Distributionally Robust Newsvendor Model for Fresh Products under Cap-and-Offset Regulation

The cap-and-offset regulation is a practical scheme to lessen carbon emissions. The retailer selling fresh products can adopt sustainable technologies to lessen greenhouse gas emissions. We aim to analyze the optimal joint strategies on order quantity and sustainable technology investment when the retailer faces stochastic market demand and can only acquire the mean and variance of distribution information. We construct a distributionally robust optimization model and use the Karush-Kuhn-Tucker (KKT) conditions to solve the analytic formula of optimal solutions. By comparing the models with and without investing in sustainable technologies, we examine the effect of sustainable technologies on the operational management decisions of the retailer. Finally, some computational examples are applied to analyze the impact of critical factors on operational strategies, and some managerial insights are given based on the analysis results.