Managing energy resources, carbon emissions and green technology adoption in circular economy transition: A mathematical approach

This study addresses the critical need to transition supply chains (SCs) to a circular economy model to reduce energy consumption and carbon emissions, underscoring that circular change requires the active involvement of all SC partners, not just manufacturers. Using a mathematical modeling approach, this study assesses how carbon caps, carbon trading, carbon taxes, and a two-level trade credit policy impact SC profitability, energy reduction, and green technology adoption within a circular economy framework. The models consider scenarios in which supplier demand is credit dependent and retailer demand is uncertain for deteriorating products, focusing on the challenges posed by credit dependency and demand volatility. Numerical results validate its effectiveness in achieving a circular SC for deteriorating products. Key findings show that in a carbon taxation, carbon emission (CE) model, suppliers and retailers attain the lowest costs, smaller order quantities, stable cash flow, and greater green technology investments when credit periods are shorter than replenishment times, effectively reducing energy consumption. In a carbon cap-and-trade CE scenario, both costs and green technology investments are lower when the credit period and carbon credits offered are shorter than the replenishment time, thus favoring both cash flow and sustainability. Under strict CE regulations, if credit periods exceed replenishment times, SC partners can achieve optimal costs, moderate order quantities, favorable payment terms, and high green technology investments, which significantly reduce overall energy use and emissions. A sensitivity analysis established the validity and effectiveness of the model in promoting energy savings, reducing carbon emissions, and minimizing SC costs. The analysis also determined the optimal energy consumption rate across various operations and the energy usage of vehicles to maximize profitability. This study offers a comprehensive perspective on balancing economic sustainability and environmental goals in SCs for deteriorating products under uncertain demand.