Ch.

6
Master Production
Scheduling
SCM 461
Dr. Ron Tibben-Lembke
Pages: 168-181, 183-188
Master Production
Schedule
 Provides basis for:
– Making good use of manufacturing
resources
– Making customer delivery promises
– Resolving tradeoffs between sales and
manufacturing
– Attaining strategic objectives in the sales
and operations plan
What is “Master
Production Scheduling?”
 Start with Aggregate plan
– (Aggregate Sales & Ops Plan)
– Output level designed to meet targets
 Disaggregates
 Converts into specific schedule for each
item
S&OP vs MPS

 “The role of the sales and operations

plan is to balance supply and demand
volume, while the MPS specifies the
mix and volume of the output”
 MPS shows when products will be
available in future
 Planned production, not forecast
Master Production
Scheduling Techniques
 Available = inventory position at end of
week
 = starting inventory + MPS – forecast
 Plan to have positive inventory level
– Buffer in case production below plan
– Or demand higher than anticipated
 MPS row is amount to make, MRP system
has to figure out how to make it
 Figure 6.2

 Level demand, level production plan

1 2 3 4 5 6 7 8 9 10 11 12
Forecast 10 10 10 10 10 10 10 10 10 10 10 10
Available (End) 20 20 20 20 20 20 20 20 20 20 20 20
MPS 10 10 10 10 10 10 10 10 10 10 10 10
On hand (start) 20
 Figure 6.3

Figure 6.3 1 2 3 4 5 6 7 8 9 10 11 12
Forecast 5 5 5 5 5 5 15 15 15 15 15 15
Available (Ending) 25 30 35 40 45 50 45 40 35 30 25 20
MPS 10 10 10 10 10 10 10 10 10 10 10 10
On hand (starting) 20
 Different sales forecast
 Same total: 120 units, starts lower, goes
higher
 Level production plan
 Figure 6.4
1 2 3 4 5 6 7 8 9 10 11 12
Forecast 5 5 5 5 5 5 15 15 15 15 15 15
Available (Ending) 20 20 20 20 20 20 20 20 20 20 20 20
MPS 5 5 5 5 5 5 15 15 15 15 15 15
On hand (starting) 20

 Same demand as 6.3

 Production adjusts to meet demand
 “Chase” production strategy
 Figure 6.5
1 2 3 4 5 6 7 8 9 10 11 12
Forecast 5 5 5 5 5 5 15 15 15 15 15 15
Available (Ending) 15 10 5 30 25 20 5 20 5 20 5 20
MPS 0 0 0 30 0 0 0 30 0 30 0 30
On hand (starting) 20

 Lot size of 30 units

 Produce if projected balance falls below 5 units
 Extra on-hand inventory is “cycle stock”
 5 unit “trigger” is safety stock
 Figure 6.5a – next week
1 2 3 4 5 6 7 8 9 10 11
Forecast 10 10 10 10 10 10 15 15 15 15 15
Available (Ending) 10 0 -10 10 0 -10 -25 -10 -25 -10 -25
MPS 0 0 0 30 0 0 0 30 0 30 0
On hand (starting) 20

 Demand in week 1 was 10

 Marketing decides forecast was incorrect
 Raise forecasts to 10 for weeks 2-6
 Ending Available for wk 2 projected to be 0
– Need to produce in week 2.
 Figure 6.6

2 3 4 5 6 7 8 9 10 11 12 13
Forecast 10 10 10 10 10 15 15 15 15 15 15 15
Available (Ending) 0 -10 10 0 -10 -25 -10 -25 -10 -25 -10 -25
MPS 0 0 30 0 0 0 30 0 30 0 30 0
On hand (starting) 10

 Roll forward one week

 Higher demand over weeks 1-12
– Total was 120, now is 155
 Need to revise MPS
 Figure 6.7
2 3 4 5 6 7 8 9 10 11 12
Forecast 10 10 10 10 10 15 15 15 15 15 15
Available (Ending) 30 20 10 30 20 5 20 5 20 5 20
MPS 30 0 0 30 0 0 30 0 30 0 30
On hand (starting) 10

 Production planned for week 4 moved to 2 –

can we do it?
 Planned to do 4 batches in 12 weeks, now
need 5 – feasible?
 Changing schedule is expensive, maybe very
expensive
 Order Promising 6.8
 Track # units ordered for each period
 More orders expected for periods 2,3
 From on-hand, how many units not yet
spoken for?
1 23 4 5 6 7 8 9 10 11 12
Forecast 5 55 5 5 5 15 15 15 15 15 15
Orders 5 32
Available (Ending) 15 105 30 25 20 5 20 5 20 5 20
ATP 10 30 30 30 30
MPS 0 0 0 30 0 0 0 30 0 30 0 30
On hand (starting) 20
 ATP = 20 – (5+3+2) = 10
Available to Promise ATP
 Backlog of 10 orders over first 3 weeks:
5,3,2
– Actual firm customer orders, not forecasts.
– Total shipments expected to be 5 in early weeks
 20 units on hand.
 10 units are available to promise
 20 units on hand have to cover all demands
until next production
Week 1 Demand is 10
 Suppose demand is 10 in week 1.
– Orders for 5 week 1 units were received
in week 1.
– Already had firm orders for 5 for wk 1.
 Increase forecasts of future week
shipments.
 Started period 1 with 20, demand was
10, ended with 10.
 Order Promising – Fig. 6.9
2 3 4 5 6 7 8 9 10 11 12 13
Forecast 10 10 10 10 10 15 15 15 15 15 15 15
Orders 5 5 2
Available (Ending) 30 20 10 30 20 5 20 5 20 5 20 5
ATP 28 30 30 30 30
MPS 30 0 0 30 0 0 30 0 30 0 30 0
On hand (starting) 10
Received more orders for periods 2-4
Period 2 ending inventory would be 0, so have to
produce in week 2.
(10+30) – (5+5+2)=28
Order backlog went from 10 to 12- factor in revising
forecasts?
 2 3 4 5 6 7 8 9 10 11 12 13
Forecast 10 10 10 10 10 15 15 15 15 15 15 15
Orders 5 5 2
Available (Ending) 30 20 10 30 20 5 20 5 20 5 20 5
ATP 28 30 30 30 30
MPS 30 0 0 30 0 0 30 0 30 0 30 0
On hand (starting) 10
 Starting inventory plus production is 10+30 = 40.
 We have orders for 5 in period 2
 It looks like we could accept orders for up to 35
more units in week 2.
 But we can’t. We’ve promised 7 of those units to
weeks 3&4.
 Selling more would mean we have to expedite
another shipment, like we just did, but which we
really, really don’t want to have to do.
 So, not safe to assume we can easily expedite in
short term
Calculating “Available”

 Current batch plus on hand

 Minus the greater of Forecast and
confirmed orders
 Previous available + MPS – (greater of
forecast or orders)
Calculating ATP

 Calculated in current week and any

week with MPS>0
– Current period: on-hand plus any current
period MPS, minus all orders in that and
subsequent periods until next MPS
– Later periods: MPS – all orders until next
MPS
– ATP = MPS in weeks 5, 8, 10, 12
 ATP: Future Deficiencies
 Order for 35 in week 10.
 Wk 10 ATP goes to 0, 5 additional units need
to come from ATP for previous MPS
 Week 8 MPS goes to 25
 Set MPS for 11? We need to do something.
2 3 4 5 6 7 8 9 10 11 12 13
Forecast 10 10 10 10 10 15 15 15 15 15 15 15
Orders 5 5 2 35
Available (Ending) 30 20 10 30 20 5 20 5 0 -15 0 -15
ATP 28 30 25 0 30
MPS 30 0 0 30 0 0 30 0 30 0 30 0
On hand (starting) 10
Consuming the Forecast
Fig. 6.10
 Go back to Fig. 6.9
 Can we accept following orders?
1. 5 units week 2
2. 15 units week 3
3. 35 units week 6
4. 10 units week 5
 5 in week 2?
2 3 4 5 6 7 8 9 10 11 12 13
Forecast 10 10 10 10 10 15 15 15 15 15 15 15
Orders 5 5 2
Available (Ending) 30 20 10 30 20 5 20 5 20 5 20 5
ATP 28 30 30 30 30
MPS 30 0 0 30 0 0 30 0 30 0 30 0
On hand (starting) 10

 5 in week 2 – must come from ATP in week 2.

 ATP in 2 is 28, so it works.
 Reduce ATP to 23, add order
 5 in week 2? OK

2 3 4 5 6 7 8 9 10 11 12 13
Forecast 10 10 10 10 10 15 15 15 15 15 15 15
Orders 10 5 2
Available (Ending) 30 20 10 30 20 5 20 5 20 5 20 5
ATP 23 30 30 30 30
MPS 30 0 0 30 0 0 30 0 30 0 30 0
On hand (starting) 10

 Reduced ATP to 23, add 5 to Orders

 15 in week 3?

2 3 4 5 6 7 8 9 10 11 12 13
Forecast 10 10 10 10 10 15 15 15 15 15 15 15
Orders 10 5 2
Available (Ending) 30 20 10 30 20 5 20 5 20 5 20 5
ATP 23 30 30 30 30
MPS 30 0 0 30 0 0 30 0 30 0 30 0
On hand (starting) 10
 15 in week 3 – needs to come from
ATP in week 2.
 ATP in 2 is 23, so it works
 15 in week 3? OK
2 3 4 5 6 7 8 9 10 11 12 13
Forecast 10 10 10 10 10 15 15 15 15 15 15 15
Orders 10 20 2
Available (Ending) 30 10 0 20 10 -5 10 -5 10 -5 10 -5
ATP 8 30 30 30 30
MPS 30 0 0 30 0 0 30 0 30 0 30 0
On hand (starting) 10
 Reduced ATP to 8, added 15 to “Orders”
 Notice all future ending levels went down by 10
 Consider moving MPS from 5 to 4.
– Depends on marketing’s beliefs about 4.
– If no more than 10 will come, we might be OK.
 35 in week 6?
2 3 4 5 6 7 8 9 10 11 12 13
Forecast 10 10 10 10 10 15 15 15 15 15 15 15
Orders 10 20 2
Available (Ending) 30 10 0 20 10 -5 10 -5 10 -5 10 -5
ATP 8 30 30 30 30
MPS 30 0 0 30 0 0 30 0 30 0 30 0
On hand (starting) 10

 ATP in week 5 is only 30.

 How could this work?
 35 in week 6? OK
2 3 4 5 6 7 8 9 10 11 12 13
Forecast 10 10 10 10 10 15 15 15 15 15 15 15
Orders 10 20 2 35
Available (Ending) 30 10 0 20 -15 -30 -15 -30 -15 -30 -15 -30
ATP 3 0 30 30 30
MPS 30 0 0 30 0 0 30 0 30 0 30 0
On hand (starting) 10
 30 from ATP in week 5, which goes to 0.
 Need 5 more ATP from week 2, ATP in 2 goes down to 3.
 But it would only be prudent to approve it if:
 You think this 35 represents all the demand you’ll see

 (Those forecasted other orders are not coming), OR

 You can adjust the MPS to meet forecasted demand

 No room to accommodate 10 in w 5, could do in week 8

 Fig. 6.10
3 4 5 6 7 8 9 10 11 12 13 14
Forecast 10 10 10 10 15 15 15 15 15 15 15 15
Orders 20 2 35 10
Available (Ending) 10 0 20 -15 -30 -15 -30 -15 -30 -15 -30 -45
ATP 3 0 30 30 30
MPS 0 0 30 0 0 30 0 30 0 30 0 0
On hand (starting) 30

 Roll one week forward in time

 What to do about Available < 0?
– Maybe nothing. forecasted sales may not appear
– If they do, we’re in trouble – produce more, or
earlier, depends on other products’ needs
 Bill of Materials
 Bill of Materials – Parent-child diagram that
shows what goes into what.
 Used to make sure
Bike enough parts for
production plan
Frame Wheel
Assy Assy
 Each part has LT,
ordering policy
Components Frame Wheel Tires
 One BOM for every
Hubs & Spokes end product
Rims
BOM formats
 Single-level BOM  Indented BOM
only shows one  Bike
layer down. – Frame Assembly
 Components
Spokes
 Frame
Wheel Tires – Wheel Assembly
 Wheel
– Hubs & Rims
– Spokes
 Tires
 Low-Level Code Numbers
LLC
 Lowest level in
structure item occurs 0

 Top level is 0; next

level is 1 etc. 1

 Process 0s first, then 2

1s
 Know all demand for 3
an item 4
 Where should blue be?
 LLC Drawing
LLC
 Item only appears in
one level of LLC 0

drawing
1
 Easier to understand
2
 Simplifies calculations
3

4
Final Assembly Schedule

 Master Production schedule is

anticipated build schedule
 FAS is actual build schedule
– Exact end-item configurations
Schedule Stability
 Stable schedule means stable component
schedules, more efficient
 No changes means lost sales
 Frozen zone- no changes at all
 Time fences
– >24 wks, all changes allowed (water)
– 16-23 wks substitutions, if parts there (slush)
– 8-16 minor changes only (slush)
– < 8 no changes (ice)
HW

 Pages 168-181, 183-188

 DQ: 1,3,5
 Problems: 1,4,6,8