Inventory model for livestock farm under quantity discount, power demand, prepayment and carbon rules

Government-enforced regulations and incentives are primarily intended to promote sustainability. Consumers’ growing concern about the environmental impact of the products they consume, including meat and dairy products, further drives this shift. As a result, livestock farming companies are consequently prioritizing environmental sustainability efforts. Strict environmental restrictions in Europe, Canada, and the USA make it challenging for industrial livestock farms to abide by them without jeopardizing their profitability. This work illustrates the business of a livestock farm operated under environmental regulations, including cap-and-price, cap-and-trade, cap-and-offset, and carbon tax policies. Under a quantity-based all-units and prepayment scheme, the company buys a single kind of newborn-growing items from a supplier and sells them after slaughter when they have gained the desired weight via feeding. The whole targeted live weight is not consumable after slaughtering due to instant weight loss during bleeding and the removal of various non-edible components from the growing items. Incorporating this attribute, the current work derives sustainable inventory and pricing decisions for a livestock farm for the first time. Furthermore, the consumption rate of the edible components of growing items is adopted as a power form of both selling price per weight unit and storage duration. To determine whether a single or a series of prepayment installment strategies is more cost-effective for the company, important criteria are defined. Finally, several salient recommendations for the farm are extracted to not only gain economically but also preserve the environment by lowering its carbon footprint. When the carbon tariff rate is higher than the reward rate, the cap-and-trade policy outperforms the cap-and-price, cap-and-offset, and carbon tax mechanisms in terms of profit. However, both cap-and-trade and carbon tax regulations perform equally better than the cap-and-price and cap-and-offset regulations in terms of released emissions.