Abstract
This paper studies the production and transportation control (PTC) problems under demand and price uncertainties in a multi-product, two-echelon, and hybrid thin film transistor-liquid crystal display (TFT-LCD) production chain. The unique characteristics of the TFT-LCD industry, including quality grades and alternative bill-of-materials (BOMs), are considered in this study. The objective is to determine a production and transportation policy that is robust to price and demand uncertainties. This two-echelon PTC problem is formulated as several two-stage robust optimisation models. An iterative procedure is developed to apply and solve these two-stage models in a TFT-LCD production chain. Our simulation study shows that the proposed method can significantly increase profits while reducing transportation and inventory costs. In addition to improving mean and variance of profits, we use several risk measures to verify the robustness of the iterative optimisation procedure.
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