Eco-conscious inventory model with deterioration and imperfect production for price and greenness sensitive demand

Abstract This paper proposes a sustainable two-phase production-inventory model that integrates manufacturing and remanufacturing activities under environmental and economic constraints. In the first phase, only fresh production is carried out, while the second phase incorporates remanufacturing defective items and reusing returned market products. Demand is modeled as a function of both the selling price and the product’s greenness level. The system considers non-instantaneous deterioration and accounts for carbon emissions arising from setup, production, storage, and deterioration processes. Environmental regulations, such as carbon taxes, and investments in preservation and green technologies, are incorporated to mitigate emissions. Some fractions of defective products are discarded. The model uniquely integrates economic and environmental engineering constraints into a unified optimization framework. The optimization is taken under the environmental constraints. The profit function is shown to be concave, ensuring optimality. A numerical example and sensitivity analysis are provided to validate the model. Findings reveal that remanufacturing becomes more favorable over time, particularly when environmental impact and cost considerations are jointly optimized.