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Optimization Models for Production Planning in LG Display

Author

Listed:
  • Seokcheol Chang

    (SCM Team, LG Display Co., Ltd., 150-721 Seoul, South Korea)

  • Jaewoo Chung

    (School of Business Administration, Kyungpook National University–Daegu, 702-701 South Korea)

Abstract

This paper introduces an application for production planning based on multiple linear programming models for a light-emitting diode (LED) array assembly. The proposed method, multirank mixing (MRM) optimization, focuses on reducing the inventory level of the LED parts used for various electronic devices, while also meeting customer demands. In this industry, high inventory levels result in high scrap rates for LED parts because product models change frequently. Therefore, maintaining low inventory levels is critical. MRM optimization determines the best combination of LED parts for each assembly step, given inventory levels of LED parts with varying quality characteristics. The results of our performance testing show that our proposed method outperforms a heuristic method that requires intensive effort by human planners. When LG Display used MRM optimization at one of its LED manufacturing facilities, the scrap rate for LED packages decreased substantially.

Suggested Citation

  • Seokcheol Chang & Jaewoo Chung, 2013. "Optimization Models for Production Planning in LG Display," Interfaces, INFORMS, vol. 43(6), pages 518-529, December.
    • Handle: RePEc:inm:orinte:v:43:y:2013:i:6:p:518-529
    DOI: 10.1287/inte.2013.0698
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    References listed on IDEAS

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    1. Chen, Kejia & Ji, Ping, 2007. "A mixed integer programming model for advanced planning and scheduling (APS)," European Journal of Operational Research, Elsevier, vol. 181(1), pages 515-522, August.
    2. Gerald Brown & Joseph Keegan & Brian Vigus & Kevin Wood, 2001. "The Kellogg Company Optimizes Production, Inventory, and Distribution," Interfaces, INFORMS, vol. 31(6), pages 1-15, December.
    3. Jennifer L. Loveland & Susan K. Monkman & Douglas J. Morrice, 2007. "Dell Uses a New Production-Scheduling Algorithm to Accommodate Increased Product Variety," Interfaces, INFORMS, vol. 37(3), pages 209-219, June.
    4. Victor Portougal & David J. Robb, 2000. "Production Scheduling Theory: Just Where Is It Applicable?," Interfaces, INFORMS, vol. 30(6), pages 64-76, December.
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    Cited by:

    1. Z. Caner Taşkın & Semra Ağralı & A. Tamer Ünal & Vahdet Belada & Filiz Gökten-Yılmaz, 2015. "Mathematical Programming-Based Sales and Operations Planning at Vestel Electronics," Interfaces, INFORMS, vol. 45(4), pages 325-340, August.
    2. Moo-Sung Sohn & Jiwoong Choi & Hoseog Kang & In-Chan Choi, 2017. "Multiobjective Production Planning at LG Display," Interfaces, INFORMS, vol. 47(4), pages 279-291, August.

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