Liyuan Liang, Tonghun Lee, Ziteng Xu
Abstract: In this paper, we want to integrate cap-and-trade mechanisms with inventory management as a double inventory management problem, which is a different perspective from the existing literature on cap-and-trade systems. To model this uncertainty, we formulate the problem as a stochastic programming model and leverage the Sample Average Approximation (SAA) method, with scenarios generated via Monte Carlo simulations. However, due to the exponential increase in model size with larger sample sizes, we propose a newsvendor quantile-based heuristic policy to approximate the solution efficiently. This heuristic not only provides computational advantages but also offers a close-to-optimal solution, marking a key contribution of our work.
Aoxi Li, Xuchen Liu, Chenran Weng
Abstract: We consider the production planning problem of a manufactory under the cap-and-trade policy and benchmark policy. The planning time horizon is 12 months(T = 12). During the time horizon, we assume the manufactory produces one type of product with zero lead-time, and the production has fixed carbon emission β per unit. Also, the demand for the product and the trading price in each time period are deterministic, given by the demand and trading price forecast of the company. Lastly, we assume the selling price and buying price is equal in each time period. Under these assumptions, our goal is to decide the production level and cap trading level in each time period to maximize total revenue over the time horizon.
Iliad Izadi, Jaewon Jeong, Catalina Pezo
Abstract: In a cap-and-trade system, policy-makers set carbon emissions limits (carbon caps) for companies and issue emissions allowances to each, with options to: purchase allowances in the carbon market if emissions exceed the cap, or sell surplus allowances for revenue if emissions are below the cap. The company wants to determine, across multiple periods, the optimal production quantity of each product, and how much (if any) excess carbon allowances to sell, in order to maximize their profit under cap-and-trade regulations.