Please use this identifier to cite or link to this item: https://doi.org/10.1016/j.ejor.2010.04.027
Title: Modified base-stock policies for semiconductor production system with dependent yield rates
Authors: Huang, H.-C. 
Song, H.
Keywords: Modified base-stock policy
Semiconductor production system
Yield rates
Issue Date: 16-Nov-2010
Source: Huang, H.-C., Song, H. (2010-11-16). Modified base-stock policies for semiconductor production system with dependent yield rates. European Journal of Operational Research 207 (1) : 206-217. ScholarBank@NUS Repository. https://doi.org/10.1016/j.ejor.2010.04.027
Abstract: We consider a two-stage production system faced by semiconductor manufacturing which produces a hierarchy of multiple grades of outputs. In the first stage, a single type of input (wafer) is used to produce multiple types of semi-finished parts with dependent yield rates, and in the second stage, each type of semi-finished parts can be transformed into a corresponding type of final products, or downgraded to a type of lower grade final products. Random customer demands are faced on the final products, and demands of different types of final products are not allowed to be substituted. The advantage of this production system is that it can prevent unhealthy ordering from customers who intentionally send out false demand signals for high grade products and revise the orders to lower grade products when the delivery time is close, which was observed in semiconductor manufacturing. The objective of the study is to plan the quantity of the input at the first stage and the respective downgrade quantities at the second stage so as to meet the required service level at the minimum cost. With some common assumptions, we propose a modified base-stock policy for this two-stage production system and show that the occurrence of nil excess inventory above the base-stock level follows a renewal process. We further extend the modified base-stock policy to a better policy that invokes risk pooling over multiple grade products. The performance of these two polices are evaluated via simulation to provide managerial insights. © 2010 Elsevier B.V. All rights reserved.
Source Title: European Journal of Operational Research
URI: http://scholarbank.nus.edu.sg/handle/10635/87081
ISSN: 03772217
DOI: 10.1016/j.ejor.2010.04.027
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