Inventory and pricing decisions in a manufacturer-two retailer system with green investment, periodic review policy, and carbon tax regulation

This paper proposes a mathematical model of a supply chain system involving a single manufacturer and two rival retailers under price-sensitive demand and green technology investment. To regulate inventory levels in a stochastic scenario, both supply chain partners use a periodic review policy. This study incorporates a carbon tax regulation and green incentives to cut down emissions. Three distinct scenarios are compared and analyzed, focusing on their respective achievements in both economic performance and environmental sustainability. The goal of this study is to determine the optimal selling prices, safety factor, length of review time, and green investment to maximize the joint total profit. The algorithm for solving the given problem is presented, and a numerical example is used to verify its implementation. The findings indicate that a product’s selling price is crucial to determine because its fluctuations will affect both demand and the prices of competitors. Competition among retailers has shown to positively influence the supply chain by boosting profits. However, this competitive drive also leads to a rise in carbon emissions. The results also imply that carbon policies, when paired with green investments and incentives, have been shown to boost overall supply chain profitability while lowering emissions effectively.