Economic production quantity model with shortages under price- and green-sensitive demand in uncertain environment

This study advances the classical economic production quantity model by incorporating multiple real-world complexities within the context of deteriorating items under uncertain environment. A novel framework is developed that integrates preservation technology to reduce deterioration rates, along with the optimal investment decisions required for its implementation. To better reflect in contemporary market dynamics, the model includes a demand rate influenced by both price and greening level. Further the model accommodates shortages, allowing partial back ordering by reserving shortfall quantities for customers in subsequent production time enhancing customer retention and operational flexibility. In alignment with global sustainability goals, the formulated model introduces carbon emission taxation, incorporating four distinct environmental policies: simple tax, cap, cap and reward, and strict under permitted cap policy. In addition to that, a unique concept, development cost is used in the proposed model. To account for economic variability, money inflation is considered, and fuzzy-random cost parameters are employed to model for tackling imprecise and uncertain market information. The model’s effectiveness is demonstrated through three hypothetical case studies, which illustrate the model’s capacity to handle uncertainty and sustainability simultaneously. Finally, the results illustrate that a sustainable version incorporating controllable carbon emission, preservation technology and green investments are more realistic and profitable as compared to other existing models.