MPS and MRP PDF

MASTER PRODUCTION SCHEDULING
JAN – MAY 2019

FABIOLA REGIS H.
MPS
Aggregate production plan (APP)
Master production schedule (MPS)
Material requirements plan (MRP)

APP VS. MPS
BASIC PRINCIPLES OF MASTER PRODUCTION SCHEDULING
¡ INPUTS
¡ LOT SIZING
¡ ROUGH-CUT CAPACITY PLANNING
¡ TWO MAIN USES OF THE MASTER PRODUCTION SCHEDULE

INPUTS
Importance: Is a crucial step that allows a company to make concrete decisions on
which products will be produced in the coming weeks and in what quantities.
INPUTS
To make these decisions, the master planner needs to consider the following information:
¡ How much inventory of each product does the company have on hand?
¡ What is the forecast demand for each product?
¡ Has the company already received firm orders with fixed delivery dates for any of the products?
¡ Can the company produce only the quantity required or does it have to respect a lot-sizing policy?
¡ What is the lead time for the finished products?
¡ What is the company’s total capacity for the production of all these products?
INPUTS
Importance: Is a crucial step that allows a company to make concrete decisions on which
products will be produced in the coming weeks and in what quantities.
Challenges:
¡ Require the most accurate information possible on inventory levels, forecast sales as well as
firm orders.
¡ A good management information system is essential, however, the accuracy of the data
depends above all on the vigilance of the employees and their ability to keep data updates.
LOT SIZING
Determining lot sizes to be applied for each item produced or purchased.
Techniques:
• Lot-for-lot (L x L)
• Fixed lot size “X”
• Minimum order quantity “X”
• Periodic order quantity (“X” periods)

LOT SIZING
Techniques:
• Lot-for-lot (L x L):
Ø The exact quantity required is that which is produced or purchased.
Ø Holding costs are avoided
Ø Appropriate for products qith intermitent demand and those with low fixed ordering or set-up
costs relative to holding costs.
LOT SIZING
Techniques:
• Fixed lot size “X”:
Ø The quantity produced or purchased is X or a multiple of X.
Ø Usually imposed by suppliers (products sold in fixed quantities, such as by the box, by the dozen, or
by the pallet).
LOT SIZING
Techniques:
• Minimum order quantity “X”:
Ø A minimum quantity X is manufactured or purchased; if the net requirement exceeds X, the exact
quantity is ordered.
Ø In many cases, this policy is used to absorb the ordering or set-up costs on a minimum number of units.
LOT SIZING
Techniques:
• Periodic order quantity (“X” periods):
Ø The quantity produced or purchased is that required to meet demand over X number of periods.
ROUGH-CUT CAPACITY PLANNING

When preparing the Master Production Scheduling (MPS), the planner must calculate
the capacity required to produce each of the different products and make sure that this
capacity is not exceeded.
TWO MAIN USES OF THE MPS

¡ To plan the timing and quantity of each product a company will need to release to
production over a given number of coming weeks.
¡ Provides two different type of information concerning inventory status:
¡ Projected on-hand inventory (Planning tool)
¡ Available-to-promise inventory (Data tracking and transmission tool)

PREPARING THE MASTER PRODUCTION SCHEDULE
The company Canada-Aviation makes remote-controlled model planes. One area of the plant is dedicated
to the assembly of two models, the twinjet plane (two equivalent units) and the trijet plane. (three
equivalent units). The company opted for a level production strategy and established its weekly capacity at
600 equivalent units (EU). It now wants to prepare the master production schedule for both products over
a period of eight weeks.
Gather all the necessary

information!!
Step 1 Step 2 Step 3 Step 4

Revise the Computing the
Prepare a preliminary available-to-
preliminary Do a rough-cut schedules and promise and using
Schedule for each capacity plan
establish the final the MPS
product
schedules dynamically

product
STEP1:
PREPARE A PRELIMINARY SCHEDULE FOR EACH PRODUCT
STEP1:
PREPARE A PRELIMINARY SCHEDULE FOR EACH PRODUCT

product
STEP 2:
DO A ROUGH-CUT CAPACITY PLAN
¡ Up to now, production has been planned for each product separately, eithout
considering the available capacity.
¡ The next step is to validate whether the two schedules we have prepared can be
fulfilled simultaneously.
¡ The units must be converted into equivalent units.

STEP 2:
STEP 2:
Adjust the preliminary schedules in order

to best meet demand while respecting The capacity is exceeded
capacity constraints.

product
STEP 3:
REVISE THE PRELIMINARY SCHEDULES AND ESTABLISH THE FINAL ONE
¡ To consider:
¡ Making a product earlier than planned in order to take advantage of available
capacity.
¡ Evaluating the possibility of circumventing the established lot-sizing policies.
¡ Evaluating whether the company should use all available capacity considering
holding costs as well as the strategic decisions made during the preparation of the
aggregate production plan.
¡ Deciding which product should be “sacrificied” if stock-outs are unavoidable.
STEP 3:
STEP 3:
STEP 3:
STEP 3:
STEP 3:

product
STEP 4:
CALCULATING THE AVAILABLE-TO-PROMISE AND USING THE MPS
DYNAMICALLY
STEP 4:
DYNAMICALLY
STEP 4:
DYNAMICALLY
STEP 4:
DYNAMICALLY
STEP 4:
DYNAMICALLY
¡ In the first period of the schedule, the available-to-promise equals:

(initial on-hand inventory + planned order receipts in the first period)
– (total customer orders up to the next period for which there is a planned order receipt)
¡ For the orher periods in the schedule, if there is no receipt scheduled in the MPS, there
is no new available-to promise (nothing is entered). If there is a planned order receipt,
the available-to-promise equals:
(planned order receipt) – (total customer orders up to the next period for which there is a planned order receipt)
¡ If there is insufficient available-to-promise to satisfy customer orders in a given week,

the missing units are taken from the previous weeks’ available-to-promise, starting with
the last previous week:
STEP 4:
DYNAMICALLY
If a customer calls in week 5 and wants to have 60 units of the Twinjet in

week 7.
Is it possible to satisfy this demand?
If possible, how should the MPS be modified to satisfy this demand?

STEP 4:
DYNAMICALLY

week 7.
STEP 4:
DYNAMICALLY

week 7.
STEP 4:
DYNAMICALLY

week 7.
MATERIAL REQUIREMENTS PLANNING
AUG – DEC 2018

FABIOLA REGIS H.
FUNDAMENTAL PRINCIPLES OF MRP
Demand forecast
Long term Mid term Short term

(one year) (several weeks) (several days)
Master Material
Aggregate Production Requirements
Production Plan Schedule Plan Scheduling
(APP) (MPS) (MRP)
Decide how to use Determine how much For each product, Establish the sequence
the production of each product needs calculate the quantities of items or orders to
resources to deal to be produced of sub-assemblies, parts be produced and assign
with monthly and weekly to meet and raw materials that the tastks to available
quarterly fluctuations demand while need to be produces resources on a daily
in aggregate demand. respecting capacity. or purchased to satisfy basis.
the MPS
KEY NOTIONS
¡ Independent and dependent demand
¡ Forward and backward scheduling
¡ The bill of materials and product structure

KEY NOTIONS

KEY NOTIONS

KEY NOTIONS
¡ The bill of materials (BOM)
¡ List
¡ Product structure tree

KEY NOTIONS
KEY NOTIONS
• Skateboard
o Deck component (1)
§ 7-layer moulded maple deck (1)
§ Griptape (1)
o Wheel components (2)
§ Axle component (1)
§ Wheels (2)
§ Nuts (2)
§ Ball-bearings (4)
o Riser pads (2)
o Bolts (8)
o Nuts (8)
KEY NOTIONS
Level 0
Skateboard
Bolts Deck Riser Wheel

Nuts Level 1
(8) component pads components
(8)
(1) (2) (2)
7-layer moulded Axle

Griptape Wheels Ball-bearings Nuts Level 2
maple deck component
(1) (2) (4) (2)
(1) (1)
MATERIAL REQUIREMENTS PLANNING INPUTS
¡ The master production schedule for each finished product for the weeks
included in the planning horizon
¡ The bill of materials and product structure of each product to be made
¡ The inventory level of each of the components, parts and raw materials required
for production of the finished products
¡ The lead time to produce or purchase each of these components, parts and raw
materials (these lead times are used to do backward scheduling)
¡ Lot sizes to be respected: as with the preparation of the MPS, the manufacture
and purchase of components, parts and raw materials may also be subject to various
lot-size constraints.
DEVELOPING THE MATERIAL REQUIREMENTS PLAN
*For items ocurring at several levels

in the product structure, the lowest
level is indicated (i.e., the level with
the highest number).
FIRST STEP: GATHER ALL THE INFORMATION
Level 0
Skateboard

Nuts Level 1
(8)
(1) (2) (2)

(1) (2) (4) (2)
(1) (1)
Level 0
Skateboard

Nuts Level 1
(8)
(1) (2) (2)

(1) (2) (4) (2)
(1) (1)
Skateboard
x8
x8
Level 0
Skateboard

Nuts Level 1
(8)
(1) (2) (2)

(1) (2) (4) (2)
(1) (1)
Level 0
Skateboard
Deck Riser Wheel

Bolts Nuts Level 1
component pads components
(8) (8)
(1) (2) (2)

(1) (2) (4) (2)
(1) (1)
Level 0
Skateboard

Nuts Level 1
(8)
(1) (2) (2)

(1) (2) (4) (2)
(1) (1)
Level 0
Skateboard

Nuts Level 1
(8)
(1) (2) (2)

(1) (2) (4) (2)
(1) (1)
Deck
component
Deck
component
Level 0
Skateboard

Nuts Level 1
(8)
(1) (2) (2)

(1) (2) (4) (2)
(1) (1)
Deck
component
Deck
component
Level 0
Skateboard

Nuts Level 1
(8)
(1) (2) (2)

(1) (2) (4) (2)
(1) (1)
Wheel
component
Wheel
component
Level 0
Skateboard

Nuts Level 1
(8)
(1) (2) (2)

(1) (2) (4) (2)
(1) (1)
Wheel
component
Wheel
component
Level 0
Skateboard

Nuts Level 1
(8)
(1) (2) (2)

(1) (2) (4) (2)
(1) (1)
Wheel
component
Wheel
component
Level 0
Skateboard

Nuts Level 1
(8)
(1) (2) (2)

(1) (2) (4) (2)
(1) (1)
Skateboard
Wheel
component
Skateboard
Wheel
component
Skateboard
Wheel
component

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MASTER PRODUCTION SCHEDULING

JAN – MAY 2019

Master production schedule (MPS)

Material requirements plan (MRP)

¡ ROUGH-CUT CAPACITY PLANNING

¡ TWO MAIN USES OF THE MASTER PRODUCTION SCHEDULE

¡ What is the forecast demand for each product?

¡ What is the lead time for the finished products?

• Fixed lot size “X”

• Minimum order quantity “X”

• Periodic order quantity (“X” periods)

Ø The exact quantity required is that which is produced or purchased.

Ø Holding costs are avoided

• Fixed lot size “X”:

Ø The quantity produced or purchased is X or a multiple of X.

• Minimum order quantity “X”:

• Periodic order quantity (“X” periods):

ROUGH-CUT CAPACITY PLANNING

TWO MAIN USES OF THE MPS

¡ Provides two different type of information concerning inventory status:

¡ Projected on-hand inventory (Planning tool)

¡ Available-to-promise inventory (Data tracking and transmission tool)

Gather all the necessary

Step 1 Step 2 Step 3 Step 4

Step 1 Step 2 Step 3 Step 4

Step 1 Step 2 Step 3 Step 4

¡ The units must be converted into equivalent units.

Adjust the preliminary schedules in order

Step 1 Step 2 Step 3 Step 4

Step 1 Step 2 Step 3 Step 4

¡ In the first period of the schedule, the available-to-promise equals:

¡ If there is insufficient available-to-promise to satisfy customer orders in a given week,

If a customer calls in week 5 and wants to have 60 units of the Twinjet in

Is it possible to satisfy this demand?

If possible, how should the MPS be modified to satisfy this demand?

If a customer calls in week 5 and wants to have 60 units of the Twinjet in

If a customer calls in week 5 and wants to have 60 units of the Twinjet in

If a customer calls in week 5 and wants to have 60 units of the Twinjet in

AUG – DEC 2018

Long term Mid term Short term

¡ Independent and dependent demand

¡ Forward and backward scheduling

¡ The bill of materials and product structure

¡ Independent and dependent demand

¡ Forward and backward scheduling

¡ The bill of materials and product structure

¡ Independent and dependent demand

¡ Forward and backward scheduling

¡ The bill of materials and product structure

¡ Independent and dependent demand

¡ Forward and backward scheduling

¡ The bill of materials (BOM)

¡ Product structure tree

Bolts Deck Riser Wheel

7-layer moulded Axle

*For items ocurring at several levels

Bolts Deck Riser Wheel

7-layer moulded Axle

Bolts Deck Riser Wheel

7-layer moulded Axle

Bolts Deck Riser Wheel

7-layer moulded Axle

Deck Riser Wheel