A study on semiconductor supply chain management in the automotive industry

Designing an effective supply chain and operating it efficiently is one of the most important issues for a large number of organizations. In the automotive industry, the fluctuating market and competitive pressure has forced organizations to create a better way to control their supply chain. One of the most significant approaches to production, which is implemented widely in the automotive industry, is "lean" production. Due to adoption of lean production by original equipment manufacturers (OEMs) and 1^st-tier suppliers, there is a negative effect on 2^nd-tier suppliers in terms of order fluctuations. This research examines the cause of demand fluctuation as a risk factor in the supply chain and considers the design of an optimized model taking into account 2^nd-tier suppliers and the extent that the demand fluctuation problem can be reduced. Due to a lack of information flow between 1^st-tier and 2^nd-tier suppliers, demand accuracy is very low. In light of this situation, we consider the Newsboy model to determine the optimal order quantity to maximize the expected profit under different scenarios.