IEOR - Designing a More Efficient World

Optimizing Site Qualification Across the Supply Network at Western Digital

Publication Date: June 20, 2017

Bo Liao, Candace Arai Yano, and Shiva Esturi. Optimizing Site Qualification Across the Supply Network at Western DigitalInterfaces.

Abstract: We describe an optimization-based methodology that Western Digital implemented to support its site-qualification decisions; that is, which sites(s) are qualified to produce each of its products. Qualifying a product at a site commonly takes several months and hundreds of hours of engineering effort. These decisions are especially challenging because Western Digital Silicon Operations offers thousands of products; and demands more than a month or two into the future are very uncertain, as they are with many electronic products. Therefore, because shortages result in lost sales, the company must consider both expected demand and demand uncertainty. We solve the problem as a mixed-integer stochastic program with multiple stages of recourse, using a linear programming solver for the recourse stages and a greedy heuristic to determine the site qualifications. Western Digital deployed the model starting in the first quarter of 2015 and established a quarterly process for making site-qualification decisions. The decision support tool facilitated a more streamlined decision process and has already provided substantial savings to Western Digital.