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Two-echelon supply chain model with manufacturing quality improvement and setup cost reduction

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  • For quality improvement purposes often times, a manufacturing unit has to change certain parts of equipment. Any such changes in the assembly line manufacturing system or production process involves a cost known as the setup cost. Minimizing the setup cost and improving the product quality is of prime importance in today's competitive business arena. This paper develops the effects of setup cost reduction and quality improvement in a two-echelon supply chain model with deterioration. The objective is to minimize the total cost of the entire supply chain model (SCM) by simultaneously optimizing setup cost, process quality, number of deliveries, and lot size. Numerical examples are provided to illustrate the model.

    Mathematics Subject Classification: Primary: 58F15, 58F17; Secondary: 53C35.


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  • Figure 1.  Buyer's inventory model

    Figure 2.  Supplier's inventory model (See for instance Sarkar [32])

    Table 1.  Comparison between the contributions of different authors

    Author(s) NameSetup cost reductionQuality improvementLot sizeDeteriorationSSMD
    Goyal [10]$\surd$$\surd$$\surd$
    Sarkar and Sarkar [48]$\surd$
    Goswami and Chaudhuri [9]$\surd$
    Sarker and Coates [44]$\surd$
    Skouri and Papachristos [31]$\surd$$\surd$
    Sarkar [37]$\surd$
    Sarkar et al. [38]$\surd$
    Sarkar and Sarkar [39]$\surd$
    Sarkar [32]$\surd$$\surd$$\surd$
    Porteus [27]$\surd$
    Paknejad et al. [25]$\surd$
    Hong and Hayya [34]$\surd$
    Rosenblatt and Lee [30]$\surd$
    This paper$\surd$$\surd$$\surd$$\surd$$\surd$
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    Table 2.  Study for non-deterioration case

    Total costLot sizeNumber of deliveriesSetup cost$\theta$
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    Table 3.  Study for SSSD case

    Total costLot sizeNumber of deliveriesSetup cost$\theta$
    6342.83 1.22 1 14.650.0041
     | Show Table
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    Table 4.  Sensitivity analysis for key parameters

    ParametersChanges of parameters (in %)TC(in %)
     | Show Table
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