Research Initiation: Coordinating the Production of Components and Assemblies When Demands and Yields are Random

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The objective of this project is to study the problem of coordinating the production of a seat of assemblies and of the components required to produce them when the component production yields and the demand for the assemblies are random. This problem is one of inter-plant coordination since the components and the assemblies are usually produced in different plants. The project is motivated by a problem in semiconductor manufacturing where a set of chips (components) is used to produce different thermo- conductor modules (assemblies). The problem is formulated as a stochastic program. The research effort is divided between approximation schemes that exploit special structures of decomposition procedure that solves the problems in two stages. An important tool is a new lower bound on the expectation of the minimum of a set of random variables. Proper plant coordination should result in higher expected (utility of) profit and in an increased ability to satisfy demand for the assemblies. Moreover, it should reduce the burden for the plants producing components by releasing components for production in the right mix.