A Hybrid Optimization Model For IC Materials Procurement

The procurement organization is a very important part of supply chain management, especially for manufacture enterprises, the procurement cost can account for 30% to 60% of the product cost. So reduce the procurement cost becomes a very effective way to improve the profitability of the enterprises.For electronic manufacture enterprises, most procurement organization can only choose to apply a sole supply sourcing method, and purchase the materials with prices according to the agreement which both party have negotiated and agreed in advance. Although this kind of purchasing method can gather the total purchasing volume and get scale advantage to control the procurement cost through price negotiation, but at the same time, the procurement organization will lose the benefit to the flexibility of the market price and will be restricted to the sole source relationships. Therefore, how to implement open-market supply source with optimized procurement strategy, to get both supply stability benefit from fix price and cost saving from market price, is a realistic question which worth to research on.This thesis will start from current procurement cost control theory, and take the actual application of ASIC procurement in company S as an example. Firstly introduced how VMI operation is applied in company S, then indicate the disadvantage of applying VMI operation, which makes the procurement organization rely on the agreed price from sole-source VMI supplier, thus cannot obtain the potential price advantage through market price fluctuation. Secondly, by introduce the market vendor as backup supplier to realize a hybrid procurement mode which combines VMI procurement and spot procurement. According to the material market price forecast of different stages, and consider the cost of shortage, stock, operation and etc., to establish an optimized decision-making model of minimum procurement cost using hybrid procurement method. Use dynamic programming to solve this model and confirm the optimized procurement strategy. Finally, illustrate the effectiveness of this decision-making model through an actual example of company S.The innovation points of this thesis are as follows:1. This thesis analyzes the strategic guidance for enterprises to cost reduce procurement costs, with the help of procurement theory, inventory control theory and TCO cost model theory.2. Pointed out the characteristic of applying sole-source VMI operation and the improvement opportunity to cost saving through the analysis to company S. According to above conclusion, by introduce the market vendor as second source supplier, to build an optimized decision-making model of minimum procurement cost using hybrid procurement method according to dynamic programming theory.3. Apply the model in the actual procurement activity in company S, illustrate the effectiveness of cost saving through introduce the second source. Furthermore, this thesis raises several corresponding improvement methods for cost control.