A green inventory model with the effect of carbon taxation

Nowadays green retail practices are increasing in number. In this paper, an inventory model is formulated with retail investments in green operations including variable holding cost. In the proposed model, the demand rate depends on selling-price as well as green concern level. The main objective of the study is to find optimal replenishment time and optimal green concern level by considering profit maximization. Here, the effect of greening-level on purchasing-price and selling-price is shown. By investing in green operations, a retailer creates considerable impact on profitability. As the greening level increases, the profit of a retailer increases. Product with lower deterioration rate would increase the profit. Based on the above consideration, the mathematical model is designed by allowing carbon tax. Then, the model is explored by numerical examples. Mathematica software is used to obtain global maximum solution to the optimal cycle time and optimal greening-level. A sensitivity analysis with respect to major parameters is performed in order to access the stability of the model. The paper concludes with conclusions and an outlook of possible future directions is depicted.