1. Fordyce, Fournier, Milne, Singh Illusion of FAB Capacity in Central Planning – hunt for CAPAVAIL 1 The Ongoing Challenge - Tutorial The Illusion Of Capacity Incorporating the Complexity Of FAB Capacity (tool deployment & operating curve) into Central Planning for Demand-Supply Networks for the production of semiconductor based packaged goods with substantial non-FAB complexity Illustrate Complexity of Interactions and the Illusion of Capacity part 4 of 4 Ken Fordyce & John Fournier, IBM Prof. John Milne, Clarkson University Dr. Harpal Singh, CEO Arkieva

2. Fordyce, Fournier, Milne, Singh Illusion of FAB Capacity in Central Planning – hunt for CAPAVAIL 2 Complexity of Interactions Wafer Start Decision –Profit, client (demand) requirements –Linked with capacity required  actual capacity needed Cycle Time Decision –Linked with OPCurve  utilization level required to meet cycle time; “cost” in terms of capacity idle without WIP or “tax” to meet cycle time commit Raw Capacity Available Decision –linked to utilization  effective capacity available Capacity allocation constrained by deployment –linked to effective capacity available  actual capacity available Wafer start decision is feasible when –Capacity needed ≤ Capacity Available “optimal” – meeting prioritized set of demands over time Now requires balancing: starts, cycle time, capacity allocation And perhaps deployment

3. Fordyce, Fournier, Milne, Singh Illusion of FAB Capacity in Central Planning – hunt for CAPAVAIL 3 INPUT Parameters WAFER STARTS Decisions allocation of shared CAPAVAIL implicit CAPAVAIL CAPREQ Customer Requirements (demand) CYCLE TIME Traditional CPE

4. Fordyce, Fournier, Milne, Singh Illusion of FAB Capacity in Central Planning – hunt for CAPAVAIL 4 INPUT Parameters Traditional CPE WAFER STARTS Decisions allocation of shared CAPAVAIL implicit CAPAVAIL CAPREQ Customer Requirements (demand) CYCLE TIME Cycle Time Alpha offset Tool Utilization Deployment & Route (opers) Tool Allocation Across Opers “FAB Detail” Decisions which influence CAPAVAIL Behind the Drapes of a Traditional CPE

5. Fordyce, Fournier, Milne, Singh Illusion of FAB Capacity in Central Planning – hunt for CAPAVAIL 5 Complexity of Interactions Wafer Start Decision –Profit, client (demand) requirements –Linked with capacity required  actual capacity needed Cycle Time Decision –Linked with OPCurve  utilization level required to meet cycle time; “cost” in terms of capacity idle without WIP or “tax” to meet cycle time commit Raw Capacity Available Decision –linked to utilization  effective capacity available Capacity allocation constrained by deployment –linked to effective capacity available  actual capacity available Wafer start decision is feasible when –Capacity needed ≤ Capacity Available “optimal” – meeting prioritized set of demands over time Now requires balancing: starts, cycle time, capacity allocation And perhaps deployment

6. Fordyce, Fournier, Milne, Singh Illusion of FAB Capacity in Central Planning – hunt for CAPAVAIL 6 Challenge for Central Planning What is the REAL capacity How to approximate the real capacity in the FAB (factory) How to develop smarter solvers for central planning engines to handle tool complexity How to dynamically incorporate the relationship between cycle time and capacity in the model and decision process How to incorporate the a confidence or prediction interval for the operating curve into central planning

7. Fordyce, Fournier, Milne, Singh Illusion of FAB Capacity in Central Planning – hunt for CAPAVAIL 7 Observation This example makes it clear that twin assumptions in typical central planning processes –cycle time and capacity are independent –capacity is well known are not correct. We can view this as classical planning meets its uncertainty principle. It is a rich ground for improved responsiveness Headache for lean advocates, who all variation can be eradicated Ignoring them is a bit like attempting to ignore special and general relativity and still produce accurate GPS locations.

8. Fordyce, Fournier, Milne, Singh Illusion of FAB Capacity in Central Planning – hunt for CAPAVAIL 8 Not Time to Do the Example end this section

9. Fordyce, Fournier, Milne, Singh Illusion of FAB Capacity in Central Planning – hunt for CAPAVAIL 9 Slides in this Section Graphical View of Interactions at high level

10. Fordyce, Fournier, Milne, Singh Illusion of FAB Capacity in Central Planning – hunt for CAPAVAIL 10 Wafer Starts Client requirements Business financials Capacity needed to support wafer starts Capacity Required per wafer start

11. Fordyce, Fournier, Milne, Singh Illusion of FAB Capacity in Central Planning – hunt for CAPAVAIL 11 Wafer Starts Client requirements Business financials Capacity needed to support wafer starts Capacity Required per wafer start ≤?

12. Fordyce, Fournier, Milne, Singh Illusion of FAB Capacity in Central Planning – hunt for CAPAVAIL 12 Effective Capacity Available Utilization required to meet cycle time OP Curve Cycle Time Raw Capacity Available ?

13. Fordyce, Fournier, Milne, Singh Illusion of FAB Capacity in Central Planning – hunt for CAPAVAIL 13 Effective Capacity Available Capacity Allocation Deployment and other allocation constraints Capacity available to support wafer starts

14. Fordyce, Fournier, Milne, Singh Illusion of FAB Capacity in Central Planning – hunt for CAPAVAIL 14 Effective Capacity Available Utilization required to meet cycle time Wafer Starts Client requirements Business financials Capacity needed to support wafer starts OP Curve Cycle Time Capacity Required per wafer start Raw Capacity Available Capacity Allocation Deployment and other allocation constraints Capacity available to support wafer starts ≤

15. Fordyce, Fournier, Milne, Singh Illusion of FAB Capacity in Central Planning – hunt for CAPAVAIL 15 Effective Capacity Available Utilization required to meet cycle time Wafer Starts Client requirements Business financials Capacity needed to support wafer starts OP Curve Cycle Time Capacity Required per wafer start Raw Capacity Available Capacity Allocation Deployment and other allocation constraints Capacity available to support wafer starts ≤

16. Fordyce, Fournier, Milne, Singh Illusion of FAB Capacity in Central Planning – hunt for CAPAVAIL 16 Effective Capacity Available Utilization required to meet cycle time Wafer Starts Client requirements Business financials Capacity needed to support wafer starts OP Curve Cycle Time Capacity Required per wafer start Raw Capacity Available Capacity Allocation Deployment and other allocation constraints Capacity available to support wafer starts ≤

17. Fordyce, Fournier, Milne, Singh Illusion of FAB Capacity in Central Planning – hunt for CAPAVAIL 17 Effective Capacity Available Utilization required to meet cycle time Wafer Starts Client requirements Business financials Capacity needed to support wafer starts OP Curve Cycle Time Capacity Required per wafer start Raw Capacity Available Capacity Allocation Deployment and other allocation constraints Capacity available to support wafer starts ≤

18. Fordyce, Fournier, Milne, Singh Illusion of FAB Capacity in Central Planning – hunt for CAPAVAIL 18 Summary (here and at end) Multiple Decision Points In traditional CPE CAPAVAIL fixed Now – multiple ways to impact CAPAVAIL

19. Fordyce, Fournier, Milne, Singh Illusion of FAB Capacity in Central Planning – hunt for CAPAVAIL 19 INPUT Parameters WAFER STARTS Decisions allocation of shared CAPAVAIL implicit CAPAVAIL CAPREQ Customer Requirements (demand) CYCLE TIME Traditional CPE

20. Fordyce, Fournier, Milne, Singh Illusion of FAB Capacity in Central Planning – hunt for CAPAVAIL 20 INPUT Parameters Traditional CPE WAFER STARTS Decisions allocation of shared CAPAVAIL implicit CAPAVAIL CAPREQ Customer Requirements (demand) CYCLE TIME Cycle Time Alpha offset Tool Utilization Deployment & Route (opers) Tool Allocation Across Opers “FAB Detail” Decisions which influence CAPAVAIL Behind the Drapes of a Traditional CPE

21. Fordyce, Fournier, Milne, Singh Illusion of FAB Capacity in Central Planning – hunt for CAPAVAIL 21 Slides in This Section Detailed View of Interaction Follows Example in Section 6

22. Fordyce, Fournier, Milne, Singh Illusion of FAB Capacity in Central Planning – hunt for CAPAVAIL 22 Wafer Start Decision

23. Fordyce, Fournier, Milne, Singh Illusion of FAB Capacity in Central Planning – hunt for CAPAVAIL 23 Wafer Start Decision total profit

24. Fordyce, Fournier, Milne, Singh Illusion of FAB Capacity in Central Planning – hunt for CAPAVAIL 24 Wafer Start Decision

25. Fordyce, Fournier, Milne, Singh Illusion of FAB Capacity in Central Planning – hunt for CAPAVAIL 25 Wafer Start Decision Customer requirements

26. Fordyce, Fournier, Milne, Singh Illusion of FAB Capacity in Central Planning – hunt for CAPAVAIL 26 Wafer Start Decision Customer requirements

27. Fordyce, Fournier, Milne, Singh Illusion of FAB Capacity in Central Planning – hunt for CAPAVAIL 27 Wafer Start Decision Customer requirements

28. Fordyce, Fournier, Milne, Singh Illusion of FAB Capacity in Central Planning – hunt for CAPAVAIL 28 Wafer Start Decision Customer requirements

29. Fordyce, Fournier, Milne, Singh Illusion of FAB Capacity in Central Planning – hunt for CAPAVAIL 29 Wafer Starts To best meet demand 1.Profit calculation 2.Must Make constraint 3.Maximum Demand constraint Wafer Start Decision Customer requirements

30. Fordyce, Fournier, Milne, Singh Illusion of FAB Capacity in Central Planning – hunt for CAPAVAIL 30 Wafer Start Decision Capacity Required

31. Fordyce, Fournier, Milne, Singh Illusion of FAB Capacity in Central Planning – hunt for CAPAVAIL 31 Wafer Start Capacity Required

32. Fordyce, Fournier, Milne, Singh Illusion of FAB Capacity in Central Planning – hunt for CAPAVAIL 32 Wafer Start Capacity Required Wafer Starts & CAPREQ 1.Calculate Capacity needed

33. Fordyce, Fournier, Milne, Singh Illusion of FAB Capacity in Central Planning – hunt for CAPAVAIL 33 OPCurve & Cycle Time Utilization level required to meet cycle time

34. Fordyce, Fournier, Milne, Singh Illusion of FAB Capacity in Central Planning – hunt for CAPAVAIL 34 Decision Set OPCurve & Cycle Time

35. Fordyce, Fournier, Milne, Singh Illusion of FAB Capacity in Central Planning – hunt for CAPAVAIL 35 Decision Set OPCurve & Cycle Time ** (1-util) ** How much output To give up to achieve cycle time

36. Fordyce, Fournier, Milne, Singh Illusion of FAB Capacity in Central Planning – hunt for CAPAVAIL 36 Decision Set OPCurve & Cycle Time

37. Fordyce, Fournier, Milne, Singh Illusion of FAB Capacity in Central Planning – hunt for CAPAVAIL 37 Decision Set OPCurve & Cycle Time

38. Fordyce, Fournier, Milne, Singh Illusion of FAB Capacity in Central Planning – hunt for CAPAVAIL 38 Decision Set OPCurve & Cycle Time 1.Calculate utilization required to meet cycle time 2.Impacts CAPAVAIL

39. Fordyce, Fournier, Milne, Singh Illusion of FAB Capacity in Central Planning – hunt for CAPAVAIL 39 Decision Raw Capacity Calculation – effective CAPAVAIL

40. Fordyce, Fournier, Milne, Singh Illusion of FAB Capacity in Central Planning – hunt for CAPAVAIL 40 Decision Raw Capacity Calculation – effective CAPAVAIL

41. Fordyce, Fournier, Milne, Singh Illusion of FAB Capacity in Central Planning – hunt for CAPAVAIL 41 Decision Raw Capacity Calculation – effective CAPAVAIL

42. Fordyce, Fournier, Milne, Singh Illusion of FAB Capacity in Central Planning – hunt for CAPAVAIL 42 Decision Raw Capacity Calculation – effective CAPAVAIL

43. Fordyce, Fournier, Milne, Singh Illusion of FAB Capacity in Central Planning – hunt for CAPAVAIL 43 Decision Raw Capacity Calculation – effective CAPAVAIL Raw Capacity & Utilization 1.Calculate effective Capacity

44. Fordyce, Fournier, Milne, Singh Illusion of FAB Capacity in Central Planning – hunt for CAPAVAIL 44 Decision Deployment & constraints on this decision

45. Fordyce, Fournier, Milne, Singh Illusion of FAB Capacity in Central Planning – hunt for CAPAVAIL 45 Decision Deployment & constraints ≥

46. Fordyce, Fournier, Milne, Singh Illusion of FAB Capacity in Central Planning – hunt for CAPAVAIL 46 Capacity Allocation Decision & constraints on decision

47. Fordyce, Fournier, Milne, Singh Illusion of FAB Capacity in Central Planning – hunt for CAPAVAIL 47 Capacity Allocation & constraints Physical limits Business preference

48. Fordyce, Fournier, Milne, Singh Illusion of FAB Capacity in Central Planning – hunt for CAPAVAIL 48 ≤ Decision Deployment & constraints

49. Fordyce, Fournier, Milne, Singh Illusion of FAB Capacity in Central Planning – hunt for CAPAVAIL 49 ≤ Capacity Allocation Decision 1.Meets deployment constraints 2.Other constraints (physical and business) 3.Best meet demand Decision Deployment & constraints

50. Fordyce, Fournier, Milne, Singh Illusion of FAB Capacity in Central Planning – hunt for CAPAVAIL 50 Calculation Actual CAPAVAIL From Capacity allocation & effective capacity

51. Fordyce, Fournier, Milne, Singh Illusion of FAB Capacity in Central Planning – hunt for CAPAVAIL 51 Calculation Actual CAPAVAIL From Capacity allocation & effective capacity

52. Fordyce, Fournier, Milne, Singh Illusion of FAB Capacity in Central Planning – hunt for CAPAVAIL 52 Calculation Actual CAPAVAIL From Capacity allocation & effective capacity

53. Fordyce, Fournier, Milne, Singh Illusion of FAB Capacity in Central Planning – hunt for CAPAVAIL 53 Calculation Actual CAPAVAIL From Capacity allocation & effective capacity Deployment Business decisions Physical limits Best meet demand

54. Fordyce, Fournier, Milne, Singh Illusion of FAB Capacity in Central Planning – hunt for CAPAVAIL 54 Calculation Actual CAPAVAIL From Capacity allocation & effective capacity

55. Fordyce, Fournier, Milne, Singh Illusion of FAB Capacity in Central Planning – hunt for CAPAVAIL 55 Calculation Actual CAPAVAIL From Capacity allocation & effective capacity Raw capacity OPCurve & Cycle Time Calculate required utilization

56. Fordyce, Fournier, Milne, Singh Illusion of FAB Capacity in Central Planning – hunt for CAPAVAIL 56 Calculation Actual CAPAVAIL From Capacity allocation & effective capacity Calculate Actual CAPAVAIL 1.Capacity allocation decision 2.Effective capacity available

57. Fordyce, Fournier, Milne, Singh Illusion of FAB Capacity in Central Planning – hunt for CAPAVAIL 57 Constraint Capacity Need ≤ Actual CAPAVAIL and sources

58. Fordyce, Fournier, Milne, Singh Illusion of FAB Capacity in Central Planning – hunt for CAPAVAIL 58 Constraint Capacity Need ≤ CAPAVAIL CAPNEED  starts & CAPREQ Starts  must make & max demand CAPAVAIL  effective CAPAVAIL & capacity allocation Effective CAPAVAIL  OPCurve & cycle time Capacity allocation  deployment, business, physical Goal is maximize profit / best meet prioritized demands

59. Fordyce, Fournier, Milne, Singh Illusion of FAB Capacity in Central Planning – hunt for CAPAVAIL 59

60. Fordyce, Fournier, Milne, Singh Illusion of FAB Capacity in Central Planning – hunt for CAPAVAIL 60

61. Fordyce, Fournier, Milne, Singh Illusion of FAB Capacity in Central Planning – hunt for CAPAVAIL 61

62. Fordyce, Fournier, Milne, Singh Illusion of FAB Capacity in Central Planning – hunt for CAPAVAIL 62

63. Fordyce, Fournier, Milne, Singh Illusion of FAB Capacity in Central Planning – hunt for CAPAVAIL 63

64. Fordyce, Fournier, Milne, Singh Illusion of FAB Capacity in Central Planning – hunt for CAPAVAIL 64

65. Fordyce, Fournier, Milne, Singh Illusion of FAB Capacity in Central Planning – hunt for CAPAVAIL 65

66. Fordyce, Fournier, Milne, Singh Illusion of FAB Capacity in Central Planning – hunt for CAPAVAIL 66

67. Fordyce, Fournier, Milne, Singh Illusion of FAB Capacity in Central Planning – hunt for CAPAVAIL 67

68. Fordyce, Fournier, Milne, Singh Illusion of FAB Capacity in Central Planning – hunt for CAPAVAIL 68 Calculate Need vs AVAIL 1.Starts change need 2.Many ways to change AVAIL

69. Fordyce, Fournier, Milne, Singh Illusion of FAB Capacity in Central Planning – hunt for CAPAVAIL 69 Summary (here and at end) Multiple Decision Points In traditional CPE CAPAVAIL fixed Now – multiple ways to impact CAPAVAIL

70. Fordyce, Fournier, Milne, Singh Illusion of FAB Capacity in Central Planning – hunt for CAPAVAIL 70 INPUT Parameters WAFER STARTS Decisions allocation of shared CAPAVAIL implicit CAPAVAIL CAPREQ Customer Requirements (demand) CYCLE TIME Traditional CPE

71. Fordyce, Fournier, Milne, Singh Illusion of FAB Capacity in Central Planning – hunt for CAPAVAIL 71 INPUT Parameters Traditional CPE WAFER STARTS Decisions allocation of shared CAPAVAIL implicit CAPAVAIL CAPREQ Customer Requirements (demand) CYCLE TIME Cycle Time Alpha offset Tool Utilization Deployment & Route (opers) Tool Allocation Across Opers “FAB Detail” Decisions which influence CAPAVAIL Behind the Drapes of a Traditional CPE