A holistic optimization framework for production, pricing, and preservation of deteriorating products under carbon emission policies

In dynamic markets driven by technological advancements and intense competition, aligning production rates with fluctuating demand is essential for minimizing operational costs. This study develops an optimization framework for managing deteriorating products, where production rates are adjusted in response to changes in demand to reduce losses and ensure efficiency. Recognizing the natural deterioration of products, investing in preservation technology is explored as a viable solution to mitigate spoilage and extend product shelf life, balancing preservation costs against potential losses from decay. Additionally, with increasingly stringent government regulations on carbon emissions, manufacturers face the dual challenge of optimizing production schedules while minimizing environmental impact. To address this, the study incorporates emissions costs and examines the implications of carbon policies. Marketing activities also influence product demand, which varies significantly across product categories. To capture this effect, two demand functions are analyzed: one that depends solely on price and another influenced by price and advertising. By integrating these factors, the study aims to maximize total earnings through optimal adjustments in selling price, preservation investment, and production rate. A numerical example illustrates the model's practicality, and sensitivity analysis provides insights into how changes in core parameters affect the optimal solution.