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, Biswajit Sarkar

Research output: Contribution to journalArticle

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.

Original languageEnglish
Article number3733
JournalEnergies
Volume12
Issue number19
DOIs
Publication statusPublished - 2019 Sep 29

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Setup Cost
Process Improvement
Quality Improvement
Supply Chain Management
Discount
Supply chain management
Service Levels
Cost reduction
Energy Consumption
Manufacturing
Energy utilization
Costs
Energy
Supply Chain
Supply chains
Process Industry
Lot Size
Distribution-free
Failure Rate
Imperfect

All Science Journal Classification (ASJC) codes

  • Renewable Energy, Sustainability and the Environment
  • Energy Engineering and Power Technology
  • Energy (miscellaneous)
  • Control and Optimization
  • Electrical and Electronic Engineering

Cite this

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