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Optimal Carbon Pricing and Carbon Footprint in a Two-Stage Production System Under Cap-and-Trade Regulation

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  • Huo-Yen Tseng

    (Department of Business Administration, Chaoyang University of Technology, Taichung 413310, Taiwan)

  • Yung-Fu Huang

    (Department of Marketing and Logistics Management, Chaoyang University of Technology, Taichung 413310, Taiwan)

  • Chung-Jen Fu

    (Department of Business Administration, Chaoyang University of Technology, Taichung 413310, Taiwan
    Department of Accounting, Chaoyang University of Technology, Taichung 413310, Taiwan)

  • Ming-Wei Weng

    (Department of Marketing and Logistics Management, Chaoyang University of Technology, Taichung 413310, Taiwan)

Abstract

Integrating low-carbon design into products is crucial for reducing carbon emissions throughout their life cycle and promoting sustainable development. Addressing the uncertainty in the carbon footprint resulting from the unknown choice of product material solutions. This paper considers ABC (activity-based costing) along with the components’ carbon footprint and scrap return issues to illustrate the above challenge in a two-stage production-inventory system with imperfect processes. We determine the optimal production and sales strategies that maximize total profit per unit time. An algorithm is developed to identify these optimal solutions. To illustrate the effectiveness of the proposed model and algorithm, two numerical examples from the Taiwan die casting industry are presented. Additionally, a sensitivity analysis is conducted to provide valuable managerial insights.

Suggested Citation

  • Huo-Yen Tseng & Yung-Fu Huang & Chung-Jen Fu & Ming-Wei Weng, 2024. "Optimal Carbon Pricing and Carbon Footprint in a Two-Stage Production System Under Cap-and-Trade Regulation," Mathematics, MDPI, vol. 12(22), pages 1-21, November.
    • Handle: RePEc:gam:jmathe:v:12:y:2024:i:22:p:3567-:d:1521620
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    References listed on IDEAS

    as
    1. Rung-Hung Su & Ming-Wei Weng & Yung-Fu Huang, 2020. "Innovative maintenance problem in a two-stage production-inventory system with imperfect processes," Annals of Operations Research, Springer, vol. 287(1), pages 379-401, April.
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    3. de Beer, Patrick & Friend, Francois, 2006. "Environmental accounting: A management tool for enhancing corporate environmental and economic performance," Ecological Economics, Elsevier, vol. 58(3), pages 548-560, June.
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