Carbon Emission Modeling in a Two Stage Supply Chain

Abstract

Carbon emission control has been a global challenge. Carbon tax and carbon cap-and-trade are two globally practiced regulatory schemes to control carbon emission. This paper investigates the joint optimal decisions on lot size in a coordinated supply chain between a retailer and a manufacturer under carbon tax mechanism and under carbon cap-and-trade mechanism. The comprehensive cost based models are proposed to capture the influence of two carbon regulatory schemes on business decisions in such coordinated two stage supply chain. The research results provide managerial implications in operations management and in carbon regulations.