Green Inventory Model under Carbon Emission Sensitive Demand with Preservation Technology Investment and Advance Payment Scheme

Abstract

Growing awareness of climate change and environmental issues, purchasing behaviour of the customers. Nowadays, designing of inventory policy affected due to the presence of sustainable products, electric vehicles, etc., in the market. Further, advance payment scheme also affected the inventory policy designed by decision-maker as this is one of the financing schemes offered by non-financial institution. Focussing, all these challenging issues, this paper presents a green inventory model that includes advanced payment policy and preservation technology investment. In the model, decision-maker designed the inventory policy considering carbon emission dependent demand. Further, preservation technology investment reduces the rate of deterioration. A credit period has been offered by supplier to retailer under advance payment scheme to pay purchased cost. The objective of the present paper is to reduce the impact of carbon emissions and minimize the business investment of retailers. In the model, two different scenarios: one where advance payment scheme is considered and other where is no scheme of advance payment is offered by supplier have been discussed. Under each case, two subcases are also derived based on preservation technology investment either applied or relaxed. Numerical examples have been illustrated to test the practical applicability of the model. Model's sensitivity depending upon key parameters and managerial insight have been also presented. Numerical study reveals that cost is at minimum when no advance payment scheme is offered and there is no investment made in preservation technology. More investment in preservation technology results 25% reduction in deterioration rate.