Inventory optimization of building materials under the dual constraints of carbon emissions and stochastic demand

Abstract

According to the characteristics of the demand for building materials, this paper constructs multiperiod inventory models for single materials with and without the carbon cap-and-trade (C&T) mechanism and analyses the models by means of operational research methods. Several findings are obtained through theoretical analysis and numerical experiments. The optimal order arrangement in terms of the C&T mechanism can reduce the carbon emissions from building material transportation and storage. In most cases, with an increase in carbon price, the economic order quantity and expected carbon emissions, which are not related to the carbon cap level, decrease. Strict, mild and minimal effects on emissions reduction caused, respectively, by strict, moderate and weak C&T mechanisms are observed for various combinations of carbon trading prices and carbon caps. Finally, the above results are verified by numerical simulation, providing evidence for policymakers to work out reasonable C&T mechanisms to avoid the blindness of carbon constraint policy setting.