SGER: Joint Optimization of Resource Allocation and Operational Decisions for Improving Random Yield

University Of Minnesota-Twin Cities, Minneapolis MN

Investigators

Abstract

This Small Grant for Exploratory Research (SGER) will focus on the manufacture of integrated circuits (ICs) and the provision of air travel as the central examples of such manufacturing and service industries. The goal is to develop mathematical models that provide a basis for determining how to allocate scarce resources among a variety of possible methods available to improve yield. Among the key questions to be addressed are: (1) How do different yield-altering interventions affect the parameters of the yield distribution? (2) How are operational decisions affected by changes in yield distributions? (3) Under which stochastic and/or parametric orders of yield distributions does a company benefit economically? (4) How can the magnitude of this benefit be quantified? These questions will be answered using techniques from operations research, including Markov decision processes, stochastic/variability orderings, and stochastic programming. The increasing complexity of production processes and the ability to create and manage a large number of market segments in service industries have served to elevate the importance of yield management to manufacturers and service providers alike. There is an extensive body of literature dealing with mathematical models necessary to make production-inventory decisions in the manufacturing context, or analogously, to decide how much capacity to make available in a particular fare-class, or how much to overbook, in the service industry context. This research will provide a bridge between two disparate bodies of literature by developing common models to evaluate yield-altering interventions.