Managing Capacity in the High-Tech Industry: A Review of Literature

Wu, S. David; Erkoc, Murat; Karabük, Süleyman

doi:10.1080/00137910590949887

Cited by 168 publications

(85 citation statements)

References 81 publications

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“…Van Mieghem (2003) presents a survey of the literature and focuses on strategic decisions whereas Wu et al (2005) focuses on tactical and operational level decisions. Capacity management problems include, among others, capacity planning in terms of the determination of the capacity levels of productive resources and the timing of the capacity adjustments.…”

Section: Introduction and Related Literaturementioning

confidence: 99%

Tactical capacity management under capacity flexibility

Tan

Alp

2008

IIE Transactions

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In many production systems a certain level of flexibility in the production capacity is either inherent or can be acquired. In that case, system costs may be decreased by managing the capacity and inventory in a joint fashion. In this paper we consider such a maketo-stock production environment with flexible capacity subject to periodic review under non-stationary stochastic demand, where we allow for positive fixed costs both for initiating production and for acquiring external capacity. Our focus is on tactical-level capacity management which refers to the determination of in-house production capacity while the operational-level integrated capacity and inventory management is executed in an optimal manner. We first develop a simple model to represent this relatively complicated problem. Then we elaborate on the characteristics of the general problem and provide the solution to some special cases. Finally, we develop several useful managerial insights as to the optimal capacity level, the effect of operating at a suboptimal capacity level and the value of utilizing flexible capacity.

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Section: Introduction and Related Literaturementioning

confidence: 99%

Tactical capacity management under capacity flexibility

Tan

Alp

2008

IIE Transactions

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“…Luss (1982) was the first literature review on capacity expansion. Van Mieghem (2003), Wu et al (2005), Julka et al (2007) and also provided literature reviews on this topic. The most recent review is Martínez-Costa et al (2014), which describes the major decisions and conditioning factors involved in strategic capacity planning, and outlines the mathematical programming models proposed in the literature to deal with the above problems.…”

Section: Literature Reviewmentioning

confidence: 99%

Single-site strategic capacity planning considering renewal, maintenance, inventory, taxes and cash flow management

Benedito

Corominas

Martínez

et al. 2016

Journal of the Operational Research Society

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This paper deals with strategic capacity planning of a single-site manufacturing system.We propose a MILP model that includes relevant business aspects and possibilities, some of which are only partially or not at all found in the literature. Specifically, we consider decisions on expansion, reduction and renewal of production capacity, and acquisition of storage capacity. In addition, we model aspects such as a) maintenance costs and unit variable costs depending, respectively, on age and characteristics of facilities, b) seasonality of the demand, and c) cash flow management, including taxes and, therefore, depreciation of assets. The model maximises the after-tax cash balance at the end of the planning horizon. We also present a computational experiment with 54 instances to show that the model can be solved for a wide range of sizes in a reasonable computing time using comercial software.

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“…Also see Wu et al (2005) for a review of the literature on capacity planning in the high-tech industry. DMEP is also closely related to the literature on procurement and option contracts (e.g., Bassok andAnupindi 1997, Vaidyanathan et al 2005).…”

Section: Literature Reviewmentioning

confidence: 99%

Capacity Planning in the Semiconductor Industry: Dual-Mode Procurement with Options

Chen

Erhun

Hertzler

et al. 2012

M&SOM

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T o help a firm reduce inefficiencies associated with equipment capacity planning, we propose a dual-mode equipment procurement (DMEP) framework. DMEP combines dual-source (i.e., a less-expensive-but-slower base mode and a faster-but-more-expensive flexible mode) procurement with option contracts in three layers: a contract negotiation layer, where the firm chooses the best combination of lead time and price for each mode from the supply contract menu; a capacity reservation layer, where the firm reserves total equipment procurement quantities from the two supply modes before the planning horizon starts; and an execution layer, where the firm orders equipment from the two supply modes based on the updated demand information. We first investigate the execution layer as a dynamic dual-source capacity expansion problem with demand backlogging and demonstrate that the optimal policy lacks structure even under the simplest setting. Thus, we propose a heuristic solution for the execution-layer problem, which also serves as a building block for the other two layers. Through numerical analysis, we quantify the value of the added flexibility of DMEP for the firm. The DMEP framework has been implemented at Intel Corporation and has resulted in savings of tens of millions of dollars for one process technology.

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Managing Capacity in the High-Tech Industry: A Review of Literature

Cited by 168 publications

References 81 publications

Tactical capacity management under capacity flexibility

Tactical capacity management under capacity flexibility

Single-site strategic capacity planning considering renewal, maintenance, inventory, taxes and cash flow management

Capacity Planning in the Semiconductor Industry: Dual-Mode Procurement with Options

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