The impact of carbon emission cap and carbon trade mechanism on the order decision with stochastic demand. (2015)

• Record Type: Journal Article
• Authors: Liu, Weihua; Xie, Wenchen; Qiu, Ping
• Is Part Of: International journal of shipping and transport logistics. Volume 7:Number 3(2015)
• Page Start: 347
• Page End: 376
• Publication Date: 2015
• Subjects: low-carbon supply chains -- supply chain management -- SCM -- carbon emissions cap -- carbon trade mechanism -- stochastic demand -- order decision models -- CO2 -- carbon dioxide -- carbon trading price -- carbon credits; Shipping -- Periodicals; Shipping -- Statistics; Logistics -- Periodicals; 387.5
• Languages: English
• ISSNs: 1756-6517

Abstract

This paper mainly discusses the impact of carbon emission cap-and-trade mechanism on the order decision-making with stochastic demand. First, considering the stochastic demand, carbon emission cap-and-trade, a single-cycle order model has been established. Then this model is solved and the optimal order quantity is put forward. Many interesting observations which are different from the order decision-making for stable demand are found out. The research shows that: a value range of carbon trading price exists; carbon cap-and-trade mechanism can motivate the organisations to reduce carbon emissions effectively; whether the company should buy carbon credits depends on the actual carbon emission and carbon emission cap; reducing carbon emissions does not necessarily lead to high cost. In certain situations, companies can reduce carbon emission and total cost, increase total revenue simultaneously.