The encyclopedia · Engineering & Operations · Operational decision · 2013
LG Display's multirank mixing kept LED inventory lean and cut scrap
LED parts obsolesce fast, so LG Display blends quality ranks at each assembly step with LP models — scrap at a pilot plant fell substantially.
LG Display
the move
In LED array assembly, the packages that make up the array come in multiple quality ranks and must be combined at each step. Product models change frequently, so high inventory of any rank means high scrap when the next model arrives.
LG Display's MRM optimization applies multiple linear-programming models to choose the best combinations of LED parts at each assembly step, given the inventory on hand. The goal is the lowest inventory that still meets customer demand.
Performance testing showed MRM outperformed the previous approach — a heuristic that demanded intensive effort from human planners. At one LG Display facility, the scrap rate for LED packages decreased substantially.
The work appeared in the 2013 Franz Edelman Award special issue of Interfaces, INFORMS's showcase of implemented operations-research practice.
why it works
- Fast-obsolescing parts punish inventory, so the model targets stock, not just output.
- Blending ranks uses what exists instead of waiting for the perfect rank.
- LP models scale where a human planner's heuristic cannot.
- Substantially lower scrap at the pilot facility proved the mechanism.
what transfers
When components vary in quality and obsolesce quickly, the lever is not bigger buffers — it is optimizing the mix of what you already hold, rank by rank, step by step.
what came after
MRM was implemented at an LG Display LED manufacturing facility, where package scrap decreased substantially, and the paper became part of the 2013 INFORMS Franz Edelman Award special issue.
references
- Optimization Models for Production Planning in LG Display
- Optimization Models for Production Planning in LG Display
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