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He fears the chip giant has too much capacity and inventory, given the dim outlook for its customers in the PC market.
Investment decisions have to be made, not only concerning the number and locations of remanufacturing facilities, but also concerning the appropriate capacity and inventory levels to guarantee specific service levels.
We formulated the problem as a mathematical model which minimizes the summation of production cost, transportation cost, inventory holding and shortage costs, subject to capacity and inventory balance constraints and propose a hybrid approach combining mathematical programming and simulation model to solve this problem.
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The result is excess capacity and inventories.
The resulting excess capacity and inventories will force prices down, confirm buyer expectations and encourage people to wait even longer to buy.
They note that in deflation buyers wait for lower prices, with the result that excess capacity and inventories force prices lower.
We model the cold supply chain design problem as a mixed-integer concave minimization problem with dual objectives of minimizing the total cost - including capacity, transportation, and inventory costs - and the global warming impact.
This involves management decisions on the design of the contract (price, uptime guarantee and overhaul interval) and the logistics network (facility locations, capacities and inventories with given service level).
We then present a multi-period mixed-integer linear programming model that accounts for the selection of depot and biorefinery locations and their capacities, shipping and inventory planning, as well as the selection of pretreatment and conversion technologies, and transportation modes.
The company said increased production capacity and high inventories had led to a fall in wafer prices, with demand in its key market of Germany falling to half the 2010 level.
A realistic estimate of material requirement computed by the model enables better system design, MRP, capacity requirement planning, and inventory control.
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Justyna Jupowicz-Kozak
CEO of Professional Science Editing for Scientists @ prosciediting.com