For a given demand and planning horizon, the general facility design proble
m faced by semiconductor manufacturers is to decide how much capacity to bu
ild into their systems. When the technology is known and only a small numbe
r of products is to be manufactured, the specific problem is to find a tool
-set configuration that minimizes the average cycle time within a prescribe
d budget. In this paper, it is shown that this version of the capacity expa
nsion problem can be modelled as a nonlinear integer program in which the d
ecision variables correspond to the number of tools at a workstation. The m
ajor difficulty encountered in trying to find solutions is that no closed f
orm expressions exist for the waiting time, primarily due to the presence o
f re-entrant flow. This means that it has to be approximated. At the outset
, it was observed that previously proposed approximation methods based on p
arametric decomposition provided extremely poor results. In response, a new
set of expressions, in the form of simultaneous equations, has been devise
d for approximating the average waiting time in a multiserver batch queuing
system. When the number of batch servers is fixed, these equations become
linear and are easy to solve. This fact is exploited in the development of
a series of algorithms. The first two are greedy in nature, the third is ba
sed on simulated annealing, and the fourth is an exact method centring on i
mplicit enumeration. Each is used to solve a large sample of test problems
generated from data (complied by Sematech) reflecting current technology, c
osts, and process routings. The results indicate that high quality solution
s can br obtained with little computational effort.