Two-warehouse inventory and pricing model for deteriorating items under carbon tax policy

If the capacity of its owned warehouse is limited for a firm, then the usual practice is to rent a warehouse for storing items in excess of the capacity of its owned warehouse. This study investigates a two-warehouse pricing and inventory problem for a deteriorating item supply chain under the carbon tax policy. The main sources of carbon emissions include transportation, storage, and disposal of deteriorated products. Decision models for maximizing profits for retailers and suppliers are separately developed, and the existence and uniqueness of the optimal solution for this complex problem are proven through mathematical analysis. The simulation results demonstrate that compared with a purely economic model that disregards carbon emissions, the proposed model achieves high profits while reducing carbon emissions. An increase in the carbon tax can effectively curb the overall carbon emissions of the supply chain. However, such an increase will also significantly increase the operating costs of supply chain enterprises, resulting in the contraction of the terminal market and economic benefit losses. Finally, reducing carbon emissions from storage not only boosts corporate profitability but also effectively mitigates emissions, thereby contributing to sustainable development.