Journal of the Chinese Institute of Industrial Engineers, Vol. 24, No. 6, pp.

489-504 (2007) 489

CAPACITY AND PRODUCT MIX PLANNING PROBLEM

FOR TFT ARRAY MULTI-PLANT
James T. Lin, Tzu-Li Chen* and Wei-June Chen
Department of Industrial Engineering and Engineering Management
National Tsing-Hua University
101, Section 2 Kuang-Fu Road, Hsinchu, Taiwan 300, R.O.C.

ABSTRACT

This research focuses on the strategic capacity and product mix planning problems in Thin
Film Transistor Liquid Crystal Display (TFT-LCD) Panel Industry. A capacity and product
mix planning decision model for TFT Array multi-plant is proposed according to TFT-LCD
panel industry environment. Capacity and product mix planning problems for TFT Array
multi-plant are resource allocation problems. Product mix and production quantity for each
product group produced in a specific plant are decided on capacity and product mix plan-
ning. In the planning, the objective is maximum contribution margin. And, we consider
many constraints to obtain the capacity and product mix plan, such as material utilization,
production capacity, production capability, production variable costs, and inventory-driven
costs for each product group produced in a specific plant. Furthermore, we use capacity and
product mix planning to balanced the difference between total supply capacity and total
demand forecast. If total supply capacity is smaller than total demand forecast, we evaluate
the feasibility to expand production capacity. On the other hand, we suggest increasing
production quantity in over-supply plant. We propose a methodology to solve capacity and
product mix planning problems for TFT Array multi-plant. There are three phases in the
methodology, including (1) capacity configuration, (2) capacity expansion, and (3) capacity
exploitation. In the first phase, we allocate production capacity in each plant to produce a
suit product mix set. If demand forecast is greater than supply capacity for a specific prod-
uct group, we evaluate the feasibility to expand production capacity in the second phase. In
the third phase, we suggest best additional production quantity of the profitable product
group to exploit the remained capacity adequately.

Keywords: product mix planning, capacity planning, TFT-LCD, TFT Array, multi-plant
planning

1. INTRODUCTION are crucial for TFT-LCD industry.

With the growth of TFT-LCD display applica-
tion, the TFT-LCD panel manufacturing has become
the new high-technology industry after the semicon-
ductor manufacturing. The production chain in
TFT-LCD panel industry consists of three manufac-
turing stages named Array, Cell and Module proc-
esses and each stage has multiple production sites.
The Array process is very similar to semiconductor
wafer fabrication with the reentrance production sys-
tem. The Cell process involves combining TFT
glasses with color filters, injecting liquid crystal, and
cutting the panels into different sizes. Array and Cell
processes are all capacity-constraint and
high-investment production environments. Effective
utilization and planning of their production capacity
* proposes a solution methodology to solve capacity
Corresponding author: d927812@oz.nthu.edu.tw
Due to two significant trends, capacity and
product mix planning gradually becomes an impor-
tant mid-term strategic issue to which TFT-LCD in-
dustry paid attention. First is the increase of product
types which causes a wide range of product groups,
such as mobile, monitor, notebook, TV and industrial
display are produced. The second trend is the ad-
vances of new technology which cause multiple gen-
erations of technologies coexist in each manufactur-
ing stage and production site. Therefore, the deci-
sions of capacity and product mix planning will not
only determine the profitable product mix and the
best production quantities of each product group at
each array site in each period but adjust the capacity
and demand quantities to balance the difference be-
tween total supply capacity and total demand forecast
for maximizing the total contribution margin.
As a result of these motivations, this paper
490 Journal of the Chinese Institute of Industrial Engineers, Vol. 24, No. 6 (2007)
and product mix planning problems for TFT Array
multi-plant. There are three phases which are formu-
lated as mixed integer programming (MILP) model
in the methodology, including (1) capacity configura-
tion, (2) capacity expansion, and (3) capacity exploi-
tation. In the first phase, we allocate production ca-
pacity in each plant to produce a suit product mix set.
If demand forecast is greater than supply capacity for
a specific product group, we evaluate the feasibility
to expand production capacity in the second phase. In
the third phase, we suggest best additional production
quantity of the profitable product group to exploit the
remained capacity adequately.
This paper is organized as follows: in Section
2 we thoroughly review some related literatures re-
garding the capacity and product mix planning prob-
lem in the semiconductor and other industry; after
that, in Section 3, we describe and define the capacity
and product mix planning problem for the TFT Array
multi-plant; Section 4 shows the solution methodol-
ogy proposed by this paper; the numerical example
are illustrated in Section 5, then the conclusion is in
Section 6.
2. LITERATURE REVIEW
More literatures discussed the capacity and
product mix planning problem in the semiconductor
manufacturing industry or the semiconductor testing
industry. But fewer literatures discuss the capacity
and product mix planning problems in the TFT-LCD
production chain.
In the semiconductor manufacturing industry,
Chou and Hong [2] first describes the characteristics
of the product mix planning problem in foundry
manufacturing that are attributable to the long flow
time and queuing network behaviors. They also de-
velop the integer linear programming techniques and
a heuristic procedure for solving product mix plan-
ning. Chung, Lee and Pearn [3] propose an applica-
tion of the analytic network process (ANP) for the
selection of product mix for efficient manufacturing
in a semiconductor fabricator. Christie and Wu [1]
and Karabuk and Wu [11] studies the real strategic
capacity planning problem in the semiconductor in-
dustry. They stated the capacity planning of the semi-
conductor industry can be described as an iterative
process between the following two main components:
(1) capacity expansion, given projected product de-
mands, identify the required manufacturing technolo-
gies and their capacity levels to be physically ex-
panded or outsourced through the planning period,
and (2) capacity configuration, determine which fa-
cility is to be configured with which technologies mix.
Christie and Wu [1] present a multistage stochastic
programming model for the strategic capacity plan-
ning under the demand uncertainty. Karabuk and Wu
[11] further considers the demand and capacity un-
certainty to propose a scenario based stochastic pro-
gramming model for this capacity planning problem
which produces a capacity configuration that hedges
against extreme outcomes of demand and capacity
fluctuation.
In the semiconductor testing industry, Wang
and Lin [8], Wang and Hou [9] and Wang, Wang and
Yang [10] started to study the practical capacity allo-
cation and expansion issue in the semiconductor test-
ing facility. Wang and Lin [8] focused on the two
capacity planning issues of the testing facility: (1)
capacity expansion— what type of and how many
testers should be invested for forthcoming orders for
wafer and chip of a semiconductor testing facility
under budget constraint? (2) capacity alloca-
tion—how to allocate tester capacity for the orders so
that the profit of a company can be maximized? They
developed a genetic algorithm simultaneously to
solve the two problems. Wang, Wang and Yang [10]
further considered various important factors of the
capacity planning decision such as resource invest-
ment alternatives, trade-offs between the price and
speed of equipment and capital time value to con-
struct a mathematical programming model. Then they
proposed a constraint programming-based genetic
algorithm (CPGA) to solve it.
3. CAPACITY AND PRODUCT
MIX PLANNING PROBLEM
3.1 Problem Analysis
For the TFT-LCD industry, the capacity and
product mix planning belongs to the strategic module
with the mid-term time horizon and the product group
level of the product hierarchy in the hierarchical
planning and scheduling framework mentioned by
Lin, Chen and Lin [7]. According to the monthly de-
mand forecast generated by the Demand Planning
Module, capacity and product mix planning deter-
mines the optimal product family mix and production
quantities at each array site. Furthermore, capacity
and product mix planning can also adjust the capacity
and demand quantities to balance the difference be-
tween total supply capacity and total demand forecast
for maximizing the total contribution margin. When
total supply capacity is smaller than total demand
forecast, we evaluate the feasibility to expand pro-
duction capacity for gaining more profits. On the
other hand, we suggest additional production quanti-
ties in over-supply sites while total supply capacity is
greater than total demand forecast.
Therefore, the capacity and product mix plan-
ning involves three main decisions, capacity con-
figuration, capacity expansion and capacity exploita-
tion. These three decisions are described as follows.
Lin et al.: Capacity and Product Mix Planning Problem for TFT Array Multi-Plant
z capacity configuration
The capacity configuration decision will find
the profitable product mix and the best production
quantities of each product group at each array site in
each period. Moreover, the unmet demand will be
generated and drive the capacity expansion decision
while total supply capacity is smaller than total de-
mand forecast. While there is no unmet demand and
there are remained capacities, the capacity exploita-
tion will be executed.
z capacity expansion
When there is the unmet demand, the capacity
expansion is driven to decide how much capacity of
which product group with high margins is expanded
to gain the highest contribution margin. The
TFT-LCD industry always purchases the new auxil-
iary tools to expand the capacity of the specific
product group at the specific site since purchasing the
new machine and constructing new site are more ex-
pensive.
z capacity exploitation
When there is no unmet demand and there are
remained capacities, the capacity exploitation will be
executed to determine the best additional production
quantity of the profitable product group for maxi-
mizing the total contribution margin. Because the
array process is capacity-constraint production envi-
ronment, its capacity should be exploited adequately
without any remained capacity.
3.2 Problem Definition
In this section, we identify the planning pur-
pose, planning performance, input information, out-
put results and assumptions to define the capacity and
product mix planning problem as shown in Figure 1.
Figure 1. The problem definition of the capacity and product mix planning
491
z Planning Purpose
According to the three decisions from the
above analysis, the purposes of the capacity and
product mix planning problem includes the following
points.
Capacity Configuration
The aim of capacity allocation decision must
consider the many constraints such as production
capacity and production capability constraints to de-
termine the product mix at each site in each period
and the production quantity of each product group at
each site in each period.
Capacity Expansion
According to the unmet demand generated by
the capacity configuration, the goal of capacity ex-
pansion decision will decide the expansion capacity
quantity for each product at each site in each period
and the purchasing amount of the auxiliary tool for
each product at each site in each period.
Capacity Exploitation
The target of capacity exploitation will find the
best additional production quantity of the profitable
product group for improving capacity utilization un-
der the remained capacity.
z Planning Performance
The decision of the capacity and product mix
planning in the real TFT-LCD industry usually made
by the human experience. Therefore, they only can
consider the single performance such as the maxi-
mum of total glass utilization rate, the minimum of
the total glass cost or the maximum of total capacity
utilization rate and neglect other performances such
as the total inventory-driven cost. This paper pro-
poses a new performance, the total contribution mar-
gin, for the capacity and product mix planning. The
total contribution margin is defined as below.
492 Journal of the Chinese Institute of Industrial Engineers, Vol. 24, No. 6 (2007)
Total contribution margin
= total revenues – total variable production cost –
total inventory-driven cost
= total revenues – total variable production cost –
(total inventory holding cost + total deprecia-
tion loss costs)
= total revenues – total variable production cost –
total inventory holding cost – total depreciation
loss costs
The following planning performance of three
decisions within the capacity and product mix plan-
ning problem are shown.
Capacity Configuration
The objective of capacity configuration is the
total contribution margin which is equal to total
revenues minus total costs, included total variable
production costs, total inventory holding costs and
total depreciation loss costs.
Capacity Expansion
The performance of capacity expansion is the
total potential contribution margin which is equal to
total contribution margin caused by the unmet de-
mand minus total expansion costs.
Capacity Exploitation
The total contribution margins of capac-
ity exploitation are calculated as total revenues
caused by the additional production quantities minus
total variable production costs.
z Input Information
The input information involves three different
categories, demand information, supply information
and cost information.
Demand Information
9 The monthly demand forecasts of each product
group in the each period which are generated
by demand planning and vary by period.
9 The monthly sale price of each product group
in the each period which is generated by de-
mand planning and varies by period.
Supply Information
9 Panel area for one piece of each product group
9 Glass area for one sheet at Array site.
9 Glass Cutting Ratio for each product group
produced at Array site.
9 Potential expansion capability for each product
group at Array site.
9 Upper bound of expansion capacity for each
product group at Array site.
9 Expansion capacity lead time.
9 Available capacity of each product group at
each site.
9 Production capability for each product group at
each site.
9 Total capacity of Array site.
9 Production lead time of each Array site.
9 Yield for each product group at each site.
9 Minimum production batch.
9 Inventory obsolescence rate.
Cost Information
9 Unit variable production cost for each product
group at Array site in each period.
9 Unit inventory holding cost of each product
group.
9 Expansion cost of each product group at Array
site.
z Output Results
The output results of the capacity and product
mix planning problem are listed as follows.
9 The “product mix” at each site in each period.
9 The “production quantity” of each product
group at each site in each period.
9 The “expansion capacity quantity” for each
product at each site in each period.
9 The “purchasing amount of the auxiliary tool”
for each product at each site in each period.
9 The “additional production quantity” of each
product group at each site in each period.
z Assumptions
Several assumptions of the capacity and prod-
uct mix planning problem discussed within this paper
are justified below.
9 The demand unit is piece.
9 The production unit of array is sheet.
9 The quantities and prices of demand are deter-
ministic and vary by period.
9 Only consider Array stage without cell and
module stages.
9 Capacity expansion only focuses on purchasing
new auxiliary tools without considering new
machines or new sites.
9 The yield rates and production lead time of
Array process are deterministic.
9 The material supplies are sufficient. Don’t con-
sider the material available constraint.
4. SOLUTION METHODOLOGY
FOR CAPACITY AND
PRODUCT MIX PLANNING
Capacity and product mix planning problem is
complicated and hard to solve by an integrated
mathematical model from the analysis of section 3. In
this section, the study developed a sequential and
iterative solution methodology to solve it. The solu-
tion methodology is composed of three phases: ca-
pacity configuration, capacity expansion and capacity
exploitation. First, the capacity configuration phase
only considers the current available capacity for each
array site and each product group to decide the best
product mix and production quantities. Then, the ca-
pacity expansion phase will recommend that the ca-
Lin et al.: Capacity and Product Mix Planning Problem for TFT Array Multi-Plant
pacity of certain product group must be expanded at
certain site in certain period. Finally, the capacity
exploitation will decide the additional production
quantities to utilize the remained capacities ade-
quately for achieving the maximum of the total con-
tribution margins when there are the remained ca-
pacities of the specific sites.
These three phases in proposed solution meth-
odology have the close and iterative relationships
shown as Figure 2. First, the capacity configuration
will generate the initial capacity and production plan.
Then, the unmet demands generated by capacity con-
figuration phase are used to judge whether the capac-
ity expansion should be executed or not. While there
are the unmet demands, the capacity expansion must
be processed. When there are no unmet demands, the
final phase, capacity exploitation must be processed.
While the capacity expansion decision can not find
any expansion opportunities, the capacity exploitation
will be executed. When there are the expanded ca-
pacities of the specific sites, the capacity configura-
tion phase are carried out again to get the new capac-
ity and product mix plan.
Because each phase within developed solution
methodology is an optimization problem, we formu-
late these three phases as mixed integer programming
models (MIP) and solve them by the existing optimi-
zation software package. The mathematical models of
the three phases are depicted as follows.
Figure 2. The flow chart of solution methodology
493
4.1 Notation Definition
Before describing the MIP model, some nota-
tions which will be used throughout these three
phases are defined.
Indices
p = the index of product group, p = 1,...,P
i = the index of Array site, i = 1,..., I
t = the index of production period, t = 1,..., T
~ ~
t = the index of sale period, t = 1,..., T
The input parameters have three different cate-
gories, demand related parameters, supply related
parameters and cost related parameters. The follow-
ing parameters are defined.
Parameters
z Demand related Parameters
D p ,t = demand of product group p in period t
Dpr ,t = unmet demand of product group p in
period t
S p ,t = price of product group p in period t
S p = average price of product group p
T
∑S p ,t
Sp = t =1
, ∀ p
T
z Supply related Parameters
A p = panel area for one piece of product
group p
Gi = glass area for one sheet at Array site i
UPp ,i = glass cutting ratio for product group p
produced at Array site i
U p ,i = glass utilization rate for product group p
produced at Array site i
A p ⋅ UPp ,i
U p ,i = , ∀ p, i
Gi
EAp ,i = potential expansion capability for prod-
uct group p at Array site i
（If EAp ,i = 1 , Array site i has capabil-
ity to expansion capacity of product
group p ; if EAp ,i = 0 , Array site i has
no capability.）
lower bound of expansion capacity for
BE p ,i = product group p at Array site i in pe-
riod t
494 Journal of the Chinese Institute of Industrial Engineers, Vol. 24, No. 6 (2007)

total capacity of Array site i to pro- Decision Variables

TCi ,t = duce product group p in period t
X p ,i ,t ,t = product mix decision for product group
TCir,t = remained capacity of Array site i to ~
p sold during the sale period t at
produce product group p in period t
Array site i in production period t
CAp ,i ,t = production capability for product group
p produced at Array site i in period （If X p ,i ,t ,t = 1 , Array site i produces
t the product group p; if X p ,i ,t ,t = 0 , Ar-
（If CApa,i ,t = 1 , product group p can ray site i doesn’t produce the product
be produced at Array site i in period group p）
t ; if CApa,i ,t = 0 , product group p XQ p ,i ,t ,t = the “release” production quantity of
product group p sold during the sale
can’t be produced at Array site i in ~
period t ) period t at Array site i in produc-
tion period t
PE p ,i ,t = upper bound of expansion capacity for Q ( t −1)
product group p at Array site i in pe- SD p ,i ,t ,t the “output” production quantity at Ar-
=
ray site i in the production period t
riod t
for product group p which sells during
PC p ,i ,t = available capacity of product group p at ~
Array site i in period t the sale period t and releases in the
PC pr ,i ,t = remained capacity of product group p at period （t-1）
Q (t )
Array site i in period t SD p ,i ,t ,t = the “output” production quantity at Ar-
minimum production batch for product ray site i in the production period t
B p ,i =
group p at Array site i for product group p which sells during
yield for product group p produced at
~
y p , i ,t = the sale period t and releases in the
Array site i in period t period t
ELTi = expansion capacity lead time at Array
site i Objective function
LTi = production lead time at Array site i
Maximize
O p = inventory obsolescence rate of product
group p
z Cost related Parameters ⎧( SD Qp ,(i t,t−,1)t + SD Qp ,(i t,t),t ) ⎫
⎪ ( t − t )
⎪
SC p ,i = expansion cost of product group p at ⎪*(1 − O p ) ⋅ S p ,t ⎪
Array site i ⎪ Q ( t −1)
⎪
VC p ,i ,t = unit variable production cost for product ⎪ −( SD p ,i ,t ,t ⋅ VC p ,i ,t −1 ⎪
⎪ ⎪
⎪ + SD p ,i ,t ,t ⋅ VC p ,i ,t )
group p at Array site i in period t Q (t )
⎪
VC p ,i = unit average variable production cost for T I P
⎪ ⎪
product group p at Array site i in pe- ∑ ∑∑∑ Q ( t −1)
⎨ −( SD p ,i ,t ,t + SD p ,i ,t ,t )
t∈{t ≤ t } t =1 i =1 p =1 ⎪
Q (t )

riod t ⎪ (1)
T ⎪*max(( S p ,t − S p ,t ), 0) ⎪
∑ VC p ,i ,t
⎪ Q ( t −1)
⎪ −( SD p ,i ,t ,t + SD p ,i ,t ,t )
Q (t ) ⎪
⎪
VC p ,i ,t = t =1
⎪ ⎡1 − (1 − O ) ( t −t ) ⎤ ⎪
T ⎪* ⎢ ⎪
p
⎥ ⋅ HC
HC p = unit holding cost for the inventory of ⎪ ⎢⎣ O ⎥⎦
P
⎪
product group p ⎩ p ⎭
h= number of days included in each period

4.2 Capacity Configuration Phase The objective of the capacity configuration de-
cision is to maximize the total contribution margins.
The total contribution margins are calculated as total
The capacity configuration phase decides the
revenues minus total costs, included total variable
best product mix and production quantities of each
production costs, total loss costs caused by the price
product group at each array site in the each period.
depreciation and total inventory holding costs.
The MIP model of the capacity configuration is for-
mulated as below.
Lin et al.: Capacity and Product Mix Planning Problem for TFT Array Multi-Plant 495

Constraints ration as the following MIP model.

1. Array Site Capability Constraints Decision Variables

X p ,i ,t ,t ≤ M ⋅ CAp ,i ,t ∀p, i, t , t (2)
E p ,i ,t = capacity expansion decision for
XQp ,i ,t ,t ≤ M ⋅ X p ,i ,t ,t ∀p, i, t , t (3) product group p at Array site i in
production period t
2. Array Site Capacity Constraints
P （If E p ,i ,t = 1 , Array site i expands
∑ ∑ XQ
t∈{t ≤t } p =1
p ,i ,t ,t ≤ TCi ,t ∀i, t (4)
the capacity of the product group p; if
E p ,i ,t = 0 , Array site i doesn’t expand
∑
t∈{t ≤t }
XQ p ,i ,t ,t ≤ PC p ,i ,t ∀p, i, t (5)
the capacity of the product group p）
3. Minimum Production Batch Constraints
EQ p ,i ,t = expansion capacity quantity for prod-
B p ,i ⋅ max ( X p ,i ,t ,t ) ≤
t ∈{t ≤t }
∑
t∈{t ≤ t }
XQp ,i ,t ,t ∀p, i, t (6) uct group p at Array site i in period
t
4. Demand Satisfaction Constraints accumulative expansion capacity
APC p ,i ,t =
⎛ LTi ⎞ Q ( t −1) quantity for product group p at Array
⎜ ⎟ ⋅ XQp ,i ,t −1,t ⋅UPp ,i ⋅ y p ,i ,t −1 = SD p ,i ,t ,t
⎝ H ⎠ site i until period t
(7) t − ELTi
∀p, i, t , t
⎛ H − LTi ⎞
APC p ,i ,t = ∑t =1
EQ p ,i ,t
⎟ ⋅ XQp ,i ,t ,t ⋅UPp ,i ⋅ y p ,i ,t = SDp ,i ,t ,t
Q (t )
⎜
⎝ H ⎠ (8) ESD Qp ,(i t,t−1) = the “output” production quantity at
∀p, i, t , t Array site i in the production pe-
riod t for product group p which re-
∑ ∑ ( SD )
I

Q ( t −1)
p ,i ,t ,t + SD Qp ,(i t,t),t ⋅ (1 − O p )(t −t ) ≤ D p ,t ∀p, t (9) leases in the period （t-1）under the
t∈{t ≤t } i =1
expanded capacity
5. Other Constraints
ESD Qp ,(i t,t) = the “output” production quantity at
X p ,i ,t ,t = 0 or 1 ∀p, i, t , t, Binary (10) Array site i in the production pe-
riod t for product group p which re-
XQ p ,i ,t ,t ≥ 0 ∀p, i, t , t (11) leases in the period t under the ex-
panded capacity
SDQp ,(i t,t−,1)t , SDQp ,(i ,tt),t ≥ 0 ∀p, i, t , t (12)
Objective function

Because some specific product groups could

Maximize
be produced in some specific sites, the production
capability constraints are shown by constraint Eqs. (2) T I P

& (3). Constraint Eqs.(4) is the available capacity ∑∑∑ ( ESD

t =1 i =1 p =1
Q ( t −1)
p ,i ,t + ESD Qp ,(i t,t) ) ⋅ ( S p ,t − VC p ,i ,t )
constraint of each site in the each period and Con- (13)
I P
straint Eqs.(5) represents the available capacity con- − ∑∑ APC p ,i ,T ⋅ SC p ,i
straint of each site and each product group in the each i =1 p =1

period. And the constraint of the minimum produc-

tion batch quantities are represented by constraint
Eqs.(6). While the array site i wants to produce The objective of the capacity expansion is to
product p in period t, the minimum production batch maximize the total potential contribution margins
quantities must be satisfied. Finally, the demand sat- under the expansion decision. The potential total
isfaction constraints are shown as constraints Eqs. contribution margins are equal to total revenues
(7)~(9). caused by the unmet demand minus total costs, in-
cluded total variable production costs, and total ex-
pansion costs.
4.3 Capacity Expansion Phase

The purpose of capacity expansion is to iden-

tify the expansion capacity amount of each product
group at each site in each period under the existing
unmet demands. We formulate the capacity configu-
496 Journal of the Chinese Institute of Industrial Engineers, Vol. 24, No. 6 (2007)

Constraints constraint Eqs.(20). While the array site i wants to

expand the capacity of the product p in period t, the
1. Potential Expansion Capability Constraint minimum expansion quantities must be satisfied. Fi-
E p ,i ,t ≤ M ⋅ EAp ,i ∀p, i, t (14) nally, the demand satisfaction constraints under the
expanded capacities are shown as constraints Eqs.
EQ p ,i ,t ≤ M ⋅ E p ,i ,t ∀p, i, t (15) (21)~(23).
2. Capacity Expansion Constraint
t − ELTi
4.4 Capacity Exploitation Phase
APC p ,i ,t = ∑t =1
EQ p ,i ,t ∀p, i, t (16)
The capacity exploitation decision will decide
the best additional production quantities of the high-
APC p ,i ,t ≤ PE p ,i ,t ∀p, i, t (17) est profitable product group under the remained ca-
APC p ,i ,t ≤ PE p ,i ,t − PC p ,i ,t ∀p, i, t (18) pacities of the specific sites. The MIP model of the
capacity exploitation is formulated as follows.
APC p ,i ,t ≤ TCir,t ∀p, i, t (19)
Decision Variables
3. Minimum Expansion Quantities Constraints
BE p ,i ⋅ E p ,i ,t ≤ EQ p ,i ,t ∀p, i, t (20) Z p ,i ,t = product mix decision for producing
4. Demand Satisfaction Constraints the additional product group p at Ar-
ray site i in production period t
⎛ LTi ⎞ Q ( t −1)
⎜ ⎟ ⋅ APC p ,i ,t −1 ⋅ UPp ,i ⋅ y p ,i ,t −1 = ESD p ,i ,t
⎝ H ⎠ (21) （If Z pa,i ,t = 1 , Array site i produces
∀p, i, t the additional product group p; if
⎛ H − LTi ⎞ Z pa ,i ,t = 0 , Array site i doesn’t produce
⎟ ⋅ APC p ,i ,t ⋅UPp ,i ⋅ y p ,i ,t = ESDp ,i ,t
Q (t )
⎜
⎝ H ⎠ (22) the additional product group p）
∀p, i, t
ZQ p ,i ,t ,t = the “release” additional production
∑ ( ESD )≤D
I
Q ( t −1) quantity for producing the product
+ ESD Q (t ) r

i =1
p ,i , t p ,i ,t p ,t
(23) group p at Array site i in production
period t
∀p, t
ZSDQp ,(i t,t−1) = the “output” additional production
5. Other Constraints quantity at Array site i in the pro-
E p ,i ,t = 0 or 1 ∀p, i, t , Binary duction period t for producing the
(24) product group p which releases in the
period （t-1）
EQ p ,i ,t ≥ 0 ∀p, i, t (25)
ZSD Qp ,(i t,t) = the “output” additional production
quantity at Array site i in the pro-
APC p ,i ,t ≥ 0 ∀p, i, t (26)
duction period t for producing the
ESD Qp ,(i t,t−1) , ESD Qp ,(i t,t) ≥ 0 ∀p, i, t (27) product group p which releases in the
period t

Constraint Eqs.(14) & (15) is to decide Objective function

whether the array site i can expand the capacity of the
product p in period t or not. If there is EAp ,i = 1 , the Maximize
site i has a capability to expand the capacity of prod- T I P ⎧⎪( ZSD Qp ,(i t,t−1) + ZSD Qp ,(i t,t) ) ⋅ s p ,t ⎫⎪
uct group p. If there is EAp ,i = 0 , the site i has no ∑∑∑ ⎨−(ZSD p =1 ⎪
Q ( t −1)
⋅VC p ,i ,t −1 + ZSD p ,i ,t ⋅ VC p ,i ,t ) ⎭⎪
Q (t ) ⎬ (28)
t =1 i =1
⎩ p ,i ,t
capability to expand the capacity of product group p.
Constraint Eqs.(16)-(19) are all capacity expansion
constraints. Constraint Eqs.(16) means the calculation The objective of the capacity exploitation de-
of the accumulative expansion capacity quantity for cision is to maximize the total contribution margins.
product group p at the array site i until period t. Con- The total contribution margins are calculated as total
straint Eqs.(17) indicates the total expansion capacity revenues caused by the additional production quanti-
can not exceed a upper bound. Constraint Eqs.(19) ties minus total variable production costs.
indicates the total expansion capacity can not exceed
the total capacity of the array site i. The constraint of
the minimum expansion quantities are represented by
Lin et al.: Capacity and Product Mix Planning Problem for TFT Array Multi-Plant 497

Constraints plants and total capacity are depicted in Table 1 and

1. Array Site Capability Constraints
Z p ,i ,t ≤ M ⋅ CAp ,i ,t
ZQ p ,i ,t ≤ M ⋅ Z p ,i ,t
2. Array Site Capacity Constraints
P
Table 2. In addition, every product group has differ-
ent application, size, resolution, and panel dimension,
shown as Table 3. Moreover, the demand information
∀p, i, t (29) is shown as Table 4.
The production capability of array plants is in-
∀p, i, t (30) dicated in Table 5. “1” represents that the product
group is able to be manufactured in that array plant.
On the contrary, “0” represents that the product group

∑ ZQ
is NOT able to be manufactured in that array plant.
p , i ,t ≤ TCir,t ∀p, i, t (31) Therefore, Array 1 can only manufacture product
p =1
group 2, 3, 4 and 6, and Array 2 can only manufac-
ZQ p ,i ,t ≤ PC pr ,i ,t ∀p, i, t (32) ture product group 1 and 5.
Following the problem description, the plan-
3. Minimum Production Batch Constraints
ning results through three-phase capacity and product
Bp,i ,t ⋅ max(max( X p,i ,t ,t ), Z p,i ,t ) ≤
t∈{t ≤t}
∑
t∈{t ≤t}
XQp ,i ,t ,t + ZQp,i ,t
mix planning are illustrated as below.
(33)
z
∀p, i, t Phase One: Capacity Configuration
According to the capacity configuration model
4. Demand Satisfaction Constraints proposed in the section 4.2, the allocation result of
⎛ LTi ⎞ Q ( t −1)
every product group for different array plants in
⎜ ⎟ ⋅ ZQp ,i ,t −1 ⋅UPp ,i ⋅ y p ,i ,t −1 = ZSDp ,i ,t every period is shown as Table 6. And the fulfillment
⎝ H ⎠ (34)
demand quantity of every product group is indicated
∀p, i, t in Table 7. Since there are the unmet demands shown
⎛ H − LTi ⎞ as Table 9 after this phase, the capacity expansion
⎟ ⋅ ZQp ,i ,t ⋅ UPp ,i ⋅ y p ,i ,t = ZSDp ,i ,t
Q (t )
⎜ must b executed.
⎝ H ⎠ (35)
z Phase Two: Capacity Expansion
∀p, i, t Following the surplus capacity and unmet de-
5. Other Constraints mand information from phase one, the expansion
capacity amount of each product group at each site in
Z p ,i ,t = 0 or 1 ∀p, i, t , Binary (36)
each period through the method proposed in section
ZQ p ,i ,t ≥ 0 ∀p, i, t (37) 4.3 is shown in Table 10. The result shows that Array
1 can expand the capacity by 33.254 K sheets for
ZSD Qp ,(i t,t−1) , ZSD Qp ,(i t,t) ≥ 0 ∀p, i, t (38) product group 1 in the third period (Mar-06). Owing
to the expansion lead time is one month, Array 1 is
Constraints Eqs. (29) & (30) show the produc- able to manufacturing product group 1 and the capac-
tion capability constraints. Constraint Eqs.(31) is the ity constraint for product group 1 is 33.254 K sheets
available capacity constraint of each site in the each after the forth period (Mar-06). The accumulative
period and Constraint Eqs.(32) represents the avail- expansion capacity amount for every period is shown
able capacity constraint of each site and each product in Table 11.
group in the each period. The constraint of the mini- z Re-planning Phase One: Capacity Configura-
mum production batch quantities are represented by tion
constraint Eqs.(33). Finally, the demand satisfaction According to the result of the expansion ca-
constraints are shown as constraints Eqs. (34)~(35). pacity amount from phase two, Array 1 requires to
purchase new tools to expand its capacity for pro-
ducing product group 1. Therefore, we need to go
5. NUMERICAL EXAMPLE back to phase one to re-plan the capacity configura-
tion for getting the new capacity and product mix
In order to verify the feasibility and reason-
plan. The planning results are shown in Table 12 and
ability of capacity and product mix planning prob-
13.
lems for TFT Array multi-plant, an example is pre-
The results of surplus capacity and the unmet
sented in this section. In the example, we simplify the
demand from re-planning capacity configuration are
capacity and product mix planning problems of
shown in Table 14 and 15. The surplus capacity of
TFT-LCD production chain in the real world. There
Array 1 is now decreased significantly after Array 1
are six product group and two array plants in this
is capable of manufacturing product group 1. How-
model. The planning horizon is one year and the
ever, the demand of product group 1 is still not ful-
planning period is one month.
filled completely and the capacity for product group 1
Array 1 and Array 2 are designed to be G3.5
will not be expanded in phase two. In such situation,
and G4.0 plants, and the detail information of the
some demands can not be totally fulfilled.
498 Journal of the Chinese Institute of Industrial Engineers, Vol. 24, No. 6 (2007)

z Phase Three: Capacity Exploitation
If there is surplus capacity after re-planning
the phase one, we continue to proceed to phase
three—capacity exploitation to maximize the capac-
ity utilization. The planning results are shown as Ta-
ble 16. The surplus capacity of Array 1 is assigned to
manufacture the additional production quantities of
product group 3 in advance to maximize the total
contribution marginal profit.
6. CONCLUSION
The strategic capacity and product mix plan-
ning problems is a complicated and difficult decision
for the TFT-LCD industry. This research decomposes
this complex problem into the three decision models
and develops the sequential and iterative solution
methodology to solve this real problem. There are
three phases in the proposed methodology, including
(1) capacity configuration, (2) capacity expansion,
and (3) capacity exploitation. In the first phase, we
allocate production capacity in each plant to produce
a suit product mix set. If demand forecast is greater
than supply capacity for a specific product group, we
evaluate the feasibility to expand production capacity
in the second phase. In the third phase, we suggest
best additional production quantity of the profitable
product group to exploit the remained capacity ade-
quately.
In the future, two extended problems can con-
tinuously study. One problem can study the capacity
and product mix planning in the more complicated
production chain involved multi-stage and multi-site
structure. This paper only considers the single-stage
and multi-site structure, since the array stage is an
important bottleneck of the TFT-LCD production
chain. Another issue can study the stochastic capacity
and product mix planning problem under the demand
uncertainty since the demand forecasts usually are
inaccuracy.

Table 1. Array plants information

Substrate Dimension Array Cell Module Through
Plant Generation
mm mm mm x mm LT (days) LT (days) LT (days) LT (days)

Array 1 G3.5 620 750 465,000 5 3 3 11

Array 2 G4 680 880 598,400 6 3 3 12

Table 2. Total capacity information

Total capacity (K sheets/ per month)

Plant Jan-06 Feb-06 Mar-06 Apr-06 May-06 Jun-06 Jul-06 Aug-06 Sep-06 Oct-06 Nov-06 Dec-06
Array 1 80 80 80 80 80 80 80 80 80 80 80 80

Array 2 100 100 100 100 100 100 100 100 100 100 100 100

Table 3. Product group information

Resolution Panel Dimension
Product Group Application Size
H V mm mm mm x mm

1 Monitor 19.0" 1280 1024 377 301 113,477

2 Monitor 19.0"W 1440 900 409 256 104,704

3 Notebook 12.1"W 1280 800 261 163 42,543

4 Notebook 14.1" 1024 768 287 215 61,705

5 Notebook 14.1"W 1280 800 304 190 57,760

6 Notebook 15.4"W 1280 800 332 207 68,724

Lin et al.: Capacity and Product Mix Planning Problem for TFT Array Multi-Plant 499

Table 4. Demand information

Demand (K pieces/ per month)

Product Group Jan-06 Feb-06 Mar-06 Apr-06 May-06 Jun-06 Jul-06 Aug-06 Sep-06 Oct-06 Nov-06 Dec-06

1 310.765 310.765 310.765 366.995 366.995 366.995 465.158 465.158 465.158 534.675 534.675 534.675

2 33.471 33.471 33.471 10.274 10.274 10.274 14.587 14.587 14.587 19.803 19.803 19.803

3 31.593 31.593 31.593 27.542 27.542 27.542 29.349 29.349 29.349 29.553 29.553 29.553

4 135.756 135.756 135.756 121.796 121.796 121.796 121.651 121.651 121.651 116.463 116.463 116.463

5 65.273 65.273 65.273 81.476 81.476 81.476 119.565 119.565 119.565 151.855 151.855 151.855

6 24.561 24.561 24.561 34.382 34.382 34.382 19.432 19.432 19.432 19.432 19.432 19.432

Table 5. Production capability information

Production Capability

Product Group Plant

Jan-06 Feb-06 Mar-06 Apr-06 May-06 Jun-06 Jul-06 Aug-06 Sep-06 Oct-06 Nov-06 Dec-06
Array 1 0 0 0 0 0 0 0 0 0 0 0 0
1
Array 2 1 1 1 1 1 1 1 1 1 1 1 1

Array 1 1 1 1 1 1 1 1 1 1 1 1 1
2
Array 2 0 0 0 0 0 0 0 0 0 0 0 0

Array 1 1 1 1 1 1 1 1 1 1 1 1 1
3
Array 2 0 0 0 0 0 0 0 0 0 0 0 0

Array 1 1 1 1 1 1 1 1 1 1 1 1 1
4
Array 2 0 0 0 0 0 0 0 0 0 0 0 0

Array 1 0 0 0 0 0 0 0 0 0 0 0 0
5
Array 2 1 1 1 1 1 1 1 1 1 1 1 1

Array 1 1 1 1 1 1 1 1 1 1 1 1 1
6
Array 2 0 0 0 0 0 0 0 0 0 0 0 0

Table 6. Result of capacity and product group allocation plan

Allocation Quantity (K sheets/ per month)
Product Group Site
Jan-06 Feb-06 Mar-06 Apr-06 May-06 Jun-06 Jul-06 Aug-06 Sep-06 Oct-06 Nov-06 Dec-06
Array 1 0 0 0 0 0 0 0 0 0 0 0 0
1
Array 2 90.622 90.622 90.622 86.742 89.328 87.604 79.633 84.947 81.404 76.034 79.614 77.227

Array 1 19.46 22.63 16.29 0 9.431 3.971 11.092 6.969 9.356 12.763 10.79 11.932
2
Array 2 0 0 0 0 0 0 0 0 0 0 0 0

Array 1 4.539 4.539 4.539 3.62 4.152 3.844 4.432 4.092 4.289 4.221 4.261 4.238
3
Array 2 0 0 0 0 0 0 0 0 0 0 0 0

Array 1 26.007 26.007 26.007 21.784 24.229 22.814 23.589 23.14 23.4 21.68 22.676 22.1
4
Array 2 0 0 0 0 0 0 0 0 0 0 0 0

Array 1 0 0 0 0 0 0 0 0 0 0 0 0
5
Array 2 9.378 9.378 9.378 13.258 10.672 12.396 20.367 15.053 18.596 23.966 20.386 22.773

Array 1 7.058 7.058 7.058 11.514 8.934 10.428 2.78 7.207 4.644 6.128 5.269 5.766
6
Array 2 0 0 0 0 0 0 0 0 0 0 0 0

Array 1 57.064 60.233 53.894 36.918 46.746 41.057 41.893 41.409 41.689 44.793 42.996 44.036
Total
Array 2 100 100 100 100 100 100 100 100 100 100 100 100
500 Journal of the Chinese Institute of Industrial Engineers, Vol. 24, No. 6 (2007)

Table 7. Fulfillment demands of each product group

Fulfillment Quantity (K pieces/ per month)
Product Group
Jan-06 Feb-06 Mar-06 Apr-06 May-06 Jun-06 Jul-06 Aug-06 Sep-06 Oct-06 Nov-06 Dec-06
1 310.765 310.765 310.765 303.341 303.73 303.73 284.905 284.905 284.905 271.867 268.945 268.945

2 33.471 33.471 33.471 10.274 10.274 10.274 14.587 14.587 14.587 19.803 19.803 19.803

3 31.593 31.593 31.593 27.542 27.542 27.542 29.349 29.349 29.349 29.553 29.553 29.553

4 135.756 135.756 135.756 121.796 121.796 121.796 121.651 121.651 121.651 116.463 116.463 116.463

5 65.273 65.273 65.273 81.476 81.476 81.476 119.565 119.565 119.565 151.855 151.855 151.855

6 24.561 24.561 24.561 34.382 34.382 34.382 19.432 19.432 19.432 19.432 19.432 19.432

Table 8. Surplus capacity

Residual Total capacity (K sheets/ per month)
Plant Jan-06 Feb-06 Mar-06 Apr-06 May-06 Jun-06 Jul-06 Aug-06 Sep-06 Oct-06 Nov-06 Dec-06
Array 1 22.936 19.767 26.106 43.082 33.254 38.943 38.107 38.591 38.311 35.207 37.004 35.964

Array 2 0 0 0 0 0 0 0 0 0 0 0 0

Table 9. Unmet demands of each product group

Unmet Demand Quantity (K pieces/ per month)
Product Group
Jan-06 Feb-06 Mar-06 Apr-06 May-06 Jun-06 Jul-06 Aug-06 Sep-06 Oct-06 Nov-06 Dec-06
1 0 0 0 63.654 63.265 63.265 180.253 180.253 180.253 262.808 265.73 265.73

2 0 0 0 0 0 0 0 0 0 0 0 0

3 0 0 0 0 0 0 0 0 0 0 0 0

4 0 0 0 0 0 0 0 0 0 0 0 0

5 0 0 0 0 0 0 0 0 0 0 0 0

6 0 0 0 0 0 0 0 0 0 0 0 0
Lin et al.: Capacity and Product Mix Planning Problem for TFT Array Multi-Plant 501

Table 10. Capacity expansion result–the expansion capacity amount

Expansion Quantity (K sheets/ per month)
Product Group Site
Jan-06 Feb-06 Mar-06 Apr-06 May-06 Jun-06 Jul-06 Aug-06 Sep-06 Oct-06 Nov-06 Dec-06
Array 1 0 0 33.254 0 0 0 0 0 0 0 0 0
1
Array 2 0 0 0 0 0 0 0 0 0 0 0 0

Array 1 0 0 0 0 0 0 0 0 0 0 0 0
2
Array 2 0 0 0 0 0 0 0 0 0 0 0 0

Array 1 0 0 0 0 0 0 0 0 0 0 0 0
3
Array 2 0 0 0 0 0 0 0 0 0 0 0 0

Array 1 0 0 0 0 0 0 0 0 0 0 0 0
4
Array 2 0 0 0 0 0 0 0 0 0 0 0 0

Array 1 0 0 0 0 0 0 0 0 0 0 0 0
5
Array 2 0 0 0 0 0 0 0 0 0 0 0 0

Array 1 0 0 0 0 0 0 0 0 0 0 0 0
6
Array 2 0 0 0 0 0 0 0 0 0 0 0 0

Table 11. Accumulative expansion capacity amount for every period

Accumulative expansion capacity amount (K sheets/ per month)
Product Group Site
Jan-06 Feb-06 Mar-06 Apr-06 May-06 Jun-06 Jul-06 Aug-06 Sep-06 Oct-06 Nov-06 Dec-06
Array 1 0 0 0 33.254 33.254 33.254 33.254 33.254 33.254 33.254 33.254 33.254
1
Array 2 0 0 0 0 0 0 0 0 0 0 0 0

Array 1 0 0 0 0 0 0 0 0 0 0 0 0
2
Array 2 0 0 0 0 0 0 0 0 0 0 0 0

Array 1 0 0 0 0 0 0 0 0 0 0 0 0
3
Array 2 0 0 0 0 0 0 0 0 0 0 0 0

Array 1 0 0 0 0 0 0 0 0 0 0 0 0
4
Array 2 0 0 0 0 0 0 0 0 0 0 0 0

Array 1 0 0 0 0 0 0 0 0 0 0 0 0
5
Array 2 0 0 0 0 0 0 0 0 0 0 0 0

Array 1 0 0 0 0 0 0 0 0 0 0 0 0
6
Array 2 0 0 0 0 0 0 0 0 0 0 0 0
502 Journal of the Chinese Institute of Industrial Engineers, Vol. 24, No. 6 (2007)

Table 12. Result of capacity and product group allocation plan for re-planning capacity configuration
Allocation Quantity (K sheets/ per month)
Product Group Site
Jan-06 Feb-06 Mar-06 Apr-06 May-06 Jun-06 Jul-06 Aug-06 Sep-06 Oct-06 Nov-06 Dec-06
Array 1 0 0 0 33.254 33.254 33.254 33.254 33.254 33.254 33.254 33.254 33.254
1
Array 2 90.622 90.622 90.622 86.742 89.328 87.604 79.633 84.947 81.404 76.034 79.614 77.227

Array 1 19.46 22.63 16.29 0 9.431 3.971 11.092 6.969 9.356 12.763 10.79 11.932
2
Array 2 0 0 0 0 0 0 0 0 0 0 0 0

Array 1 4.539 4.539 4.539 3.62 4.152 3.844 4.432 4.092 4.289 4.221 4.261 4.238
3
Array 2 0 0 0 0 0 0 0 0 0 0 0 0

Array 1 26.007 26.007 26.007 21.784 24.229 22.814 23.589 23.14 23.4 21.68 22.676 22.1
4
Array 2 0 0 0 0 0 0 0 0 0 0 0 0

Array 1 0 0 0 0 0 0 0 0 0 0 0 0
5
Array 2 9.378 9.378 9.378 13.258 10.672 12.396 20.367 15.053 18.596 23.966 20.386 22.773

Array 1 7.058 7.058 7.058 11.514 8.934 10.428 2.78 7.207 4.644 6.128 5.269 5.766
6
Array 2 0 0 0 0 0 0 0 0 0 0 0 0

Array 1 57.064 60.233 53.894 70.172 80 74.31 75.146 74.662 74.942 78.046 76.249 77.29
Total
Array 2 100 100 100 100 100 100 100 100 100 100 100 100

Table 13. Fulfillment demands for re-planning capacity configuration

Fulfillment Quantity (K pieces/ per month)
Product Group
Jan-06 Feb-06 Mar-06 Apr-06 May-06 Jun-06 Jul-06 Aug-06 Sep-06 Oct-06 Nov-06 Dec-06
1 310.77 310.765 310.765 339.565 360.927 360.927 342.101 342.101 342.101 329.064 326.142 326.142

2 33.471 33.471 33.471 10.274 10.274 10.274 14.587 14.587 14.587 19.803 19.803 19.803

3 31.593 31.593 31.593 27.542 27.542 27.542 29.349 29.349 29.349 29.553 29.553 29.553

4 135.76 135.756 135.756 121.796 121.796 121.796 121.651 121.651 121.651 116.463 116.463 116.463

5 65.273 65.273 65.273 81.476 81.476 81.476 119.565 119.565 119.565 151.855 151.855 151.855

6 24.561 24.561 24.561 34.382 34.382 34.382 19.432 19.432 19.432 19.432 19.432 19.432

Table 14. Surplus capacity for re-planning capacity configuration

Residual Total capacity (K sheets/ per month)
Plant Jan-06 Feb-06 Mar-06 Apr-06 May-06 Jun-06 Jul-06 Aug-06 Sep-06 Oct-06 Nov-06 Dec-06
Array 1 22.936 19.767 26.106 9.828 0 5.69 4.854 5.338 5.058 1.954 3.751 2.71

Array 2 0 0 0 0 0 0 0 0 0 0 0 0

Table 15. Unmet demands for re-planning capacity configuration

Product Unmet Demand Quantity (K pieces/ per month)
Group
Jan-06 Feb-06 Mar-06 Apr-06 May-06 Jun-06 Jul-06 Aug-06 Sep-06 Oct-06 Nov-06 Dec-06
1 0 0 0 27.43 6.069 6.069 123.057 123.057 123.057 205.611 208.533 208.533

2 0 0 0 0 0 0 0 0 0 0 0 0

3 0 0 0 0 0 0 0 0 0 0 0 0

4 0 0 0 0 0 0 0 0 0 0 0 0

5 0 0 0 0 0 0 0 0 0 0 0 0

6 0 0 0 0 0 0 0 0 0 0 0 0
Lin et al.: Capacity and Product Mix Planning Problem for TFT Array Multi-Plant 503

Table 16. Capacity exploitation result

Product Additional Production Quantity (K sheets/ per month)
Site
Group
6-Jan 6-Feb 6-Mar 6-Apr 6-May 6-Jun 6-Jul 6-Aug 6-Sep 6-Oct 6-Nov 6-Dec
Array 1 0 0 0 0 0 0 0 0 0 0 0 0
1
Array 2 0 0 0 0 0 0 0 0 0 0 0 0

Array 1 0 0 0 0 0 0 0 0 0 0 0 0
2
Array 2 0 0 0 0 0 0 0 0 0 0 0 0

Array 1 22.936 19.767 26.106 9.828 0 5.69 4.854 5.338 5.058 1.954 3.751 2.71
3
Array 2 0 0 0 0 0 0 0 0 0 0 0 0

Array 1 0 0 0 0 0 0 0 0 0 0 0 0
4
Array 2 0 0 0 0 0 0 0 0 0 0 0 0

Array 1 0 0 0 0 0 0 0 0 0 0 0 0
5
Array 2 0 0 0 0 0 0 0 0 0 0 0 0

Array 1 0 0 0 0 0 0 0 0 0 0 0 0
6
Array 2 0 0 0 0 0 0 0 0 0 0 0 0

Array 1 22.936 19.767 26.106 9.828 0 5.69 4.854 5.338 5.058 1.954 3.751 2.71
Total
Array 2 0 0 0 0 0 0 0 0 0 0 0 0

REFERENCES constrained budget”, Production Planning & Control,

13, 429-437 (2002).

1. Christie, R. M. E. and S. D. Wu, “Semiconductor ca-
pacity planning: stochastic modeling and computa-
tional studies”, IIE Transactions, 34, 131-143 (2002).
2. Chun, Y. C., and I. H. Hong, “A methodology for
product mix planning in semiconductor foundry
manufacturing”, IEEE Transactions on Semiconductor
Manufacturing, 13, 278-285 (2000).
3. Chung, S. H., A .H. I. Lee and W. L. Pearn, “Product
mix optimization for semiconductor manufacturing
based on AHP and ANP analysis”, International
Journal of Advanced Manufacturing Technology, 25,
1144-1156 (2005).
4. Chung, S. H., A. H. I Lee, and W. L. Pearn, “Analytic
network process (ANP) approach for product mix
planning in semiconductor fabricator”, International
Journal of Production Economics, 96, 15-36 (2005).
5. Hopp, W. J. and M. L. Spearman, Factory Physics:
Foundations of Manufacturing Management, Second
Edition, McGraw-Hill, New York (2000).
6. Karabuk, S. and S. D. Wu, “Coordinating strategic
capacity planning in the semiconductor industry”, Op-
erations Research, 51, 839-849 (2003).
7. Lin, J. T., T. L. Chen and Y. T. Lin, “A hierarchical
planning and scheduling framework for TFT-LCD
production chain”, Proceedings of IEEE International
Conference on Service Operations and Logistics, and
Informatics, Jun. 21-23, Shanghai, China, 711-716
(2006).
8. Wang, K. J. and S. H. Lin, “Capacity expansion and
allocation for a semiconductor testing facility under
9. Wang, K. J. and T. C. Hou, “Modelling and resolving
the joint problem of capacity expansion and allocation
with multiple resources and a limited budget in the
semiconductor testing industry”, International Journal
of Production Research, 41, 3217-3235 (2003).
10. Wang, K. J., S. M. Wang and S. J. Yang, “A resource
portfolio model for equipment investment and alloca-
tion of semiconductor testing industry”, European
Journal of Operational Research, 179, 390-403
(2007).
11. Wu, S. D., M. Erkoc and S. Karabuk, “Managing ca-
pacity in the high-tech industry: a review of literature”,
The Engineering Economist, 50, 125-158 (2005).
ABOUT THE AUTHORS
James T. Lin is a Professor in the Department of
Industrial Engineering and Engineering Management
at National Tsing-Hua University (NTHU), Taiwan
R.O.C. He received his Ph.D. degree in Industrial
Engineering at Lehigh University in 1986. His cur-
rent research and teaching interests are in the general
area of Supply Chain and Production Management. In
particular, he is interested in Supply Chain Manage-
ment, Simulation Modeling of Manufacturing Sys-
tems, Advanced Planning and Scheduling. He is a
member of IIE, SCS, and CIIE.
Tzu-Li Chen is a Ph.D graduate student of Industrial
Engineering and Engineering Management at Na-
tional Tsing-Hua University (NTHU). His research
interests are Simulation, Planning and Scheduling.
504 Journal of the Chinese Institute of Industrial Engineers, Vol. 24, No. 6 (2007)

Wei-June Chen received his MS degree from Indus- Scheduling.

trial Engineering and Engineering Management De-
partment at National Tsing-Hua University (NTHU). (Received May 2007; revised March 2007; accepted
His research interests are Simulation, Planning and May 2007)

TFT Array 多廠區之產能與產品組合規劃問題

林則孟、陳子立*、陳韋均
清華大學工業工程與工程管理學系
300 新竹市光復路二段 101 號工程一館

摘要

本研究針對薄膜液晶顯示器(TFT-LCD)面板業之策略層次的產能與產品組合規劃問題
進行探討，提出一適用於目前 TFT 陣列(Array)多廠區的產能與產品組合規劃之決策模
式，以解決目前業界所面臨之問題。TFT Array 多廠區之產能與產品組合規劃問題，
主要是根據各產品族的需求預測，考量各產品族於不同世代廠區生產的材料利用率、
各世代廠區的產能與生產能力限制、生產變動成本、存貨驅動成本等，以最大化邊際
貢獻(contribution margin)為目標，決定 TFT Array 各世代廠區最適合生產的產品族集
合，與各產品族於各世代廠區之生產數量。當供給產能與需求預測有差異時，將供給
產能與需求預測進行平衡，若供給產能小於需求預測時，評估是否需要擴充各世代廠
區之設備，以增加供給產能水準；若供給產能大於需求預測時，則必須有效利用已投
資之廠區設備，決定投入生產的供給產能水準，以最小化產能損失成本。本研究針對
TFT Array 多廠區之產能與產品組合規劃問題，提出三階段之規劃方法論：(1)階段一：
產能與產品組合分配，將需求預測與供給產能作最佳化的組合分配，以達到最大邊際
貢獻；(2)階段二：產能擴充，當需求預測大於供給產能時，評估是否可擴充產能以滿
足最大化需求；(3)階段三：產能填補，當各廠區仍有剩餘產能時，則建議額外投入之
產品族與投入數量，以降低產能損失成本，創造最大化之利益。

關鍵字：產品組合規劃、產能規劃、薄膜液晶顯示器、多廠區規劃
(*聯絡人: d927812@oz.nthu.edu.tw)