PRODUCTION POTIMIZATION FROM A SUSTAINABLE PERSPECTIVE

Abstract

ABSTRACT: This work analyzes some implications of environmental constraints on production planning since the entry into force of the Kyoto Protocol. Under an integrated approach we apply a linear programming model that reflects the company productive limitations to obtain the optimal output mix that maximizes profit, including CO2 emissions constraints. To illustrate the application of the model an example has been applied to one of the sectors affected. The information provided by the optimal program has been differentiated whether the optimal program involves the total or partial consumption of emission allowances available and whether included in the model the estimated market price of emission allowances. The results obtained showed that the model used is sensitive to the variation of the parameters considered, highlighting the role that the emissions allowances available and the price of them in CO2 emissions market. Also, the sensitivity analysis allowed us to show the effect of variations in the parameters considered in the model on the production plan. Key Words: production planning, linear programming, environmental management, Protocol Kyoto, CO2 emissions, emission allowances