Balancing Sustainability and Efficiency: A Flexible Production System With Green Subsidies and Preservation Investment Under Carbon Taxation

ABSTRACT In today's world, there is a growing awareness and concern about environmental sustainability and the need for ‘green’ products. This has led to an increase in consumer demand for environmentally friendly goods, also known as green products, which are designed to have minimal environmental impact. Since producing green products is more expensive, governments in many countries have started funding programmes for companies that make them. Carbon control agencies in several countries have implemented carbon taxation programmes to reduce carbon emissions and encourage production from eco‐friendly materials. Being eco‐friendly is good for the environment, and it can also save a business money by keeping production costs low while having a flexible production rate, etc. This research examines the impacts of collaborative investment in green invention and preservation technology within a flexible production strategy focused on sustainability. It also gives real‐life practitioners some better ideas about what to do. Under the carbon taxation regulatory system, the best inventory choices are looked at, considering how the selling price and the level of environmental sustainability affect demand. The objective is to optimize revenue by determining the best approach to invest in preservation technology, the best‐selling price, the best degree of environmental sustainability and the optimum production rate. To support the concept, a numerical example is provided. To determine the impact on management, a sensitivity analysis of the optimal choices for the important inventory parameters is conducted.