Incorporating Carbon-Related Costs into Production Decisions in the Fastener Industry Under the Net-Zero Transition

The implementation of global net-zero emission policies and carbon pricing mechanisms, including the Carbon Border Adjustment Mechanism (CBAM), has increased the need for export-oriented manufacturers to make carbon-related costs visible in production decisions. Taiwan’s fastener industry is particularly exposed because of its multi-stage production structure, intensive use of steel-based inputs, and reliance on international markets. Traditional single-base cost allocation can obscure differences in resource consumption across products and processes. To enhance the decision-making value of cost information, this study develops an Activity-Based Costing (ABC) framework that assigns modeled resource consumption to activities and products while separately internalizing carbon-related costs in a mixed-integer production-planning model. Theory of Constraints (TOC) is used as a bottleneck-focused managerial interpretation of finite production capacities rather than as a separate objective function. Using Taiwan’s fastener manufacturing industry as the research context, the model is demonstrated through an illustrative numerical example parameterized to reflect representative production and resource consumption relationships. The reported findings are therefore numerical results of the model rather than statistical empirical validation of a sampled population or a disclosed company dataset. Under the specified baseline parameters, Product 4 is selected because its revenue, purchasing-tier, activity driver, capacity, and carbon-related cost coefficients jointly dominate the alternatives. Product exclusion scenarios further show how the preferred product changes when individual products are exogenously removed while carbon price parameters are held fixed. The framework provides a transparent decision support structure for jointly examining activity costs, constrained resources, and carbon-related charges; it should not be interpreted as a legal replication of CBAM certificate obligations. Industry 5.0 extensions are positioned as future research.