Sustainable Inventory Model for Perishable Products with Expiration Date and Price Reliant Demand Under Carbon Tax Policy

In today’s era of sustainable development, green inventory systems with a motto to reduce carbon emissions are crucial for economic growth and development. Green inventory systems managing perishable products need special attention since spoilage and deterioration result in a significant loss of items which hampers consumers’ satisfaction. The perishable products (e.g., vegetables, fruits, milk, juices, frozen foods, baked foods) have an adverse impact on demand as the products decay continuously which also has a strong influence on the customers’ purchase decision. Thus, a price-sensitive demand is a more realistic assumption. In addition, perishable products have a time-varying deterioration rate, which also depends on the expiration date of the products. Further, the main sources of carbon emissions in operating the inventory system are transhipments, inventory holding, and deterioration of the perishable products. Being environmentally conscious, carbon tax policy proves to be a more flexible and effective tool to mitigate carbon emissions. The research so far has addressed different types of sustainable inventory models, but still, there is a scope to explore the green inventory models further for practical use. Hence, the present paper addresses an inventory model for perishable products with the expiration date, under carbon tax policy in order to achieve sustainability goals. The mathematical model is developed with an objective to determine the optimal cycle length and selling price so as to maximize the total profit. Numerical example and sensitivity analysis have been presented to elucidate the model characteristics.