Stochastic Green Production Planning with Lot Sizing

Abstract

This paper studies carbon management for optimisation of lot sizing in manufacturing under the stochastic make-to-order production planning environment, with an aim to maximise operational profit. It covers not only about the business benefits, but also about the ecological impingements involved with production planning. Our main concerns are focused on two primary green factors—carbon tax and public green awareness—to address their respective impacts on production planning, because carbon tax inevitably increases cost while public green awareness affects customers’ inclination towards green products and hence market demand. The result underscores the critical roles played by carbon management in manufacturing for achieving both ecological and economic benefits. It also provides managerial insight into operations optimisation in production planning to help firms abate ecological deterioration resulting from carbon emissions when achieving their economic performance.