Operations improvement in a semiconductor capital equipment manufacturing plant : capacity management and inventory policies

Abstract

This thesis addresses the challenge of increasing capacity in a high-mix low-volume semiconductor equipment assembly plant, without investing in additional floor space or labor shifts. A hypothesis-driven methodology is used to analyze the factory operations and identify factors limiting capacity. Based on the preliminary analysis, a hypothesis tree is developed. Space, effective utilization of labor for assembly operations and inventory stock-outs are identified to be the main factors limiting the plant's capacity. A factory simulation model is used to estimate current capacity and identify imbalances in the assembly line design. A new layout is developed which is capable of increasing throughput by 30% with five fewer assembly bays on the shop floor. Implementing the new layout in addition to increasing the percentage of labor hours devoted to assembly operations is expected to increase capacity by 36%. An improvement in percentage of labor hours dedicated to assembly operations is observed to result in a greater increase in throughput for the proposed layout compared to the current layout. Based on the above findings, a comprehensive labor and space utilization strategy is presented to the management for increasing plant capacity. Line starvation or inflated operation times due to inventory shortage lowers the capacity of the plant. Hence, a finished goods inventory policy is proposed based on the base-stock model to effectively manage the high-volume assemblies which are made in the supermarket area on a make-to-stock basis for downstream usage in the assembly line. Shortage of inventory at the component level is found to be a major cause of stock-outs for these assemblies. A systematic component level inventory policy is developed to improve the service level. The proposed inventory policies are also expected to reduce expediting costs and total safety stock costs across the bill of materials for the high volume assemblies.