Sustainable inventory models with controllable deterioration under two-level trade credit policy and various carbon emissions regulations

Due to growing concerns about environmental impacts and the necessity for the economic validity, the integration of sustainability factors into inventory models has gained a great deal of attention. The proposed study addresses an inventory model by incorporating controllable deterioration, permissible delay in payment, and various carbon emissions regulations. The primary objective of this paper is to show the way in which a business partner can benefit by reducing the deterioration rate and strengthening the business relationship while considering an environmental threat. At first, a mathematical formulation is provided for the given situation in order to identify the best investment strategies for preservation technology, selling prices, and replenishment cycle time that maximize the inventory system's overall profit. Thereafter, some helpful theoretical findings and an algorithm are formulated to describe the best solutions. Two different comparison analyses are drawn under two different examples to show the significance of the carbon regulations. The comparison analyses show that the total profit function performs better under carbon cap-and-price policy than other regulations (carbon tax, carbon cap-and-trade and without carbon emission). Finally, the proposed study's behavior is analyzed using sensitivity analysis with some key managerial insights of the best outcome.