On the newsvendor problem with multiple inputs under a carbon emission constraint
Author(s)
Advisor
Date
2012Publisher
Bilkent University
Language
English
Type
ThesisItem Usage Stats
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Abstract
In this thesis, we consider two problems in the newsvendor setting with multiple
inputs, under a carbon emission constraint and non-linear production functions.
In the first problem, we assume a strict carbon cap and find the optimal production
quantity and input allocation that will maximize the expected profit under
this constraint. In the second problem, we consider an emission trading scheme
where an advance purchase of carbon emission permits is made at an initial price
before the random demand is realized. When the demand is realized and new
carbon trade prices are revealed, it is possible to buy additional permits or to
sell an excess amount. The aim is to decide on the optimal allocation of the
inputs as well as the carbon trading policy so as to maximize the expected profit.
In both problems, the production quantity is linked to multiple inputs via the
Cobb-Douglas and Leontief production functions. Optimal policy structures are
derived and numerical examples are provided.
Keywords
ProductionNewsvendor Problem
Inventory Management
Production Function
Multiple Inputs
Carbon Emission
Carbon Cap
Emission Permit Trading
Cobb-Douglas
Leontief