A shadow-price based heuristic for capacity planning of TFT-LCD manufacturing

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January 2010, 6(1): 209-239. doi: 10.3934/jimo.2010.6.209

A shadow-price based heuristic for capacity planning of TFT-LCD manufacturing

Tzu-Li Chen ^1, , James T. Lin ^1, and Shu-Cherng Fang ^2,

1.	Department of Industrial Engineering and Engineering Management, National Tsing-Hua University, Hsinchu, Taiwan, Taiwan
2.	Edward P. Fitts Department of Industrial and Systems Engineering, North Carolina State University, Raleigh, NC, United States

Received March 2009 Revised October 2009 Published November 2009

Abstract
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This paper studies the capacity planning and expansion for the thin film transistor - liquid crystal display (TFT-LCD) manufacturing. Capacity planning is critical to TFT-LCD industry due to its complex product hierarchy and increasing product types; the coexistence of multiple generations of manufacturing technologies in a multi-site production environment; and the rapidly growing market demands. One key purpose of capacity planning is to simultaneously determine the profitable "product mix" and "production quantities" of each product group across various generation sites in a particular period and the optimal "capacity expansion quantity" of specific product groups at a certain site to improve the limited flexibility configurations through the acquisition of new auxiliary tools. This paper proposes a mixed integer linear programming model for capacity planning that incorporates practical characteristics and constraints in TFT-LCD manufacturing. A shadow-price based heuristic is developed to find a near-optimal solution. Preliminary computational study shows that the proposed heuristic provides good quality solutions in a reasonable amount of time. The proposed heuristic outperforms the traditional branch and bound method as the data size becomes large.

Keywords: shadow price., mixed integer linear programming, Capacity planning, TFT-LCD manufacturing.

Mathematics Subject Classification: Primary: 90C11, 90C59; Secondary: 90C9.

Citation: Tzu-Li Chen, James T. Lin, Shu-Cherng Fang. A shadow-price based heuristic for capacity planning of TFT-LCD manufacturing. Journal of Industrial & Management Optimization, 2010, 6 (1) : 209-239. doi: 10.3934/jimo.2010.6.209

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