Supply network capacity planning for semiconductor manufacturing with uncertain demand and correlation in demand considerations

Aditya Rastogi, John Fowler, Matthew Carlyle, Ozgur Araz, Arnold Maltz, Burak Buke

Research output: Contribution to journalArticlepeer-review

Abstract

A semiconductor supply network involves many expensive steps, which have to be executed to serve global markets. The complexity of global capacity planning combined with the large capital expenditures to increase factory capacity makes it important to incorporate optimization methodologies for cost reduction and long-term planning. The typical view of a semiconductor supply network consists of layers for wafer fab, sort, assembly, test and demand centers. We present a two-stage stochastic integer-programming formulation to model a semiconductor supply network. The model makes strategic capacity decisions, (i.e., build factories or outsource) while accounting for the uncertainties in demand for multiple products. We use the model not only to analyze how variability in demand affects the make/buy decisions but also to investigate how the correlation between demands of different products affects these strategic decisions. Finally, we demonstrate the value of incorporating demand uncertainty into a decision-making scheme.
Original languageEnglish
Pages (from-to)322-332
Number of pages11
JournalInternational Journal of Production Economics
Volume134
Issue number2
DOIs
Publication statusPublished - Dec 2011

Keywords

  • Supply network capacity
  • Stochastic programming
  • Production planning
  • Semiconductor manufacturing

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