The carbon-constrained EOQ

In this paper, we provide analytical support for the notion that it may be possible, via operational adjustments alone, to significantly reduce emissions without significantly increasing cost. Using the EOQ model, we provide a condition under which it is possible to reduce emissions by modifying order quantities. We also provide conditions under which the relative reduction in emissions is greater than the relative increase in cost and discuss factors that affect the difference in the magnitude of emission reduction and cost increase. We discuss the applicability of the results to systems under a variety of environmental regulations, including strict carbon caps, carbon tax, cap-and-offset, and cap-and-price. © 2012 Elsevier B.V. All rights reserved.