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A Carbon-Constrained Production Planning Model for Sustainable Manufacturing
Dwi Kurniawan
Institut Teknologi Nasional Bandung , dwi_kurniawan@itenas.ac.id
Abstract:   (90 Views)
While traditional production planning focused on optimizing supply-demand balance through make-to-stock/make-to-order strategies and capacity management, the new imperative of carbon neutrality introduces critical complexities. Regulatory emission caps now require manufacturers to strategically trade carbon allowances, fundamentally transforming the challenges of production optimization. This study developed an aggregate production planning model that incorporates carbon trading constraints into operational decision-making, providing industries with a systematic approach to address both economic and environmental objectives. The model optimized multi-period production plans across alternative technologies, each with distinct cost-emission profiles, while incorporating subcontracting options. It simultaneously considered government-allocated emission permits, dynamic carbon market prices, technology-specific costs and emissions, and subcontracting expenses. Through mathematical optimization of production quantities, subcontracting levels, and carbon credit transactions, the model minimized total costs while ensuring compliance. Computational experiments with nonlinear programming solved via LINGO  demonstrated the model's effectiveness in identifying optimal technology deployment strategies that achieve significant cost reductions while meeting environmental targets, offering manufacturers a powerful tool for sustainable operations in carbon-constrained markets.
 
Keywords: Aggregate production planning, carbon trading, emission allowance, emission price
     
Type of Study: Research | Subject: Production Planning & Control
Received: 2025/07/7 | Accepted: 2025/07/19
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Creative Commons License This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License.