Sepideh A., 2017. "Economic and environmental considerations in a stochastic inventory control model with order splitting under different delivery schedules among suppliers," Omega, Elsevier, vol. 71(C), pages 46-65.
    5. Yang, Lei & Hu, Yijuan & Huang, Lijuan, 2020. "Collecting mode selection in a remanufacturing supply chain under cap-and-trade regulation," European Journal of Operational Research, Elsevier, vol. 287(2), pages 480-496.
    6. Yugang Yu & Xue Li & Xiaoping Xu, 2022. "Reselling or marketplace mode for an online platform: the choice between cap-and-trade and carbon tax regulation," Annals of Operations Research, Springer, vol. 310(1), pages 293-329, March.
    7. García-Alvarado, M.S. & Paquet, M. & Chaabane, A., 2015. "On inventory control of product recovery systems subject to environmental mechanisms," International Journal of Production Economics, Elsevier, vol. 165(C), pages 132-144.
    8. Bibhas C. Giri & Ishani Ray, 2022. "Optimal sustainability investment and pricing decisions in a two-echelon supply chain with emissions-sensitive demand under cap-and-trade policy," OPSEARCH, Springer;Operational Research Society of India, vol. 59(3), pages 786-808, September.
    9. Lin, Xiaogang & Chen, Danna & Zhou, Yong-Wu & Lin, Qiang, 2022. "Horizontal mergers in low carbon manufacturing," European Journal of Operational Research, Elsevier, vol. 297(1), pages 359-368.
    10. Zhimiao Tao & Jiuping Xu, 2019. "Carbon-Regulated EOQ Models with Consumers’ Low-Carbon Awareness," Sustainability, MDPI, vol. 11(4), pages 1-16, February.
    11. Mallidis, Ioannis & Vlachos, Dimitrios & Iakovou, Eleftherios & Dekker, Rommert, 2014. "Design and planning for green global supply chains under periodic review replenishment policies," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 72(C), pages 210-235.
    12. Hong, Zhaofu & Dai, Wei & Luh, Hsing & Yang, Chenchen, 2018. "Optimal configuration of a green product supply chain with guaranteed service time and emission constraints," European Journal of Operational Research, Elsevier, vol. 266(2), pages 663-677.
    13. Xu, Xiaoping & He, Ping & Xu, Hao & Zhang, Quanpeng, 2017. "Supply chain coordination with green technology under cap-and-trade regulation," International Journal of Production Economics, Elsevier, vol. 183(PB), pages 433-442.
    14. Meng, Xiaoge & Yao, Zhong & Nie, Jiajia & Zhao, Yingxue & Li, Zenglu, 2018. "Low-carbon product selection with carbon tax and competition: Effects of the power structure," International Journal of Production Economics, Elsevier, vol. 200(C), pages 224-230.
    15. Liangjie Xia & Tingting Guo & Juanjuan Qin & Xiaohang Yue & Ning Zhu, 2018. "Carbon emission reduction and pricing policies of a supply chain considering reciprocal preferences in cap-and-trade system," Annals of Operations Research, Springer, vol. 268(1), pages 149-175, September.
    16. Yunting Feng & Yong Geng & Ge Zhao & Mengya Li, 2022. "Carbon Emission Constraint Policy in an OEM and Outsourcing Remanufacturer Supply Chain with Consumer Preferences," IJERPH, MDPI, vol. 19(8), pages 1-16, April.
    17. Liang Shen & Fei Lin & T. C. E. Cheng, 2022. "Low-Carbon Transition Models of High Carbon Supply Chains under the Mixed Carbon Cap-and-Trade and Carbon Tax Policy in the Carbon Neutrality Era," IJERPH, MDPI, vol. 19(18), pages 1-21, September.
    18. Tang, Shaolong & Wang, Wenjie & Cho, Stella & Yan, Hong, 2018. "Reducing emissions in transportation and inventory management: (R, Q) Policy with considerations of carbon reduction," European Journal of Operational Research, Elsevier, vol. 269(1), pages 327-340.
    19. Doo-Ho Lee & Jong-Chul Yoon, 2022. "Decisions on Pricing, Sustainability Effort, and Carbon Cap under Wholesale Price and Cost-Sharing Contracts," Sustainability, MDPI, vol. 14(8), pages 1-21, April.
    20. Yanping Cheng & Yunjuan Kuang & Xiutian Shi & Ciwei Dong, 2018. "Sustainable Investment in a Supply Chain in the Big Data Era: An Information Updating Approach," Sustainability, MDPI, vol. 10(2), pages 1-18, February.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:spr:endesu:v:23:y:2021:i:12:d:10.1007_s10668-021-01411-2. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.