Optimal procurement decision with a carbon tax for the manufacturing industry

Abstract

A carbon tax, which has been implemented in several countries, is a cost-effective scheme for reducing carbon emission and developing sustainable supply chains. Two problems, how to make the optimal decision on order quantity and how to select appropriate suppliers for a manufacturer, are studied in this paper in consideration of a carbon tax. For the first problem, a dynamic programming model is developed to study the impact of the carbon tax on calculating the optimal order quantity. In reality, the manufacturer could choose a traditional or a greener supplier. The greener supplier is relatively expensive but yields lower emissions. To obey the emission regulations, the manufacturer should..