Optimal production–inventory decision with shortage for deterioration item and effect of carbon emission policy combination with green technology

Carbon emissions are a major contributor to global warming and climate change. The government has adopted carbon tax (CT) and cap-and-trade policies to reduce carbon emissions from carbon companies. This paper develops a production–inventory model for scarce perishable goods under different carbon policies and outside green technology. This study covers the contribution of energy-efficient green technology in a multi-stage supply chain to control carbon emissions in producing and transporting goods from the manufacturer to the dealer. However, it discusses a different combination of carbon policies chosen for manufacturers and retailers in their countries. According to the findings, changes in carbon pricing, CT, and exchange rates under various policy combinations have varying effects on the entire supply chain, each member’s interests, and the social benefits of reducing carbon emissions. It seeks to provide useful information to decision-makers in businesses or supply chains, especially multinational corporations, to make decisions related to fixed rate CT and cap partial deficit cases, long cycle time, reasonable profit with small value, and long term and low cost of green technology investment. The main objective is to find the best material sourcing, production, and distribution strategy for manufacturers and the best replenishment strategy for retailers to maximize the overall joint profitability of the supply chain. In summary, sensitivity analysis has provided an optimal solution management implication based on certain key parameters and CT size.