Decision model for the subsides to low-carbon production by the government under the emission trading scheme

Abstract

In the view of supply chain aspect, reducing carbon footprint becomes to the recent business trends. We build a model which includes a re-manufactory which can reduce the carbon emissions by using the recycled products participating in the production process. To support the environmental mode of production, national governments offer subsidies for the re-manufactory to support its production, but not to reduce the total profit of the whole supply chain. We build a bi-objective optimization model to analyze the optimal strategy to reduce the emissions without serious pernicious influence to the industry profit. The outcome proposes significant instructions for the decision making of government and manufactory, when they are under supply chain management. © Springer-Verlag Berlin Heidelberg 2013.