A Dynamic Approach to Sustainable Knitted Footwear Production in Industry 4.0: Integrating Short-Term Profitability and Long-Term Carbon Efficiency

Abstract

This study proposes a novel approach to support sustainable decision-making in knitted shoe manufacturing by integrating activity-based costing (ABC), the theory of constraints (TOC), and carbon emission costs into a comprehensive mathematical programming model. The model is applied to evaluate the impact of different carbon tax and carbon trading policies on the profitability and product mix of a knitted shoe company in Taiwan. The model considers single-period and multi-period scenarios, as well as continuous and discontinuous carbon tax functions, with and without carbon trading. The results show that a continuous carbon tax leads to higher profitability in single-period models, while a continuous carbon tax function combined with carbon trading yields the highest profits in multi-period models. Reducing the carbon emission cap is found to be more effective in curbing emissions than raising carbon taxes. This research contributes to sustainable operations management by providing a holistic approach that integrates cost control, profit optimization, and environmental sustainability in the context of Industry 4.0. The findings offer valuable insights for footwear manufacturers in making strategic decisions and for governments in designing effective carbon tax and emission trading schemes to drive industrial transformation towards a low-carbon economy.