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Investing in carbon emissions reduction in the EOQ model

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  • Jun-Yeon Lee

Abstract

Investment in carbon emissions reduction is an important decision for many firms due to climate change and growing pressures from various stakeholders. In this paper, we examine the problem of jointly determining optimal order quantity and investment in carbon emissions reduction in the EOQ model with a cap-and-price regulation policy, in which the firm is penalised (rewarded) if its carbon footprint is larger (smaller) than a threshold. Cap-and-trade, carbon tax, cap-and-offset, and carbon cap can be viewed as special cases of the cap-and-price policy. The investment reduces the carbons emitted per replenishment and per unit produced. We characterise the optimal solutions and compare different regulations in terms of the firm’s annual total cost and carbon footprint.

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  • Jun-Yeon Lee, 2020. "Investing in carbon emissions reduction in the EOQ model," Journal of the Operational Research Society, Taylor & Francis Journals, vol. 71(8), pages 1289-1300, August.
    • Handle: RePEc:taf:tjorxx:v:71:y:2020:i:8:p:1289-1300
    DOI: 10.1080/01605682.2019.1609889
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    Cited by:

    1. Tapan Kumar Datta & Sayantan Datta & Adrijit Goswami, 2024. "A sustainable bi-objective inventory model with source-based emissions and plan-based green investments under inflation and the present value of money," Operations Research and Decisions, Wroclaw University of Science and Technology, Faculty of Management, vol. 34(1), pages 91-117.
    2. Ata Allah Taleizadeh & Leila Aliabadi & Park Thaichon, 2022. "A sustainable inventory system with price-sensitive demand and carbon emissions under partial trade credit and partial backordering," Operational Research, Springer, vol. 22(4), pages 4471-4516, September.
    3. Khan, Md. Al-Amin & Cárdenas-Barrón, Leopoldo Eduardo & Treviño-Garza, Gerardo & Céspedes-Mota, Armando, 2024. "Strategizing emissions reduction investment for a livestock production farm amid power demand pattern: A path to sustainable growth under the carbon cap environmental regulation," Operations Research Perspectives, Elsevier, vol. 13(C).
    4. Khan, Md. Al-Amin & Cárdenas-Barrón, Leopoldo Eduardo & Treviño-Garza, Gerardo & Céspedes-Mota, Armando & Loera-Hernández, Imelda de Jesús & Smith, Neale R., 2024. "Effects of variable prepayment installments on pricing and inventory decisions with power demand pattern and non-linear holding cost under carbon cap-and-price regulation," Operations Research Perspectives, Elsevier, vol. 12(C).
    5. Dye, Chung-Yuan & Hsieh, Tsu-Pang, 2024. "A sustainable dynamic optimization model of pricing and advertising in the presence of green innovation investment," European Journal of Operational Research, Elsevier, vol. 315(2), pages 654-667.
    6. Zhang, Yu & Yi, Yuyin, 2024. "Sustainable production strategies of loss-averse competitive manufacturers with reference dependence under cap-and-trade policy," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 192(C).
    7. Vishnupriya Kalathil Sahadevan & Umakanta Mishra, 2024. "A green manufacturer–retailer circular economic production model with carbon emissions and waste control," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 26(5), pages 12367-12406, May.
    8. Chenglin Hu & Junsong Bian & Kin-Keung Lai, 2023. "Joint Optimal Production Planning in Supply Chains under Diverse Low-Carbon Policies," Mathematics, MDPI, vol. 11(15), pages 1-22, August.
    9. Fu, Ke & Li, Yanzhi & Mao, Huiqiang & Miao, Zhaowei, 2023. "Firms’ production and green technology strategies: The role of emission asymmetry and carbon taxes," European Journal of Operational Research, Elsevier, vol. 305(3), pages 1100-1112.
    10. Neha Rani & Sumit Maheshwari & Manoj Kumar Sharma, 2025. "A sustainable inventory model: integrating eco-packaging, advertising, and pricing strategies under carbon tax policies," International Journal of System Assurance Engineering and Management, Springer;The Society for Reliability, Engineering Quality and Operations Management (SREQOM),India, and Division of Operation and Maintenance, Lulea University of Technology, Sweden, vol. 16(3), pages 1339-1356, March.

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