SUSTAINABLE INVENTORY MODEL WITH TWO-LEVEL CREDIT POLICY FOR COMPLEMENTARY PRODUCTS AND CONTROLLABLE CARBON EMISSION

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Paul A., Pervin M., Roy S. K., Pivro R. V., Macula N., WEBER G., ...More

Journal of Dynamics and Games, pp.1-23, 2026 (ESCI, Scopus)

  • Publication Type: Article / Article
  • Publication Date: 2026
  • Doi Number: 10.3934/jdg.2026004
  • Journal Name: Journal of Dynamics and Games
  • Journal Indexes: Emerging Sources Citation Index (ESCI), Scopus, Compendex, MathSciNet, zbMATH
  • Page Numbers: pp.1-23
  • Keywords: carbon cap-and-trade policy, deterioration, Inventory model for complementary products, optimization, sustainability-sensitive demand, two-level trade-credit policy
  • Middle East Technical University Affiliated: No

Abstract

This study develops a sustainable inventory model for complementary products by integrating a two-level credit policy with controllable carbon emissions. The model captures key operational complexities such as sustainability-sensitive demand, product interdependence, carbon-cap-and-trade regulations, and deterioration effects. The analysis reveals that offering a coordinated two-level credit period significantly enhances retailer liquidity and stimulates higher demand for both complementary items, thereby increasing overall system profitability. The results show that (i) offering two-level credit enhances retailer profitability and encourages higher-order quantities for complementary goods, (ii) controllable carbon emission investment reduces environmental impact while maintaining cost efficiency, and (iii) joint consideration of credit terms and carbon control creates a win-win scenario for economic and environmental performance. Results further show that investing in carbon-reduction efforts not only lowers total emissions but also reduces regulatory costs under cap-and-trade schemes, leading to economically and environmentally balanced decisions. Sensitivity analysis highlights the critical roles of credit duration, emission-control cost, and deterioration rate in shaping optimal order quantity, carbon-reduction level, and total profit. The findings provide actionable insights for retailers seeking to align financial incentives with sustainable operational strategies while managing interrelated product lines.