Inventory Management Optimization Problem Under The Low Carbon Environment

The pressure of global warming and increasingly stringent environmentalregulations forces companies to pay more attention to the implementation of the greensupply chain. In order to reduce the negative environmental impacts, it is vital for thesupply chain members to intensify their coordination and cooperation to reduce thecarbon emissions. In order to alleviate global warming, many countries have enactedlegislation to curb the total amount of carbon emissions. Among these legislation andmechanisms, carbon cap and trade mechanism is an efficient policy to reduce carbonemission.In this thesis, a company’s optimal production quantity and its profit is studiedunder the carbon cap and trade policy, and also analyzed the effect of this policy oncompany’s strategic decision-making. Because of the limitation of the carbonfootprint, the optimal production quantity of a company is less than the amount whenthe total profit is the only target. There exists a threshold related to the carbon trading,when the threshold is more than, equal to or less than the carbon cap, the companycould buy sell the carbon credits or not to trade. Besides, this paper also examines theimpacts of carbon cap, carbon price, and carbon footprint on optimal productionquantity and the total profit. Based on the above analysis, this paper investigates aVMI model in the green supply chain with a supplier and a manufacturer. Thesystem’s optimal decision and its profit is studied under the carbon cap and tradepolicy. Furthermore we make interesting observations from the numerical examplesand provide managerial insights from the analytical results. What is more important,we find an interesting conclusion, that is, after introducing the cap and trademechanism, the total cost of the supply chain becomes even greater, VMI policy is nolonger efficient in saving both environment cost and economic cost. Enterprises needto adjust their strategies according to the realistic policy.