Optimal Production Planning with Emissions Trading
成果类型：
Article
署名作者：
Gong, Xiting; Zhou, Sean X.
署名单位：
Chinese University of Hong Kong; Chinese University of Hong Kong
刊物名称：
OPERATIONS RESEARCH
ISSN/ISSBN：
0030-364X
DOI：
10.1287/opre.2013.1189
发表日期：
2013
页码：
908-924
关键词：
transaction costs
Permits
strategies
management
portfolio
selection
capacity
摘要：
Emissions trading is a market-based mechanism for curbing emissions, and it has been implemented in Europe, North America, and several other parts of the world. To study its impact on production planning, we develop a dynamic production model, where a manufacturer produces a single product to satisfy random market demands. The manufacturer has access to both a green and a regular production technology, of which the former is more costly but yields fewer emissions. To comply with the emissions regulations, the manufacturer can buy or sell the allowances in each period via forward contracts in an outside market with stochastic trading prices while needing to keep a nonnegative allowance account balance at the end of the planning horizon. We first derive several important structural properties of the model, and based upon them, we characterize the optimal emissions trading and production policies that minimize the manufacturer's expected total discounted cost. In particular, the optimal emissions trading policy is a target interval policy with two thresholds that decrease with the starting inventory level. The optimal production policy is established by first determining the optimal technology choice and then showing the optimality of a base-stock type of production policy. We show that the optimal base-stock level is independent of the starting inventory level and the allowance level when the manufacturer trades the allowance or uses both technologies simultaneously. A numerical study using representative data from the cement industry is conducted to illustrate the analytical results and to examine the value of green technology for the manufacturer.