A green approach to inventory optimisation: strategic investments in preservation and carbon regulation compliance

As the urgency to combat global warming intensifies, reducing carbon emissions and mitigating waste from product deterioration have become critical priorities. This study presents an innovative and sustainable inventory model aimed at minimising waste through strategic investments in preservation and green technologies. By focusing on maximising total system profit, the model integrates a deterministic framework that accounts for price and advertisement-dependent demand, as well as time-variant holding costs, all within the constraints of a carbon cap-and-trade regulation policy. Especially, the model allows for shortages, which are fully backlogged, providing a realistic approach to inventory management. The study's primary objective is to identify the optimal value of the total profit function. We further validate the concavity of the objective function by applying both necessary and sufficient criteria, complemented by graphical representation. At last, we have completed numerical illustrations and sensitivity analysis to assess the model's effectiveness and practical applicability.