Discussion Questions and Problems:

1. Product A is an ATO product. It has a lot size of 150, and currently has an on-hand

inventory of 110 units. There is a two week demand time fence and a twelve week planning time

fence. The following table gives the original forecast and the actual customer orders for the next

12 weeks:

Week 1 2 3 4 5 6 7 8 9 10 11 12

Forecast 80 80 80 70 70 70 70 70 70 70 70 70

Demand 83 78 65 61 49 51 34 17 11 7 0 0

a. Given this information, develop a realistic master schedule, complete with

ATP logic.

b. Tell how you would respond to each of the following customer order requests.

Assume these are independent requests, and do not have cumulative effects.

Also, show what the master schedule would look like if the order was

accepted:

- 20 units in week three

- 40 units in week five

- 120 units in week seven

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 a.

Week 1 2 3 4 5 6 7 8 9 10 11 12
Forecast 80 80 80 70 70 70 70 70 70 70 70 70
Demand 83 78 65 61 49 51 34 17 11 7 0 0
Projected Available 110 27 99 19 99 29 109 39 119 49 129 59 139
Available to Promise 27 7 40 65 122 143 150
MPS 0 150 0 150 0 150 0 150 0 150 0 150

b.

20 units in week three - Can provide from current inventory on hand

40 units in week five - Can provide from week 4

120 units in week seven - Can provide from weeks 1, 2, 4, and 6

2. Suppose that a master scheduler consistently finds that there is inadequate capacity to

produce the product the facility needs in order to satisfy customer demand. What

actions should they take and why?

The company should consider options for additional capacity including overtime,
subcontract, hiring additional personnel, extra shifts, etc.

3. How are Sales and Operations Plans and Master Schedules different for pure service

operations as opposed to manufacturing? What is (are) the major causes of the

differences?

The major difference is the source or amount of customer input. The pure service
operation is closer to an MTO than any other type of product environment because the
customer has a tremendous impact on the product environment (a barber shop for
instance). Manufacturing has less of a customer input than in a service industry.

4. Describe in your own words why the minimum time horizon for a master schedule

should be longer than the assembly time for the final product.

The company needs to be able to plan for the assembly of all components

otherwise components won't be available when needed

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 5. (a) Given the following Master Schedule, fill in the Projected Available and

Available to Promise rows:

On Hand: 35 Planning Time Fence: 10 Lot Size: 200

Demand Time Fence: 2

Period 1 2 3 4 5 6 7 8 9 10 11 12

Forecast 30 40 40 50 40 40 30 40 40 50 40 40

Customer Orders 31 35 29 21 17 14 33 11 5 2 0 1

Projected Avail.

Avail. To Promise

MPS 200 200

b) A customer wants an order of 100 in period 4. What can you tell them?

c) The customer from part (b) cancels their request, but then says they want 120 in

period 5. What do you tell them now?

d) Sales has requested that you add a MPS of 200 in period 9 to cover their needs for a

sales promotion. What do you tell them and why?

e) What action (if any) should be taken in period 11? Why is it okay to take the action?

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a.

Period 1 2 3 4 5 6 7 8 9 10 11 12

Forecast 30 40 40 50 40 40 30 40 40 50 40 40

Customer Orders 31 35 29 21 17 14 33 11 5 2 0 1

Projected Avail. 4 169 129 79 39 199 166 126 86 36 196 156

Avail. To Promise 4 98 135 199

MPS 200 200 200

b. We only have 98 available to promise. We can fill the rest of the order in period 6

c. We still only have 98 available, but can fill the request in Period 6.

d. The planning time fence is 10 weeks so we don't have enough time to complete all

components in 9 weeks only additional costs are involved to expedite.

e. An order for 200 units should be added to the MPS to meet demand.

6. Evaluate and discuss the following comments recently overheard:

(a) “Operations managers have very little to do with customer demand except to

input the orders into the master schedule.”

(b) “The major purpose of the two-level master schedule is to reduce the time it takes

to generate the MRP data.”

a. Operations managers have to manage demand so that the right product is

available at the right time. Operations managers must work closely with sales and

marketing in order to maintain good customer service.

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b. The major purpose of the two level master schedule is to afford a better ability to

delivery customer expectations. From a good system, you are better able to

determine what can be promised from your process. Some products may not

require all sub-assemblies but the two level schedule gives you a better idea of what

final assembled products can be delivered. On page 85 of the text, the example of

the bicycle assembly is used to illustrate this concept. The idea that the two level

schedule makes it easier to generate MRP data is a beneficial byproduct of the

process.

7. Fill in the following Master Schedule with the projected available balance and the

available-to-promise sections, then answer the questions:

Demand Time Fence = 3, Planning Time Fence = 10, On hand = 46

Period 1 2 3 4 5 6 7 8 9 10 11 12

Forecast 20 25 20 30 30 20 20 25 25 20 20 30

Cust. Orders 21 22 24 20 17 21 17 12 9 11 4 2

Projected Avail. 25 3 29 9 42 21 54 42 83 72 108 106

ATP 3 6 12 21 30 44

MPS 50 50 50 50 50

a. Is there anything on the master schedule that should be of great concern? Why, and

what should you do?

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b. A customer wants 8 of the units in period 4. What should you tell them and why?

c. After you satisfy the customer who wants the 8 in period 4, another customer wants 16

in period 5. What do you tell them and why?

d. Suppose the forecast for period 12 increases from 30 up to 75 units because of a

possible marketing campaign. What should you do and why?

e. Sales informs you they want you to add a MPS of 50 in period 8 for a sales promotion.

What should you tell them and why?

a. If customer orders meet forecasted projections, the company will stock out in period 4

and period 6.

b. We have only 6 units available but will have additional units in period 5

c. We have only 10 units available, but will have additional inventory in period 7

d. We would have to schedule additional product to be produced in period 12.

e. The planning lead time on this product is 10 weeks. That means that it takes 10 weeks

to produce the product and to produce or purchase all of the component parts. Therefore

it is highly unlikely that enough components will be available in week 8 to produce an

additional 50 units in period 8.j

8. The following is the MPS for Item J with Option 1

Item J Starting Inv: 0

January*************************** February ************************ March

Week 1 2 3 4 5 6 7 8 9
Forecast 1800 1800 1800 1800 1750 1750 1750 1750 1400

Booked Orders 1000 1000 1000 0 0 0 1000 0 0

Proj. Avail 3000 2000 5000 5000 1500 1500 4000 4000 7000

ATP 2000 3000 3500 2500 3000

FAS 4000 4000 3500 3500 3000

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 Week 1 2 3 4 5 6 7 8 9
Unconsumed 800 800 800 1800 1750 1750 750 1750 1400
Forecast

Option 1 Plan % 50% On 500 Lot Lot-for-

hand: size: lot

Week 1 2 3 4 5 6 7 8 9
Option 900 900 900 900 875 875 875 875 700
Forecast
Booked Orders 450 400 550 0 0 0 475 0 0

Proj. Avail 50 550 900 1800 2650 3500 3875 4725 5425
0 500 350 900 850 850 375 850 700
ATP
MPS 400 900 900 900 850 850 850 850 700

(a) Complete the projected available and ATP calculations for the end item shown above

(b) Calculate the unconsumed forecast for the end item, Item J.

(c) Complete the projected available and ATP calculations for Option 1

9. Chester's Chippers makes oversized golf clubs. The company president has asked you

to show her how master scheduling techniques could be applied to her business. You have the

following data:

a. Inventory at the beginning of April is expected to be 50 clubs.

b. Total monthly forecasted demand for April and May are 800 and 1000, respectively.

Demand is expected to be spread evenly throughout the month.

c. The company makes just enough clubs to meet forecasted demand for each month. These

clubs will be ready to sell in the first week of every month.

d. The company already has orders booked as follows:

1st week, April 220 1st week, May 240

2nd week 215 2nd week 230

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 3rd week 210 3rd week 180

4th week 205 4th week 150

(a) Complete the ATP below.

Clubs Starting Inv: 50

April*************************** May********************
Week 1 2 3 4 5 6 7 8
Forecast 200 200 200 200 250 250 250 250
Booked Orders 220 215 210 205 240 230 180 150
Proj. Avail 630 415 205 0 760 530 350 200
Master 800 1000
Schedule
ATP 0 200

(b) Is the company in trouble yet? Explain.

Yes - we have no room left for any additional orders in the first month. We would have to
delay any additional orders in April until the month of May. We have 200 ATP in May.

10. Yodel Hotel is a four-star hotel located in Asheville, NC. Guests book rooms for a week at
a time. Many of the guests also want to make reservations for extra-cost services at the same
time. In this sense, a weekly reservation can be thought of as an "assemble-to-order" product.

The hotel manager would like to create a system that allows customers to book the extra-cost
services when they make a weekly reservation. Under your advice, the hotel manager has
created a superbill that describes how many customers have chosen the extra-cost services, based
on past demand:

Weekly
Guest
Reservation

Hot mud bath 35% Deluxe makeover 25% Swedish massage 55%

Set up the two-level master schedule for weekly guest reservations. Assume the following
information:

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a. The number of hot mud baths that can be scheduled each week is limited to 40.
b. The number of deluxe makeovers each week is limited to 30.
c. The number of Swedish massages each week is limited to 60.
d. The forecasted number of reservations per week is 100.
e. Yodel has enough rooms to handle 120 reservations per week.
f. As of right now, there are no "booked orders" for January.

Assembly: Weekly Guest Reservations On-hand: 120 Lot size: 1

Week 1 2 3 4 5 6 7 8 9

Forecast 100 100 100 100 100 100 100 100 100

Customer orders

Projected available 120 120 120 120 120 120 120 120 120

Available to promise 120 120 120 120 120 120 120 120 120

MPS 120 120 120 120 120 120 120 120 120

Assembly: Hot Mud Bath On-hand: 40 Lot size: 1

Week 1 2 3 4 5 6 7 8 9

Option Forecast 35 35 35 35 35 35 35 35 35

Booked orders

Projected available 40 40 40 40 40 40 40 40 40

Available to promise 40 40 40 40 40 40 40 40 40

MPS 40 40 40 40 40 40 40 40 40

Assembly: Deluxe Makeover On-hand: 30 Lot size: 1

Week 1 2 3 4 5 6 7 8 9

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Option Forecast 25 25 25 25 25 25 25 25 25

Customer orders

Projected available 30 30 30 30 30 30 30 30 30

Available to promise 30 30 30 30 30 30 30 30 30

MPS 30 30 30 30 30 30 30 30 30

Assembly: Swedish Massages On-hand: 60 Lot size: 1

Week 1 2 3 4 5 6 7 8 9

Option Forecast 55 55 55 55 55 55 55 55 55

Customer orders

Projected available 60 60 60 60 60 60 60 60 60

Available to promise 60 60 60 60 60 60 60 60 60

MPS 60 60 60 60 60 60 60 60 60

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