Coordinating Strategic Capacity Planning in the Semiconductor Industry

Suleyman Karabuk and S. David Wu ()
Additional contact information
Suleyman Karabuk: Department of Industrial and Systems Engineering, Lehigh University, Bethlehem, Pennsylvania 18015
S. David Wu: Department of Industrial and Systems Engineering, Lehigh University, Bethlehem, Pennsylvania 18015

Operations Research, 2003, vol. 51, issue 6, 839-849

Abstract: We study strategic capacity planning in the semiconductor industry. Working with a major US semiconductor manufacturer on the configuration of their worldwide production facilities, we identify two unique characteristics of this problem as follows: (1) wafer demands and manufacturing capacity are both main sources of uncertainty, and (2) capacity planning must consider the distinct viewpoints from marketing and manufacturing. We formulate a multi-stage stochastic program with demand and capacity uncertainties. To reconcile the marketing and manufacturing perspectives, we consider a decomposition of the planning problem resembling decentralized decision-making. We develop recourse approximation schemes representing different decentralization schemes, which vary in information requirements and complexity. We show that it is possible to arrive at near optimal solutions (within 6.5%) with information decentralization while using a fraction (16.2%) of the computer time.

Keywords: Facilities/equipment planning; capacity expansion: strategic capacity planning; Programming/stochastic: scenario analysis; recourse approximation; Production; planning: decentralized coordination (search for similar items in EconPapers)
Date: 2003
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (32)

Downloads: (external link)
http://dx.doi.org/10.1287/opre.51.6.839.24917 (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:inm:oropre:v:51:y:2003:i:6:p:839-849

Access Statistics for this article

More articles in Operations Research from INFORMS Contact information at EDIRC.
Bibliographic data for series maintained by Chris Asher ().