Contents lists available at ScienceDirect Robotics and Computer Integrated Manufacturing journal homepage: www.elsevier.com/locate/rcim Impact of safety factors and setup time reduction in a two-echelon supply chain management Biswajit Sarkar a , Rekha Guchhait a,b , Mitali Sarkar a , Sarla Pareek b , Namhun Kim ⁎ ,c a Department of Industrial & Management Engineering, Hanyang University, Ansan Gyeonggi-do 155 88, South Korea b Department of Mathematics & Statistics, Banasthali Vidyapith, Rajasthan 304 022, India c School of Mechanical, Aerospace, and Nuclear Engineering, Ulsan National Institute of Science and Technology, Ulsan 449 19, South Korea ARTICLE INFO Keywords: Supply chain management Stochastic demand Setup time reduction Quality improvement Transportation crashing cost ABSTRACT A two-echelon supply chain model is formulated to reduce lead time and setup time to obtain their impacts on the expected total cost when lead time demand is stochastic in nature. Two different safety factors are utilized to avoid shortages even though the system contains backorder. The lead time is lot size dependent and consists of production time as well as setup time. It does not follow any particular distribution as only mean and standard deviation are known to us. A distribution free approach is used here to handle this situation. Quality im- provement and safety factor are related issues to make an impact in the model as they are directly related to the customer satisfaction. The unit production cost is variable and dependent on production rate. An analytical procedure is derived to investigate the effects of reducing lead time, setup time crashing cost, and transportation crashing cost. Some numerical examples are illustrated to test the model. Sensitivity analysis and managerial insights are given to show the applicability of the model. 1. Introduction Supply chain is a system of organizations where materials flow from upper organizations to lower and cash flows from lower organizations to upper. It involves many participants in a business and in this study, two participants, namely, vendor and buyer, are involved. Every par- ticipant’s demand is depending upon lower most participant’s demand, as cash flow is started from there. But price of any product is depending upon the topmost participant as product flows in ascending. Now, the situation is that the demand of retailer, i.e, lower participant is de- pending upon various factor that affecting demand. Thus, demand is basically stochastic in nature. To reduce the complexity of the model, authors assumed that demand is constant. Besides these, lead time de- mand is a major issue for vendor (for instance, see [32]). High lead time can cause lost sale and it is indirectly related to setup of the vendor. To control backorder and lost sale, safety stock is an effective idea to maintain the business reputation. In this case, safety factor plays an important role. Shortage and safety factor have always an inverse re- lation to the inventory. For (Q, r, L) model, reorder point plays a de- cision making role, as well as safety factor also. Whenever safety stock increase, reorder point decreases, i.e., delay in order for next lot is a cause of stock out situation which is a cause of shortage. Now, the attention grows up to reduce setup time, setup cost, and lead time. Different investments are used to reduce lead time, setup time and cost etc. But maintaining the quality of the products are the basic criterion of a business. Industry always try to reduce these factors by keeping the quality same or improving the quality of products [33] and improving the service level to the customers. Transportation has a major impact in a supply chain [34]. Different transporting mode are used in different business purpose. Transportation cost sometimes has to paid vendor or sometimes by buyer. Most of the cases, transportation cost is paid by the vendor and transportation cost reduction strategy is used in various way. In this paper, transportation cost depends upon demand. 2. Literature review Lead time is defined as placing some orders and receiving the same. Thus, by definition it is clear that the more ordering quantity indicates more lead time and similarly the reversible relation with the production rate as more production rate indicates less lead time. Therefore, the lead time should depend on ordering quantity and production rate. This idea is not considered by any of the authors till now except Glock [1]. The lead time may influence over customer service, and satisfaction, and impact on several inventory cost [2]. Lead time can be decomposed into several components as setup time, processing time, and queuing https://doi.org/10.1016/j.rcim.2018.05.001 Received 31 May 2017; Received in revised form 8 April 2018; Accepted 2 May 2018 ⁎ Corresponding author. E-mail address: nhkim@unist.ac.kr (N. Kim). Robotics and Computer Integrated Manufacturing xxx (xxxx) xxx–xxx 0736-5845/ © 2018 Elsevier Ltd. All rights reserved. Please cite this article as: Sarkar, B., Robotics and Computer Integrated Manufacturing (2018), https://doi.org/10.1016/j.rcim.2018.05.001