Pricing and Inventory Decisions for the Apparel Industry under a Carbon Neutrality Target with Green Investments and Recycling Efforts

Abstract

The apparel industry is the second largest source of pollution globally, following only the petrochemical industry in terms of environmental pollution caused by production, sales, and consumption processes. Low-carbon, environmentally friendly, and energy-efficient production and consumption methods are crucial pathways for the apparel industry to achieve carbon neutrality targets. Therefore, considering green investments in apparel products and the recycling of discarded apparel, this paper investigated the inventory and pricing optimization decisions of apparel enterprises within the context of a carbon neutrality target. The results indicated that green investment or recycling can effectively increase the total profits of the apparel brand. Due to the cumulative effect of comprehensive environmental strategies, apparel brands achieve greater profits when simultaneously adopting both green investments and recycling efforts compared to implementing either one alone. Green investments focus on reducing the environmental impact during production by minimizing resource consumption and emissions from the source, while recycling emphasizes product reutilization, effectively extending the utilization cycle of resources. By implementing these two strategies, brands not only reduce the negative environmental impacts during production but also maximize resource reuse throughout the product lifecycle.