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Effect of Electrical Energy on the Manufacturing Setup Cost Reduction, Transportation Discounts, and Process Quality Improvement in a Two-Echelon Supply Chain Management under a Service-Level Constraint

Irfanullah Khan (), Jihed Jemai (), Han Lim () and Biswajit Sarkar ()
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Irfanullah Khan: Department of Industrial & Management Engineering, Hanyang University, Ansan, Gyeonggi-do 15588, Korea
Jihed Jemai: Department of Industrial Engineering, Hanyang University, Seoul 04763, Korea
Han Lim: Department of Industrial & Management Engineering, Hanyang University, Ansan, Gyeonggi-do 15588, Korea
Biswajit Sarkar: Department of Industrial Engineering, 50 Yonsei-ro, Sinchon-dong, Seodaemun-gu, Seoul 03722, Korea

Energies, 2019, vol. 12, issue 19, 1-32

Abstract: The need for efficient electrical energy consumption has greatly expanded in the process industries. In this paper, efforts are made to recognize the electrical energy consumption in a two-echelon supply chain model with a stochastic lead-time demand and imperfect production, while considering the distribution free approach. The initial investments are made for quality improvement and setup cost reduction, which ultimately reduce electrical energy consumption. The inspection costs are considered in order to ensure the good qualities of the product. Centralized and decentralized strategies are used to analyze the proposed supply chain model. The main objective of this study is to reduce the overall cost through efficient electrical energy consumption in supply chain management by optimizing the lot size, the number of shipments, the setup cost, and the failure rate. A quantity-based transportation discount policy is applied to reduce the expected annual costs, and a service-level constraint is incorporated for the buyer to avoid a stockout situation. The impact of the decision variables on the expected total costs is analyzed, and sensitivity analysis is carried out. The results show a significant reduction in overall cost, with quality improvement and setup cost reduction ultimately reducing electrical energy consumption.

Keywords: electrical energy consumption; supply chain management; imperfect production; distribution free approach; service level constraint; transportation discount (search for similar items in EconPapers)
JEL-codes: Q Q0 Q4 Q40 Q41 Q42 Q43 Q47 Q48 Q49 (search for similar items in EconPapers)
Date: 2019
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