Factories operate most efficiently when their load is smooth and predictable. At the very least, they require a minimum level of utilization from week to week. Demand for product tends to be variable (i.e., different from week to week) and unpredictable (i.e., the estimate of demand for a product during a given week can change over time). A plan that "chases" such a demand signal will produce an “optimal” plan that would be highly undesirable from a factory standpoint.

It is well known that there are some products in On Semi’s portfolio with relatively stable demand over the long run. The need for steady production levels in the factory can be met by using such products to fill holes in capacity utilization, thereby using the stock of such products as a buffer against the fluctuation in the demand for less stable products.

The objective of this project was to identify such products and compute the range within which the inventory level for these products could be allowed to vary. Once these ranges were computed, the planning engine could use this flexibility to ensure factory utilization.