Introduction to Materials

Management
Chapter 3 – Master Scheduling
 The Master Schedule is:
◼ The formal link between production
planning and actual production
◼ The basis for calculation of resources
needed
◼ The driving force behind the material
requirements plan
◼ The primary priority plan for
manufacturing
Introduction to Materials Management, 7th Edition © 2012, 2008, 2004, 2001, 1998, 1996 Pearson Education, Upper Saddle River, NJ 07458.
Arnold, Chapman, Clive All Rights Reserved.
 Master production schedule
◼ Whereas the production plan deals in
families of products, the MPS works with
end items.
◼ It breaks down the production plan into
the requirements for individual end items,
in each family, by date and quantity.
◼ the total of the items in the MPS should
not be different from the total shown on
the production plan
Introduction to Materials Management, 7th Edition © 2012, 2008, 2004, 2001, 1998, 1996 Pearson Education, Upper Saddle River, NJ 07458.
Arnold, Chapman, Clive All Rights Reserved.
 Master production schedule
◼ The end items made by the company are
assembled from component and subcomponent
parts.
◼ These must be available in the right quantities at
the right time to support the master production
schedule.
◼ The MRP system plans the schedule for these
components based on the needs of the MPS.
◼ Thus the MPS drives the MRP.

Introduction to Materials Management, 7th Edition © 2012, 2008, 2004, 2001, 1998, 1996 Pearson Education, Upper Saddle River, NJ 07458.
Arnold, Chapman, Clive All Rights Reserved.
 Master production schedule
◼ The MPS forms a vital link between sales
and production as follows:
◼ It makes possible valid order promises. The
MPS is a plan of what is to be produced and
when. As such, it tells sales and manufacturing
when goods will be available for delivery.
◼ It is a contract between marketing and
manufacturing. It is an agreed-upon plan.

Introduction to Materials Management, 7th Edition © 2012, 2008, 2004, 2001, 1998, 1996 Pearson Education, Upper Saddle River, NJ 07458.
Arnold, Chapman, Clive All Rights Reserved.
 Information Needed to Develop
an MPS
◼ Production Plan data
◼ Forecasts
◼ Actual customer orders
◼ Inventory levels
◼ Capacity constraints

Introduction to Materials Management, 7th Edition © 2012, 2008, 2004, 2001, 1998, 1996 Pearson Education, Upper Saddle River, NJ 07458.
Arnold, Chapman, Clive All Rights Reserved.
 Relationship to Production Plan

Introduction to Materials Management, 7th Edition © 2012, 2008, 2004, 2001, 1998, 1996 Pearson Education, Upper Saddle River, NJ 07458.
Arnold, Chapman, Clive All Rights Reserved.
 Objectives and Steps for the
MPS
◼ Objectives –
◼ Maintain good customer service
◼ Make effective use of resources
◼ Maintain effective levels of inventory
◼ Accomplished by:
◼ Develop a preliminary MPS
◼ Check MPS against capacity and resources
◼ Reconcile any differences

Introduction to Materials Management, 7th Edition © 2012, 2008, 2004, 2001, 1998, 1996 Pearson Education, Upper Saddle River, NJ 07458.
Arnold, Chapman, Clive All Rights Reserved.
 EXAMPLE PROBLEM
◼ The Hotshot Lightning Rod Company makes a
family of two lightning rods, Models H and I. It
bases its production planning on weeks. For the
present month, production is leveled at 1000 units.
Opening inventory is 500 units, and the plan is to
reduce that to 300 units by the end of the month.
The MPS is made using weekly periods. There are
4 weeks in this month, and production is to be
leveled at 250 units per week. The forecast and
projected available for the two lightning rods
follows. Calculate an MPS for each item.

Introduction to Materials Management, 7th Edition © 2012, 2008, 2004, 2001, 1998, 1996 Pearson Education, Upper Saddle River, NJ 07458.
Arnold, Chapman, Clive All Rights Reserved.
 Answer
Production Plan

week 1 2 3 4 Total

Forecast 300 350 300 250 1200

Projected 450 350 300 300

available
(500)
Production 250 250 250 250 1000
plan

Introduction to Materials Management, 7th Edition © 2012, 2008, 2004, 2001, 1998, 1996 Pearson Education, Upper Saddle River, NJ 07458.
Arnold, Chapman, Clive All Rights Reserved.
 Master schedule: Model H
Week 1 2 3 4 Total
Forecast 200 300 100 100 700
Projected 250 200 100 100
available
(200)
MPS 250 250 100

Introduction to Materials Management, 7th Edition © 2012, 2008, 2004, 2001, 1998, 1996 Pearson Education, Upper Saddle River, NJ 07458.
Arnold, Chapman, Clive All Rights Reserved.
 Master schedule: Model I
Week 1 2 3 4 Total
Forecast 100 50 200 150 500
Projected 200 150 200 200
available
(300)
MPS 250 150

Introduction to Materials Management, 7th Edition © 2012, 2008, 2004, 2001, 1998, 1996 Pearson Education, Upper Saddle River, NJ 07458.
Arnold, Chapman, Clive All Rights Reserved.
 Rough-cut Capacity Planning
◼ Establishes whether critical resources
are available
◼ Bottleneck operations
◼ Critical labor resources
◼ Critical material
◼ Often uses a resource bill for a single
product

Introduction to Materials Management, 7th Edition © 2012, 2008, 2004, 2001, 1998, 1996 Pearson Education, Upper Saddle River, NJ 07458.
Arnold, Chapman, Clive All Rights Reserved.
 Example Resource Bill

Introduction to Materials Management, 7th Edition © 2012, 2008, 2004, 2001, 1998, 1996 Pearson Education, Upper Saddle River, NJ 07458.
Arnold, Chapman, Clive All Rights Reserved.
 Example MPS Environments

Introduction to Materials Management, 7th Edition © 2012, 2008, 2004, 2001, 1998, 1996 Pearson Education, Upper Saddle River, NJ 07458.
Arnold, Chapman, Clive All Rights Reserved.
 Final Assembly Schedule
◼ Assembly according to customer
schedule
◼ Generally used in an Assemble-to-Order
environment
◼ Many options
◼ Too many possible final configurations to
forecast or master schedule
◼ MPS usually done at the option level
Introduction to Materials Management, 7th Edition © 2012, 2008, 2004, 2001, 1998, 1996 Pearson Education, Upper Saddle River, NJ 07458.
Arnold, Chapman, Clive All Rights Reserved.
 MPS, FAS and Other Planning
Activities

Introduction to Materials Management, 7th Edition © 2012, 2008, 2004, 2001, 1998, 1996 Pearson Education, Upper Saddle River, NJ 07458.
Arnold, Chapman, Clive All Rights Reserved.
 MPS Planning Horizon
◼ Minimum time horizon over which the
master schedule must extend to ensure
complete planning
◼ Calculated as the longest end-to-end
lead time of the product structure

Introduction to Materials Management, 7th Edition © 2012, 2008, 2004, 2001, 1998, 1996 Pearson Education, Upper Saddle River, NJ 07458.
Arnold, Chapman, Clive All Rights Reserved.
 EXAMPLE - Cumulative Planning
Horizon
◼ For this product – Minimum Planning Horizon 12
weeks

Introduction to Materials Management, 7th Edition © 2012, 2008, 2004, 2001, 1998, 1996 Pearson Education, Upper Saddle River, NJ 07458.
Arnold, Chapman, Clive All Rights Reserved.
 Delivery Promises
◼ MPS is a plan for what production can
and will do
◼ Sales delivery promises can be made
from
◼ “Consumption” of forecasts – Projected
available balance
◼ Available to Promise calculations
◼ MPS values for a given time period left after
actual customer orders are subtracted.
Introduction to Materials Management, 7th Edition © 2012, 2008, 2004, 2001, 1998, 1996 Pearson Education, Upper Saddle River, NJ 07458.
Arnold, Chapman, Clive All Rights Reserved.
 Available to Promise Example

Introduction to Materials Management, 7th Edition © 2012, 2008, 2004, 2001, 1998, 1996 Pearson Education, Upper Saddle River, NJ 07458.
Arnold, Chapman, Clive All Rights Reserved.
 Projected available balance
◼ Take into consideration not only sales
forecast, but also actual customer demand.
◼ Projected available balance is calculated
based on whichever is the greater.
◼ For example, if the beginning projected available
balance is 100 units, the forecast is 40 units, and
customer orders are 50 units, the ending
projected available balance is 50 units, not 60.

Introduction to Materials Management, 7th Edition © 2012, 2008, 2004, 2001, 1998, 1996 Pearson Education, Upper Saddle River, NJ 07458.
Arnold, Chapman, Clive All Rights Reserved.
 Projected Available Balance
◼ The projected available balance (PAB) is
calculated in one of two ways, depending on
whether the period is before or after the
demand time fence.
◼ Demand time fence is the number of
periods, beginning with period 1, in which
changes are not excepted due to excessive
cost caused by schedule disruption.

Introduction to Materials Management, 7th Edition © 2012, 2008, 2004, 2001, 1998, 1996 Pearson Education, Upper Saddle River, NJ 07458.
Arnold, Chapman, Clive All Rights Reserved.
 Projected available balance
◼ Within demand time fence (forecast not
taken into account)
◼ PAB = Prior period PAB + MPS – customer
orders
◼ Outside of demand time fence
◼ PAB = Prior period PAB + MPS – greater of
customer order or forecast

Introduction to Materials Management, 7th Edition © 2012, 2008, 2004, 2001, 1998, 1996 Pearson Education, Upper Saddle River, NJ 07458.
Arnold, Chapman, Clive All Rights Reserved.
 Problem
◼ Given the following data, calculate the
projected available balance. The
demand time fence is the end of week
3, the order quantity is 100, 40 are
available at the beginning of the period.

Introduction to Materials Management, 7th Edition © 2012, 2008, 2004, 2001, 1998, 1996 Pearson Education, Upper Saddle River, NJ 07458.
Arnold, Chapman, Clive All Rights Reserved.
 Problem
Week 1 2 3 4 5

Forecast 40 40 40 40 40

Customer 39 42 39 33 23
orders

Introduction to Materials Management, 7th Edition © 2012, 2008, 2004, 2001, 1998, 1996 Pearson Education, Upper Saddle River, NJ 07458.
Arnold, Chapman, Clive All Rights Reserved.
 solution
week 1 2 3 4 5
Forecast 40 40 40 40 40
Customer 39 42 39 33 23
orders
Projected 1 59 20 80 40
available
balance 40

MPS 100 100

Introduction to Materials Management, 7th Edition © 2012, 2008, 2004, 2001, 1998, 1996 Pearson Education, Upper Saddle River, NJ 07458.
Arnold, Chapman, Clive All Rights Reserved.
 Time Fences
◼ Points in the planning horizon to define the
flexibility allowed in the MPS
◼ Frozen Zone (closest to current date)
◼ Capacity and materials committed to customer orders,
forecast generally ignored
◼ Senior management approval for changes
◼ Slushy Zone
◼ Less commitment of materials and capacity
◼ Tradeoffs negotiated between marketing and
manufacturing
◼ Liquid Zone – All changes allowed within limits of
the Production Plan
Introduction to Materials Management, 7th Edition © 2012, 2008, 2004, 2001, 1998, 1996 Pearson Education, Upper Saddle River, NJ 07458.
Arnold, Chapman, Clive All Rights Reserved.
 Time Fences

Introduction to Materials Management, 7th Edition © 2012, 2008, 2004, 2001, 1998, 1996 Pearson Education, Upper Saddle River, NJ 07458.
Arnold, Chapman, Clive All Rights Reserved.