Abstract <p>Management of deteriorating food products poses significant challenges due to their short shelf life, quality degradation, and awareness about environmental sustainability. Products, which deteriorate physically over time, require more attention to avoid losses in business. Deteriorating products, such as fruits, vegetables, and frozen foods, face a decline in demand if they are not fresh and spoil quickly. Consequently, the order and supply of these products are affected. This study developed an inventory model for a regularly consumed perishable item—bread—that incorporates variable holding costs, product deterioration, and expiration dates. The demand is dependent on price, level of inventory, and product freshness status. To support business growth, the supplier offers the retailer a reasonable credit period to facilitate payment. In the environment, carbon emission is also a burning issue among various other factors that affect the environment rigorously, so carbon emission has been incorporated into the present model. Numerical illustrations demonstrate how carbon emissions, product deterioration, and payment delays jointly impact profitability and sustainability. The findings offer practical guidance for inventory managers seeking to balance environmental and economic goals. The results demonstrate that balancing preservation investment, credit policies, and environmental costs can reduce waste, mitigate emissions, and enhance financial performance. These insights provide practical guidance for retailers in developing strategies that align economic objectives with environmental responsibility.</p>