INVENTORY MODEL

INTERNAL ASSESSMENT

M.Sc. in Mathematics Semester-IV Examination, 2025

Paper: MATH304 (Seminar Presentation & Viva-Voce)
NAME : POULAMI SARKAR
Roll: 002416 No.: 0020
Reg. No.: 00231622003
Session: 2023-2024

1 Introduction
Driven by urbanization and industrialization, the amount of wastewater increases rapidly.
Wastewater emissions result from untreated wastewater discharged into rivers and lakes;
this eventually leads to eutrophication and risks human health. Some efforts to address
these problems have been made by various researchers, utilizing different processes to
reduce water emissions from industrial plants. These methods include both linear and
nonlinear models, pinch analysis, genetic algorithms, management strategies, benchmark-
ing, and wastewater treatment.

Harmful GHG emissions from manufacturing industries include carbon dioxide (CO2 ),
sulfur oxide (SOx ), nitrogen oxide (N Ox ), and methane (CH4 ). These gases are emit-
ted through the combustion, production, and transportation of fossil fuels, as well as
many other procedures. A study by Ritchie et al. revealed that the annual GHG emis-
sions would reach 11 million tons and continually increase. However, CH4 emissions
associated with landfills, coal mining, and natural gas and petroleum distribution have
decreased. Other research has been conducted to address GHG emission problems, fo-
cusing on inventory management, fuel-saving strategies, and transshipment routes.

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 The pollution emission problems may also contribute to the substantial costs of imple-
menting sustainable processes and a cleaner production system. Other researchers linked
the problem to the green attitude-behavior gap of consumers, which compares customers’
favorable attitudes and purchasing activities with green products. However, implement-
ing sustainability is a dilemma for industries as most consumers are more concerned with
product price than green products.

2 EPQ in Shortage and Multiproduct Situations

In practice, a shortage happens when demand for a product exceeds available supply;
costs from this type of situation will inevitably emerge as a shortage cost. The economic
production quantity (EPQ) model is frequently used to determine the optimal production
quantity that balances the costs of setting up a production run and the costs of holding
inventory. The work of Cárdenas-Barrón extended the traditional EPQ model to short-
age situations and utilized an algebraic approach to modify the EPQ model. It covered
the multiproduct EPQ model in a vendor-buyer system through a heuristic algorithm.
Another study considering shortages by Wee et al. included linear and fixed backorder
costs using the optimization method. The optimal inventory policies were analyzed, as
well as the schedule for shortages. Wang et al. considered the lot-sizing and joint pricing
problem in the inventory model, especially when the setup cost largely exceeds the or-
der cost. They included all unit discount policies and a franchise fee to determine finite
production rates in their optimization method. On considering multiproduct, Chiu et al.
determined the optimal standard production cycle policy for a multi-item EPQ model
with the scenarios of scrap, rework, and multiple deliveries. Their model was obtained
through mathematical modelling and analysis. Similarly, Nobil et al. considered a mul-
timachine and multiproduct EPQ problem for an imperfect manufacturing system. In
their study, a hybrid genetic algorithm was used to identify the machines to purchase, the
items to allocate in each machine, and determine the optimal cycle length. Overall, the
EPQ models developed from previous studies served as a guide in creating the sustainable
EPQ models presented in this paper that consider GHG and wastewater emission costs,
shortages, and multiproduct costs in a real production plant. The effectiveness of the
EPQ model was determined by comparing production quantity, cycle length, and total
costs generated under the three scenarios.

3 Sustainable EPQ Models

Using the mathematical optimization method and modifying the equation from Taleizadeh
et al., the three (3) scenarios developed in this study include:
1. Sustainable EPQ model with CO2 emission costs from inventory holding and pro-
duction; SOX and N Ox emission costs from production; CH4 emission costs from

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 waste disposal; BOD and COD emission costs during production for the wastewater
emission.

2. Sustainable EPQ model using the exact emission costs in scenario 1, with a shortage.

3. Sustainable EPQ model using the exact emission costs in scenario 1, with multi-
product and shortage situations.
Unlike most relevant researchers who did not consider CO2 , SOx , N Ox , CH4 , and
wastewater emissions (BOD and COD) in their models, this study develops an
EPQ model to determine and compare the costs and optimal production quantities
of the enumerated scenarios. The study covered a backordering situation and a
multiproduct sustainable EPQ model with warehouse capacity constraints.

4 Mathematical Modeling
4.1 Solution Method
Wood is the primary raw material in the pulp and paper industry. A variety of wood
is available and used to produce paper. The manufacture of pulp and paper includes
seven distinct processes: wood handling, pulping, chemical recovery, pulp washing, pulp
bleaching, papermaking, and packaging. Wood handling refers to the conversion of raw
wood materials intowood chips. Pulping focuses on producing pulp, amaterial that is
pivotal in papermaking and can be created from an artificial mineral, cellulosic, or wood
fibers. There are various types of pulping processes. In this study, a chemical pulping
process was considered where wood logs are chopped to form wood chips that are cooked
with chemicals under high pressure. Cooking these wood chips removes the lignin and
separates it into cellulose fibers. The fibers are then screened to remove impurities and
prevent any discoloration or disintegration of the final product—the paper. Half of the
used wood chips are dissolved in a black liquor substance and separated from the pulp
during the screening process. The process is performed because the black liquor can be
recycled and reused in the future by undergoing a chemical recovery process and because
only the wood pulp is needed for the succeeding process.
4.1.1 The Sustainable EPQ Model
The model was developed to derive the optimal quantity from production to minimize
the total cost and the adverse effect on the environment. The parameters’ sensitivity to
change is extensively tested using various test cases. Figure 2 illustrates the traditional
EPQ model developed by Bajpai under two stages: production and nonproduction.
His work assumed constant demand and production rates, assuming production is
more prominent than demand in the production stage. The inventory then decreases in

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the nonproduction stage because of demand. Figure 2 shows the production and nonpro-
duction stages as T1 and T2, respectively, and the total cycle length is T. The objective
of this model is to optimize production quantity over time.

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 The sustainable EPQ model considered carbon emissions from inventory holding,
production, and waste disposal. It also included costs from SOx and NOx emissions.
Wastewater emissions during production were also accounted for, where BOD and COD
were used to measure the cost. The total cost for the proposed sustainable EPQ is:

T C(Q) = CS + CHE + CP E + CW W + CW E (1)

1. Setup Cost
C1 C1 D
CS = = (2)
T Q

2. Inventory Cost (Holding Cost and Carbon Emission of Inven-

tory)
C2e = ver Eg C4 (3)

In finding the average inventory level, the inventory cost function presented in Equa-
tion (7) contains the holding cost and carbon emission cost of the warehouse.

Q(P − D)
CHE = (C2 + C2e ) (7)
2P

3. Production Costs (CO2 + N Ox + SOx )

CP E = (C3 + C4e + C5e + C6e )D (12)

4. Wastewater Cost (Treatment Cost, BOD, and COD)

C7 D
CW W = + (C8e + C9e )D (15)
Q

5. Solid Waste Disposal Cost (Disposal Cost and CH4 )

C10 D
CW E = + C11e D (18)
Q

6. Total Cost
dT C C1 D (C2 + C2e )(P − D) C7 D C10 D
=− 2 + − 2 − (20)
dQ Q DP Q Q2

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References
[1] JK Sharma, OPERATIONS RESEARCH THEORY AND APPLICATIONS, VI-
SIONIAS, 1 January 2023.

[2] R. Panneerselvam., OPERATIONS RESEARCH, 3rd Edition, PHI Learning, 30

April 2023.

[3] Hamdy A., Operations Research, 10th Edition, Global EduTech, 1 January 2019.