Sustainable Production Inventory Model with Green Technology Investment under Carbon Tax and Carbon Cap and Trade policy

The purpose of this study is to find the optimal decision for manufacturers with low carbon inventory management and also to optimize the total cost for the manufacturer. Carbon emission has become a crucial problem. To reduce carbon emissions, we applied green technology investment and different carbon regulation policies. In this paper, an EPQ model with a demand-dependent production rate that functions of investment in green technology and promotion is developed with different carbon regulations policies. In this study, we optimize the total cost. The numerical example is carried out to find the numerical value of the total cost and sensitivity analysis is carried out to find the significant effects of different carbon regulations on the total cost. From the sensitivity analysis, it is revealed that the carbon tax system has greater benefits than cap-and-trade and limits carbon regulations to minimize the manufacturer’s total cost. This model is developed for the economic production quantity model with different carbon emission regulation policies.