Abstract
This study investigates how environmental policies influence production planning in environmentally sensitive manufacturing systems, particularly in the paper and pulp industry. Despite growing regulatory pressure and consumer awareness, existing research often overlooks the integration of environmental policies with operational uncertainty. To address this gap, we propose the Environmental Hedging Point Policy (EHPP) as a strategic framework that draws on optimal control theory to dynamically balance sustainability and operational performance under uncertainty. Our approach combines simulation-based optimization with multi-objective particle swarm optimization and K-means clustering to evaluate trade-offs between cost, customer satisfaction, and environmental impact. We model a dynamic demand environment shaped by eco-conscious customer preferences and test policy scenarios using data from a paper manufacturing system involving both recyclable and virgin paper inputs. The results provide actionable insights for policymakers and manufacturers, supporting sustainable production planning under uncertainty.
| Original language | English |
|---|---|
| Number of pages | 35 |
| Journal | Annals of Operations Research |
| Early online date | 22 Jan 2026 |
| DOIs | |
| Publication status | E-pub ahead of print - 22 Jan 2026 |
Bibliographical note
Copyright © The Author(s) 2026. This article is licensed under a Creative Commons Attribution 4.0 International License, which permits use, sharing, adaptation, distribution and reproduction in any medium or format, as long as you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons licence, and indicate if changes were made. The images or other third party material in this article are included in the article's Creative Commons licence, unless indicated otherwise in a credit line to the material. If material is not included in the article's Creative Commons licence and your intended use is not permitted by statutory regulation or exceeds the permitted use, you will need to obtain permission directly from the copyright holder. To view a copy of this licence, visit https://creativecommons.org/licenses/by/4.0/.Keywords
- AI-enhanced simulation
- Environmental control policy
- Land-use management
- Paper and pulp
- Simulation optimization
- Unreliable manufacturing systems
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