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Advances in Operations Research
Volume 2017 (2017), Article ID 4834839, 12 pages
Research Article

Effect of Green Technology Investment on a Production-Inventory System with Carbon Tax

BITS Pilani, Dubai Campus, Dubai International Academic City, Dubai, UAE

Correspondence should be addressed to Tapan Kumar Datta;

Received 24 June 2017; Revised 4 November 2017; Accepted 20 November 2017; Published 13 December 2017

Academic Editor: Konstantina Skouri

Copyright © 2017 Tapan Kumar Datta. This is an open access article distributed under the Creative Commons Attribution License, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.


Carbon emissions play the central role in global warming. Manufacturing firms are significant contributors to carbon emissions. In many countries, regulatory authorities are taking actions to reduce emissions. Carbon taxation and cap-and-trade schemes are two mechanisms implemented in many countries. In the present paper, the author analyzes a production-inventory model under a carbon tax system. The production rate is assumed to be a decision variable and can be set at any level within machine limits. A proportion of items produced are defective, and this proportion depends on the production rate. Demand depends on the selling price. Unit price is a decreasing function of the production rate. Emissions can be reduced to some extent by capital investment on green technology, and this capital investment amount is a decision variable. Customers are categorized as retail customers and wholesale customers. A discount is offered to the wholesale customers on the regular selling price. The results are illustrated by a numerical example and a sensitivity analysis is performed.