Optimization of production planning for green manufacturing

This paper studies the production planning for green manufacturing to help manufacturers to determine their emission allowances and emission trading strategy. Under the government emission regulation and the emission trading scheme, the manufacturer plans his production with both an emission limitation in a finite planning horizon and an emission cap in each production period, and trades the emission permits through an outside market. The manufacturer thus prompts emission abatement through technology innovation and has strong motivations to optimize their production planning to cut down his operation cost. We focus on this problem and present a mixed integer programming model to optimize the production planning for the manufacturer with an objective of minimizing his operation cost. We further propose a pseudo-polynomial dynamic programming algorithm to solve the model. We first consider a one-period problem for a given production quantity and a given emission level. This problem can be solved by an algorithm based on dynamic programming. The multi-period problem is solved based on the result of the one-period problem. It is also solved using dynamic programming by allocating the production quantity and an emission level to each of the periods.