Analysis of the mass balance and wafer starts method to prevent excess inventory for XYZ semiconductor corporation

Abstract

XYZ semiconductors is an American multinational company specialized in manufacturing semiconductors, programmable and logic circuits. The company has 10 major Product lines with numerous product categories within them. The products manufactured by XYZ semiconductors are used across various applications such as wearables, remote controls, lighting solutions, home automation, automotive, consumer electronics, industrial and medical devices. The supply chain of XYZ semiconductors has four major sections which are FAB, Die bank, Bank End (BE) process and FG (Finished goods) section. While the section of the supply chain from FAB to Die-bank is called as “Front End” process, the section of the supply chain from the Die bank to Back end process which includes Assembly, Test and Finish is called as the “Back End” process. The Front End process follows “Build to Forecast” model with lead time ranging between 8 to 13 weeks. The Back End process follows “Build to Order” model with a lead time of 4 weeks. Production is also done in batches. The batch size is normally held at 25 wafers wherein a single wafer includes 10,000 dies. All products of the company have been mapped under a Division, Biz Unit and Family. We also have data pertaining to BE parts, several of which are mapped to a single FE (Front end) part along with their demand and standard deviation. We were also provided with data pertaining to the cycle times for each FE part (Both Front end and Back end Cycle times). Currently XYZ manages inventory based on two critical data. The first is actual consumer demand which in XYZ terminology is referred to as ‘Backlog’. The second is referred as ‘Build Plan’. The Build plan contains the forecast shared by the marketing team for various parts. The primary objective of this project is to develop an analytical model which would enable XYZ to predict the total inventory which has to maintained across the Company. We are also expected to provide a breakup of the total inventory which needs to be carried across all four levels (FAB, Die bank, BE and FG).