Supply Chain Management

Production and Materials Planning

(MPS & MRP 2 - Available-to-Promise)
Wisner Ch6

10-1
 Master Production Schedule
The MPS is the production quantity to meet demand from all
sources and is used for computing the requirements of all
time-phased end items
It shows the production for shorter time periods and how many
of each model will be produced

10-2
Available-to-Promise (ATP) Quantities
The MPS decides whether additional orders can be safely
accepted by calculating the difference between confirmed
customer orders & the planned production quantities
These are Available-to-Promise Quantities (ATP)
This difference provides an estimate of spare production
and indicates how many additional orders can be safely
included in the MPS, without major changes
It allows new orders to be quickly negotiated and
delivery dates to be confirmed with customers in response
to their demands

10-3
Available-to-Promise (ATP) Quantities
There are three basic methods of calculating the
available-to-promise quantities:
1. Discrete available-to-promise
2. Cumulative available-to-promise without look
ahead, &
3. Cumulative available-to-promise with look ahead
We will look at the first, Discrete Available-
to-Promise (ATP:D)

10-4
Discrete Available-to-Promise (ATP:D)
The discrete available-to-promise (ATP:D) is calculated as follows:
1. The ATP for the first period is the sum of the beginning inventory
and the MPS, minus the sum of all the committed customer orders
(CCOs) from period 1 up to but not including the period of the
next scheduled MPS
2. For all subsequent periods, there are two possibilities:
a. If no MPS has been scheduled for the period, the ATP is zero.
b. If an MPS has been scheduled for the period, the ATP is the MPS
quantity minus the sum of all CCOs from that period up to but not
including the period of the next scheduled MPS.
3. If an ATP for any period is negative, the deficit must be subtracted
from the most recent positive ATP, and the quantities must be
revised to reflect these changes
As a check, the sum of the BI and MPS with the sum of CCO and
ATP quantities – they should be equal
10-5
Discrete Available-to-Promise (ATP:D) –
Basic Calculations (1)
Week 1 2 3 4 5 6 7 8
Model X
MPS BI = 60 20 30 10 20 20 20 10 20
Committed Customer Orders (CCO) 50 10 10 10 20 20 10 0
ATP:D 30 20 0 10 0 0 0 20

 The formula for calculating the first value ATP:D(1) is:

BI + MPS(1) – CCO(1) = 60 + 20 – 50 = 30
 The next rows are calculated the MPS quantity minus the sum of
the CCOs for that period up to the next scheduled production:
ATP:D(2) = MPS(2) – CCO(2) = 30 – 10 = 20
ATP:D(3) = MPS(3) – CCO(3) = 10 – 10 = 0
Check: BI + MPStotal = 210 = CCOtotal + ATP:Dtotal = 210
10-6
Discrete Available-to-Promise (ATP:D) –
Basic Calculations (2)
Week 1 2 3 4 5 6 7 8
Model X
MPS BI = 60 20 30 10 40 0 30 0 10
Committed Customer Orders (CCO) 50 10 10 10 20 10 10 0
ATP:D 30 20 0 10 0 10 0 10

 If there is no production scheduled in the next period then the

formula aggregates the CCO values up to the next scheduled
production. The ATP value for the periods when no production is
scheduled is 0:

ATP:D(4) = MPS(4) – CCO(4) - CCO(5) = 40 – 10 - 20 = 10

ATP:D(6) = MPS(6) – CCO(6) - CCO(7) = 30 – 10 - 10 = 10

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Discrete Available-to-Promise (ATP:D) –
Basic Calculations (3)
Week 1 2 3 4 5 6 7 8
Model X
MPS BI = 60 20 40 10 20 20 30 10 10
Committed Customer Orders (CCO) 50 10 20 10 20 20 10 10
ATP:D 30 30
20 -10
0 10 0 10 0 0

 If the ATP:D is negative for any period, the deficit must be

subtracted from the most recent positive ATP, and then revise the ATP
quantities:
ATP:D(3) = MPS(3) – CCO(3) = 10 – 20 = -10
Take 10 from ATP:D(2) and revise ATP values
ATP:D(2) = 30 – 10 = 20
ATP:D(3) = -10 + 10 = 0
10-8
Discrete Available-to-Promise (ATP:D) –
Worked Example
Week 1 2 3 4 5 6 7 8
Model X
MPS BI = 30 10 10 0 20 0 20 0 20
Committed Customer Orders (CCO) 20 10 7 0 0 20 18 0
ATP:D 13 0 0 2 0 0 0 20

1. ATP(1) = BI + MPS(1) – CCO(1) = 30 + 10 – 20 = 20

2. ATP(2) = MPS(2) – CCO(2) – CCO(3) = 10 – 10 – 7 = -7
ATP(1) = 20-7 = 13; ATP(3) = -7+7 = 0
3. ATP(3) =0
4. ATP(4) = MPS(4) – CCO(4) – CCO(5) = 20 – 0 – 0 = 20
5. ATP(5) = 0
6. ATP(6) = MPS(6) – CCO(6) – CCO(7) = 20 – 20 – 18 = -18
ATP(4) = 20-18 = 2; ATP(6) = -18+18 = 0
7. ATP(7) = 0
8. ATP(8) = MPS(8) – CCO(8) = 20 – 0 = 20
Group Work : Complete the ATP:D exercises in the handout
10-9
 ATP:D Exercise #1
Week 1 2 3 4 5 6 7 8
Model X
MPS BI = 40 10 10 10 10 0 0 20 0
Committed Customer Orders (CCO) 20 10 0 0 0 10 0 15
ATP:D 30 0 10 0 0 0 5 0

1. ATP(1) = BI + MPS(1) – CCO(1) = 40 + 10 − 20 = 30

2. ATP(2) = MPS(2) – CCO(2) = 10 − 10 = 0
3. ATP(3) = MPS(3) – CCO(3) = 10 − 0 = 10
4. ATP(4) = MPS(4) – CCO(4) – CCO(5) – CCO(6) = 10 − 0 − 0 − 10 = 0
5. ATP(5) = 0
6. ATP(6) = 0
7. ATP(7) = MPS(7) – CCO(7) – CCO(8) = 20 − 0 − 15 = 5
8. ATP(8) = 0

10-10
 ATP:D Exercise #2
Week 1 2 3 4 5 6 7 8
Model X
MPS BI = 30 10 10 20 0 20 0 0 20
Committed Customer Orders (CCO) 10 0 28 0 0 20 0 10
ATP:D 30 2 0 0 0 0 0 10

1. ATP(1) = BI + MPS(1) – CCO(1) = 30 + 10 − 10 = 30

2. ATP(2) = MPS(2) – CCO(2) = 10 − 0 = 10
3. ATP(3) = MPS(3) – CCO(3) – CCO(4) = 20 − 28 − 0 = −8 (use 8 units from ATP2)
Revising: ATP(2) = 10 − 8 = 2 and ATP(3) = −8 + 8 = 0
4. ATP(4) = 0 (no scheduled MPS)
5. ATP(5) = MPS(5) – CCO(5) – CCO(6) – CCO(7) = 20 − 0 − 20 − 0 = 0
6. ATP(6) = 0 (no scheduled MPS)
7. ATP(7) = 0 (no scheduled MPS)
8. ATP(8) = MPS(8) – CCO(8) = 20 − 10 = 10

10-11
 ATP:D Exercise #3
Week 1 2 3 4 5 6 7 8
Model X
MPS BI = 20 20 0 20 20 0 20 20 20
Committed Customer Orders (CCO) 10 10 10 10 10 0 0 10
ATP:D 20 0 10 0 0 20 20 10

1. ATP(1) = BI + MPS(1) – CCO(1) = 20 + 20 – 10 = 30

2. ATP(2) = MPS(2) – CCO(2) = 0 – 10 = -10
ATP(1) = 30-10 = 20; ATP(2) = -10+10 = 0
3. ATP(3) = MPS(3) – CCO(3) = 20 – 10 = 10
4. ATP(4) = MPS(4) – CCO(4) – CCO(5) = 20 –10 – 10 = 0
5. ATP(5) = 0
6. ATP(6) = MPS(6) – CCO(6) = 20 – 0 = 20
7. ATP(7) = MPS(7) – CCO(7) = 20 – 0 = 20
8. ATP(6) = MPS(8) – CCO(8) = 20 –10 = 10

There are 30 units available for an order to be delivered in week 4, but there will not be enough for the 60 units
in week 8, so the Sales Manager will not be able to accept the full order, but could accept the first part and
schedule the remaining 10 units for the second part of the order to be made in the next production period and
delivered in week 9 or 10.
10-12
 ATP:D Exercise #4
Week 1 2 3 4 5 6 7 8
Model X
MPS BI = 40 20 0 10 20 10 10 0 20
Committed Customer Orders (CCO) 10 40 20 20 10 0 0 20
ATP:D 0 0 0 0 0 10 0 0

1. ATP(1) = BI + MPS(1) – CCO(1) = 40 + 20 – 10 = 50

2. ATP(2) = MPS(2) – CCO(2) = 0 – 40 = -40
ATP(1) = 50-40 = 10; ATP(2) = -40+40 = 0
3. ATP(3) = MPS(3) – CCO(3) = 10 – 20 = -10
ATP(1) = 10-10 = 0; ATP(3) = -10 + 10 = 0
4. ATP(4) = MPS(4) – CCO(4) = 20 –20 = 0
5. ATP(5) = MPS(5) – CCO(5) = 10 –10 = 0
6. ATP(6) = MPS(6) – CCO(6) – CCO(7) = 10 – 0 – 0 = 10
7. ATP(7) = 0
8. ATP(6) = MPS(8) – CCO(8) – CCO(7) = 20 –20 = 0

The earliest time a new order of 10 units could be filled is week 6 to be delivered in week 7.

10-13
 MRP: List of Terms
Time bucket / Period / Horizon: One week is typical. By
definition, we are at the beginning of period 1.
Gross Requirement: This is the firm or forecast demand for
the corresponding period.
Scheduled Receipts: These are parts which we are guaranteed
to receive at the beginning of the corresponding period.
On hand: This is the inventory at the end of the corresponding
period. It should remain positive.
Planned order release: Here are the orders which are planned
to be launched to prevent the inventory from becoming negative.

10-14