Optimizing Sustainable Supply Chains: An Analysis of Quantity-Discount Pricing Strategies Under Carbon Cap-and-Trade Regulations

This study investigates two pricing strategies within a vendor-buyer supply chain system under cap-and-trade regulation, emphasizing demand sensitivity to market price and green technology investment. The findings reveal that quantity discounts significantly enhance profitability across the supply chain by encouraging buyers to place larger orders, thereby benefiting vendors, buyers, and end consumers. A novel profit-sharing parameter is introduced to foster sustainable and mutually beneficial relationships between supply chain participants. A search algorithm is developed to determine the optimal solutions by using the profit-sharing mechanisms. The analysis yields three key insights: first, a critical cap threshold is identified, enabling supply chain participants to make informed strategic decisions based on the value of the cap; second, another critical cap threshold is derived to assist governments in setting feasible emission limits that incentivize vendors to invest in green technology—caps below this threshold may discourage such investments; third, a reasonable return on investment (ROI) benchmark is established to guide vendors in adopting effective green technology strategies. Numerical examples and sensitivity analyses are conducted to illustrate the theoretical framework and validate the findings.

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Publication Details

Journal
Mathematics
Published
2025-05-26
DOI
https://doi.org/10.3390/math13111761
Citations
1
Primary Topic
Sustainable Supply Chain Management
Type
article
Field-Weighted Citation Impact
2.23

Funders

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article

Optimizing Sustainable Supply Chains: An Analysis of Quantity-Discount Pricing Strategies Under Carbon Cap-and-Trade Regulations

Hui‐Ming Wee, Xi-Bin Lin, Kung‐Jeng Wang, Jonas C.P. Yu
1 citations
Mathematics
Sustainable Supply Chain Management
2.23
article

Optimizing Sustainable Supply Chains: An Analysis of Quantity-Discount Pricing Strategies Under Carbon Cap-and-Trade Regulations

Hui‐Ming Wee, Xi-Bin Lin, Kung‐Jeng Wang, Jonas C.P. Yu
article en
1 citations

Abstract

This study investigates two pricing strategies within a vendor-buyer supply chain system under cap-and-trade regulation, emphasizing demand sensitivity to market price and green technology investment. The findings reveal that quantity discounts significantly enhance profitability across the supply chain by encouraging buyers to place larger orders, thereby benefiting vendors, buyers, and end consumers. A novel profit-sharing parameter is introduced to foster sustainable and mutually beneficial relationships between supply chain participants. A search algorithm is developed to determine the optimal solutions by using the profit-sharing mechanisms. The analysis yields three key insights: first, a critical cap threshold is identified, enabling supply chain participants to make informed strategic decisions based on the value of the cap; second, another critical cap threshold is derived to assist governments in setting feasible emission limits that incentivize vendors to invest in green technology—caps below this threshold may discourage such investments; third, a reasonable return on investment (ROI) benchmark is established to guide vendors in adopting effective green technology strategies. Numerical examples and sensitivity analyses are conducted to illustrate the theoretical framework and validate the findings.

MathematicsVol. 13(11)
Chung Yuan Christian University (TW), National Taiwan University of Science and Technology (TW), Takming University of Science and Technology (TW), Chihlee Institute of Technology (TW)
National Science and Technology Council
Openalex Percentile: Top 11%
Sustainable Supply Chain Management
2.23
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