Product mix in the TFT-LCD industry

As operational costs and equipment depreciation in the TFT-LCD (thin film transistor-liquid crystal display) industry are a high percentage of the total cost, most manufacturers usually fully utilise their production capacity to reduce the average unit cost. However, when the market demand is less than the supply the stock of panels increases; this forces manufacturers to instigate a price war to reduce levels of stock and results in a wide fluctuation in panel prices. Inventory stocks of panels could be decreased by optimising the product mix. This will help manufacturers to reduce the risk of holding stocks, increase profit, and improve competitive advantage. This study uses mixed integer linear programming (MILP) to construct a product mix for the TFT-LCD industry given the conditions of profit, productivity, raw materials supply, and market demand. A case study shows that this model is proven to be effective in generating product mix for the TFT-LCD industry while improving profit. The product mix generated by this model can provide a reference for the sales department for orders and shipping, for the production department for the order quantity, and for master production scheduling for each product.