Impact of price decline on planning and scheduling

Fast technology improvement and product replacement lead to a rapid decline in average selling prices of semiconductor products. It is observed from historical data that such price decline follows a predictable, stable rate. A quantitative estimation of these decline rates can be incorporated into fab planning and scheduling based on optimization of the total realized revenue, which is affected by the value depreciation caused by manufacturing cycle time. This study compares the revenue-oriented methods for planning and scheduling with those considering only cost optimization on three hierarchical levels: production planning, release scheduling, and shop floor dispatching. We demonstrate that the largest gain in profitability from application of revenue-oriented methods is at the planning level, i.e., leverage declines as the time horizon and focus is narrowed