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Production planning in a multi-product manufacturing system considering the carbon cap and trade mechanism and product recycling mechanism

  • 1.

    School of Management, Hefei University of Technology, Hefei 230009, China

  • 2.

    School of Economics, Hefei University of Technology, Hefei 230009, China

  • 3.

    School of Public Affairs, University of Science and Technology of China, Hefei 230026, China

Cite this:
https://doi.org/10.52396/JUST-2021-0175
  • Received Date: 31 July 2021
  • Rev Recd Date: 26 September 2021
  • Publish Date: 30 September 2021
    Abstract

  • Abstract

    With the deterioration of ecological environment and the shortage of natural resources, firms are forced to change and adjust their production planning along an environmentally friendly road to reduce the negative effects on the environment. This paper investigate the optimal production planning in a multi-product manufacturing system considering the product recycling mechanism and carbon cap and trade mechanism, in which a firm uses limited machine capacity, working time and carbon quotas to manufacture multiple products for fulfilling stochastic market demands. Based on the cost-volume-profit analysis, a profit maximization model is proposed to characterize the optimization problem. In this model, the cost structure consists of production cost, holding or shortage cost, recycling cost and carbon cost. The revenue structure consists of sales revenue and recycling benefits.According to the profit maximization model and the numerical example, the optimal production and recycling decisions are analyzed. Meanwhile, the effects of cap and trade mechanism and product recycling mechanism on production quantity, total carbon emissions and total profits are also investigated. The results indicate that under the carbon cap and trade mechanism and the product recycling mechanism, a higher carbon permit price can motivate manufacturers to produce green product, and that product recycling mechanism is beneficial to lower carbon emissions and increase the firm profit. Managerial insights and suggestions for future research are given.

    Abstract

    With the deterioration of ecological environment and the shortage of natural resources, firms are forced to change and adjust their production planning along an environmentally friendly road to reduce the negative effects on the environment. This paper investigate the optimal production planning in a multi-product manufacturing system considering the product recycling mechanism and carbon cap and trade mechanism, in which a firm uses limited machine capacity, working time and carbon quotas to manufacture multiple products for fulfilling stochastic market demands. Based on the cost-volume-profit analysis, a profit maximization model is proposed to characterize the optimization problem. In this model, the cost structure consists of production cost, holding or shortage cost, recycling cost and carbon cost. The revenue structure consists of sales revenue and recycling benefits.According to the profit maximization model and the numerical example, the optimal production and recycling decisions are analyzed. Meanwhile, the effects of cap and trade mechanism and product recycling mechanism on production quantity, total carbon emissions and total profits are also investigated. The results indicate that under the carbon cap and trade mechanism and the product recycling mechanism, a higher carbon permit price can motivate manufacturers to produce green product, and that product recycling mechanism is beneficial to lower carbon emissions and increase the firm profit. Managerial insights and suggestions for future research are given.
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    • References(45)
  • [1]
    Chen M, Abrishami P. A mathematical model for production planning in hybrid manufacturing-remanufacturing systems. The International Journal of Advanced Manufacturing Technology, 2014, 71: 1187-1196.
    [2]
    Andriolo A, Battini D, Persona A, et al. A new bi-objective approach for including ergonomic principles into EOQ model. International Journal of Production Research, 2016, 54(9): 2610-2627.
    [3]
    Shi L, Wu K J, Tseng M L. Improving corporate sustainable development by using an interdependent closed-loop hierarchical structure. Resources, Conservation and Recycling, 2017, 119: 24-35.
    [4]
    He H, Li S, Wang S, et al. Electrification decisions of traditional automakers under the dual-credit policy regime. Transportation Research Part D: Transport and Environment, 2021, 98: 102956.
    [5]
    Haller S A, Hyland M. Capital-energy substitution: Evidence from a panel of Irish manufacturing firms. Energy Economics, 2014, 45: 501-510.
    [6]
    Chang X, Xia H, Zhu H, et al. Production decisions in a hybrid manufacturing-remanufacturing system with carbon cap and trade mechanism. International Journal of Production Economics, 2015, 162: 160-173.
    [7]
    Li Y P, Nie S, Huang C Z,et al. An integrated risk analysis method for planning water resource systems to support sustainable development of an arid region. Journal of Environmental Informatics, 2017, 29(1): 1-15.
    [8]
    Wang S, Wang J, Li J, et al. Do motivations contribute to local residents’ engagement in pro-environmental behaviors? Resident-destination relationship and pro-environmental climate perspective. Journal of Sustainable Tourism, 2020, 28(6): 834-852.
    [9]
    Zhang B, Xu L. Multi-item production planning with carbon cap and trade mechanism. International Journal of Production Economics, 2013, 144(1): 118-127.
    [10]
    Liu B, Holmbom M, Segerstedt A, et al. Effects of carbon emission regulations on remanufacturing decisions with limited information of demand distribution. International Journal of Production Research, 2015, 53(2): 532-548.
    [11]
    Li Z, Pan Y, Yang W, et al. Effects of government subsidies on green technology investment and green marketing coordination of supply chain under cap-and-trade mechanism. Energy Economics ,2021, 101: 105426.
    [12]
    He P, Zhang W, Xu X, et al. Production lot-sizing and carbon emissions under cap-and-trade and carbon tax regulations. Journal of Cleaner Production, 2015, 103: 241-248.
    [13]
    Chen W, Chen J, Ma Y. Renewable energy investment and carbon emissions under cap-and-trade mechanisms. Journal of Cleaner Production, 2021, 278: 123341.
    [14]
    Toptal A, zlü H, Konur D. Joint decisions on inventory replenishment and emission reduction investment under different emission regulations. International Journal of Production Research, 2014, 52(1): 243-269.
    [15]
    Yang L, Hu Y, Huang L. Collecting mode selection in a remanufacturing supply chain under cap-and-trade regulation. European Journal of Operational Research, 2020, 287(2): 480-496.
    [16]
    Mitra S, Datta P P. Adoption of green supply chain management practices and their impact on performance: An exploratory study of Indian manufacturing firms. International Journal of Production Research, 2014, 52(7): 2085-2107.
    [17]
    Zhang J, Liu X, Tu Y L. A capacitated production planning problem for closed-loop supply chain with remanufacturing. The International Journal of Advanced Manufacturing Technology, 2011, 54(5): 757-766.
    [18]
    Madaan J, Chan F T, Niu B. Strategies for evaluating performance of flexibility in product recovery system. International Journal of Production Research, 2016, 54(10): 2895-2906.
    [19]
    Ming N I, Liang D, Guo J. A study of the recycling mechanism of waste electronic products based on the government rewarding towards different participants. Industrial Engineering Journal, 2016, 9(8): 71-75.
    [20]
    Sutherland J W, Adler D P, Haapala K R, et al. A comparison of manufacturing and remanufacturing energy intensities with application to diesel engine production. CIRP Annals: Manufacturing Technology, 2008, 57(1): 5-8.
    [21]
    Abbasi M, Houshmand M. Production planning and performance optimization of reconfigurable manufacturing systems using genetic algorithm. The International Journal of Advanced Manufacturing Technology, 2011, 54(1): 373-392.
    [22]
    Luo T, Hang J G, Nakayama S F, et al. Dioxins in breast milk of Chinese mothers: A survey 40 years after the e-waste recycling activities. Science of the Total Environment, 2021, 758: 143627.
    [23]
    Nidumolu R, Prahalad C K, Rangaswami M R. Why sustainability is now the key driver of innovation. Harvard Business Review, 2009, 87(9): 56-64.
    [24]
    Battaïa O, Dolgui A, Guschinsky N. Decision support for design of reconfigurable rotary machining systems for family part production. International Journal of Production Research, 2017, 55(5): 1368-1385.
    [25]
    Letmathe P, Balakrishnan N. Environmental considerations on the optimal product mix. European Journal of Operational Research, 2005, 167(2): 398-412.
    [26]
    Tsai W H, Lin W R, Fan Y W, et al. Applying a mathematical programming approach for a green product mix decision. International Journal of Production Research, 2012, 50(4): 1171-1184.
    [27]
    Debo L G, Toktay L B, Van Wassenhove L N. Market segmentation and product technology selection for remanufacturable products. Management Science, 2005, 51(8): 1193-1205.
    [28]
    Kaya O. Incentive and production decisions for remanufacturing operations. European Journal of Operational Research, 2010, 201(2): 442-453.
    [29]
    Zanoni S, Segerstedt A, Tang O, et al. Multi-product economic lot scheduling problem with manufacturing and remanufacturing using a basic period policy. Computers and Industrial Engineering, 2012, 62(4): 1025-1033.
    [30]
    Mahmoudzadeh M, Sadjadi S J, Mansour S. Robust optimal dynamic production/pricing policies in a closed-loop system. Applied Mathematical Modelling, 2013, 37(16): 8141-8161.
    [31]
    Xiong Y, Li G, Zhou Y, et al. Dynamic pricing models for used products in remanufacturing with lost-sales and uncertain quality. International Journal of Production Economics, 2014, 147: 678-688.
    [32]
    Smale R, Hartley M, Hepburn C, et al. The impact of CO2 emissions trading on firm profits and market prices. Climate policy, 2006, 6(1): 31-48.
    [33]
    González L. Multiproduct CVP analysis based on contribution rules. International Journal of Production Economics, 2001, 73(3): 273-284.
    [34]
    Tsai W H, Chen H C, Liu J Y, et al. Using activity-based costing to evaluate capital investments for green manufacturing systems. International Journal of Production Research, 2011, 49(24): 7275-7292.
    [35]
    Inderfurth K, Vogelgesang S. Concepts for safety stock determination under stochastic demand and different types of random production yield. European Journal of Operational Research, 2013, 224(2): 293-301.
    [36]
    Taticchi P, Garengo P, Nudurupati S S, et al. A review of decision-support tools and performance measurement and sustainable supply chain management. International Journal of Production Research, 2015, 53(21): 6473-6494.
    [37]
    Matsui K. When should a manufacturer set its direct price and wholesale price in dual-channel supply chains? European Journal of Operational Research, 2017, 258(2): 501-511.
    [38]
    Mollenkopf D A, Frankel R, Russo I. Creating value through returns management: Exploring the marketing-operations interface. Journal of Operations Management, 2011, 29(5): 391-403.
    [39]
    Serranti S, Luciani V, Bonifazi G, et al. An innovative recycling process to obtain pure polyethylene and polypropylene from household waste. Waste Management, 2015, 35: 12-20.
    [40]
    Fan S K S, Fan C, Yang J H, et al. Disassembly and recycling cost analysis of waste notebook and the efficiency improvement by re-design process. Journal of Cleaner Production, 2013, 39: 209-219.
    [41]
    Ozturk I, Acaravci A. The long-run and causal analysis of energy, growth, openness and financial development on carbon emissions in Turkey. Energy Economics, 2013, 36: 262-267.
    [42]
    Axtman S J, Wilck J. A review of aviation manufacturing and supply chain processes. International Journal of Supply Chain Management, 2015, 4(4): 22-27.
    [43]
    Diaby M, Cruz J M, Nsakanda A L. Shortening cycle times in multi-product, capacitated production environments through quality level improvements and setup reduction. European Journal of Operational Research, 2013, 228(3): 526-535.
    [44]
    Li P, Chen B, Li Z L, et al. ASOC: A novel agent-based simulation-optimization coupling approach-algorithm and application in offshore oil spill responses. Journal of Environmental Informatics, 2016, 28(2): 90-100.
    [45]
    Chen B, Li P, Wu H J, et al. MCFP: A Monte Carlo simulation-based fuzzy programming approach for optimization under dual uncertainties of possibility and continuous probability. Journal of Environmental Informatics, 2017, 29(2): 90-100.
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    [1]
    Chen M, Abrishami P. A mathematical model for production planning in hybrid manufacturing-remanufacturing systems. The International Journal of Advanced Manufacturing Technology, 2014, 71: 1187-1196.
    [2]
    Andriolo A, Battini D, Persona A, et al. A new bi-objective approach for including ergonomic principles into EOQ model. International Journal of Production Research, 2016, 54(9): 2610-2627.
    [3]
    Shi L, Wu K J, Tseng M L. Improving corporate sustainable development by using an interdependent closed-loop hierarchical structure. Resources, Conservation and Recycling, 2017, 119: 24-35.
    [4]
    He H, Li S, Wang S, et al. Electrification decisions of traditional automakers under the dual-credit policy regime. Transportation Research Part D: Transport and Environment, 2021, 98: 102956.
    [5]
    Haller S A, Hyland M. Capital-energy substitution: Evidence from a panel of Irish manufacturing firms. Energy Economics, 2014, 45: 501-510.
    [6]
    Chang X, Xia H, Zhu H, et al. Production decisions in a hybrid manufacturing-remanufacturing system with carbon cap and trade mechanism. International Journal of Production Economics, 2015, 162: 160-173.
    [7]
    Li Y P, Nie S, Huang C Z,et al. An integrated risk analysis method for planning water resource systems to support sustainable development of an arid region. Journal of Environmental Informatics, 2017, 29(1): 1-15.
    [8]
    Wang S, Wang J, Li J, et al. Do motivations contribute to local residents’ engagement in pro-environmental behaviors? Resident-destination relationship and pro-environmental climate perspective. Journal of Sustainable Tourism, 2020, 28(6): 834-852.
    [9]
    Zhang B, Xu L. Multi-item production planning with carbon cap and trade mechanism. International Journal of Production Economics, 2013, 144(1): 118-127.
    [10]
    Liu B, Holmbom M, Segerstedt A, et al. Effects of carbon emission regulations on remanufacturing decisions with limited information of demand distribution. International Journal of Production Research, 2015, 53(2): 532-548.
    [11]
    Li Z, Pan Y, Yang W, et al. Effects of government subsidies on green technology investment and green marketing coordination of supply chain under cap-and-trade mechanism. Energy Economics ,2021, 101: 105426.
    [12]
    He P, Zhang W, Xu X, et al. Production lot-sizing and carbon emissions under cap-and-trade and carbon tax regulations. Journal of Cleaner Production, 2015, 103: 241-248.
    [13]
    Chen W, Chen J, Ma Y. Renewable energy investment and carbon emissions under cap-and-trade mechanisms. Journal of Cleaner Production, 2021, 278: 123341.
    [14]
    Toptal A, zlü H, Konur D. Joint decisions on inventory replenishment and emission reduction investment under different emission regulations. International Journal of Production Research, 2014, 52(1): 243-269.
    [15]
    Yang L, Hu Y, Huang L. Collecting mode selection in a remanufacturing supply chain under cap-and-trade regulation. European Journal of Operational Research, 2020, 287(2): 480-496.
    [16]
    Mitra S, Datta P P. Adoption of green supply chain management practices and their impact on performance: An exploratory study of Indian manufacturing firms. International Journal of Production Research, 2014, 52(7): 2085-2107.
    [17]
    Zhang J, Liu X, Tu Y L. A capacitated production planning problem for closed-loop supply chain with remanufacturing. The International Journal of Advanced Manufacturing Technology, 2011, 54(5): 757-766.
    [18]
    Madaan J, Chan F T, Niu B. Strategies for evaluating performance of flexibility in product recovery system. International Journal of Production Research, 2016, 54(10): 2895-2906.
    [19]
    Ming N I, Liang D, Guo J. A study of the recycling mechanism of waste electronic products based on the government rewarding towards different participants. Industrial Engineering Journal, 2016, 9(8): 71-75.
    [20]
    Sutherland J W, Adler D P, Haapala K R, et al. A comparison of manufacturing and remanufacturing energy intensities with application to diesel engine production. CIRP Annals: Manufacturing Technology, 2008, 57(1): 5-8.
    [21]
    Abbasi M, Houshmand M. Production planning and performance optimization of reconfigurable manufacturing systems using genetic algorithm. The International Journal of Advanced Manufacturing Technology, 2011, 54(1): 373-392.
    [22]
    Luo T, Hang J G, Nakayama S F, et al. Dioxins in breast milk of Chinese mothers: A survey 40 years after the e-waste recycling activities. Science of the Total Environment, 2021, 758: 143627.
    [23]
    Nidumolu R, Prahalad C K, Rangaswami M R. Why sustainability is now the key driver of innovation. Harvard Business Review, 2009, 87(9): 56-64.
    [24]
    Battaïa O, Dolgui A, Guschinsky N. Decision support for design of reconfigurable rotary machining systems for family part production. International Journal of Production Research, 2017, 55(5): 1368-1385.
    [25]
    Letmathe P, Balakrishnan N. Environmental considerations on the optimal product mix. European Journal of Operational Research, 2005, 167(2): 398-412.
    [26]
    Tsai W H, Lin W R, Fan Y W, et al. Applying a mathematical programming approach for a green product mix decision. International Journal of Production Research, 2012, 50(4): 1171-1184.
    [27]
    Debo L G, Toktay L B, Van Wassenhove L N. Market segmentation and product technology selection for remanufacturable products. Management Science, 2005, 51(8): 1193-1205.
    [28]
    Kaya O. Incentive and production decisions for remanufacturing operations. European Journal of Operational Research, 2010, 201(2): 442-453.
    [29]
    Zanoni S, Segerstedt A, Tang O, et al. Multi-product economic lot scheduling problem with manufacturing and remanufacturing using a basic period policy. Computers and Industrial Engineering, 2012, 62(4): 1025-1033.
    [30]
    Mahmoudzadeh M, Sadjadi S J, Mansour S. Robust optimal dynamic production/pricing policies in a closed-loop system. Applied Mathematical Modelling, 2013, 37(16): 8141-8161.
    [31]
    Xiong Y, Li G, Zhou Y, et al. Dynamic pricing models for used products in remanufacturing with lost-sales and uncertain quality. International Journal of Production Economics, 2014, 147: 678-688.
    [32]
    Smale R, Hartley M, Hepburn C, et al. The impact of CO2 emissions trading on firm profits and market prices. Climate policy, 2006, 6(1): 31-48.
    [33]
    González L. Multiproduct CVP analysis based on contribution rules. International Journal of Production Economics, 2001, 73(3): 273-284.
    [34]
    Tsai W H, Chen H C, Liu J Y, et al. Using activity-based costing to evaluate capital investments for green manufacturing systems. International Journal of Production Research, 2011, 49(24): 7275-7292.
    [35]
    Inderfurth K, Vogelgesang S. Concepts for safety stock determination under stochastic demand and different types of random production yield. European Journal of Operational Research, 2013, 224(2): 293-301.
    [36]
    Taticchi P, Garengo P, Nudurupati S S, et al. A review of decision-support tools and performance measurement and sustainable supply chain management. International Journal of Production Research, 2015, 53(21): 6473-6494.
    [37]
    Matsui K. When should a manufacturer set its direct price and wholesale price in dual-channel supply chains? European Journal of Operational Research, 2017, 258(2): 501-511.
    [38]
    Mollenkopf D A, Frankel R, Russo I. Creating value through returns management: Exploring the marketing-operations interface. Journal of Operations Management, 2011, 29(5): 391-403.
    [39]
    Serranti S, Luciani V, Bonifazi G, et al. An innovative recycling process to obtain pure polyethylene and polypropylene from household waste. Waste Management, 2015, 35: 12-20.
    [40]
    Fan S K S, Fan C, Yang J H, et al. Disassembly and recycling cost analysis of waste notebook and the efficiency improvement by re-design process. Journal of Cleaner Production, 2013, 39: 209-219.
    [41]
    Ozturk I, Acaravci A. The long-run and causal analysis of energy, growth, openness and financial development on carbon emissions in Turkey. Energy Economics, 2013, 36: 262-267.
    [42]
    Axtman S J, Wilck J. A review of aviation manufacturing and supply chain processes. International Journal of Supply Chain Management, 2015, 4(4): 22-27.
    [43]
    Diaby M, Cruz J M, Nsakanda A L. Shortening cycle times in multi-product, capacitated production environments through quality level improvements and setup reduction. European Journal of Operational Research, 2013, 228(3): 526-535.
    [44]
    Li P, Chen B, Li Z L, et al. ASOC: A novel agent-based simulation-optimization coupling approach-algorithm and application in offshore oil spill responses. Journal of Environmental Informatics, 2016, 28(2): 90-100.
    [45]
    Chen B, Li P, Wu H J, et al. MCFP: A Monte Carlo simulation-based fuzzy programming approach for optimization under dual uncertainties of possibility and continuous probability. Journal of Environmental Informatics, 2017, 29(2): 90-100.
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