Supply and Demand

SCAP101

Lesson 9

Master Production Schedule

Attainment
Shop Floor Control

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Agenda – Supply & Demand

 Check in
 Master Production Scheduling
 Attainment
 Capacity Planning

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Learning Objectives

 Describe master production scheduling (MPS) process

 Describe purpose for time fences
 Describe purpose and activities associated with Shop Floor Control
 Describe KPIs used to measure shop floor performance
 Define capacity, design capacity, effective capacity
 Define and calculate utilization, efficiency
 Calculate effective capacities
 Define capacity planning and describe techniques
 Discuss strategies for adding capacity

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The Big Picture ... Inventory Management
Production Distribution

Aggregate Plan
S&OP Process

 Master Production Schedule  Independent Demand:

(MPS)  Re-Order Point Systems

 Material Requirements  EOQ

Planning (MRP)  Safety Stock

 Shop Floor Control; e.g.,  Dependent Demand:

kanban  Distribution Requirements
Planning (DRP)

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Master Production Schedule (MPS)
 Schedule of planned production in the near term:
 Defines what needs to be manufactured over a near term horizon,
generally 6-8 weeks out.
 Consistent with the constraints of the Aggregate Plan (S&OP).
 The MPS contains item level data in either weekly or daily buckets:
 Forecasted demand
 Production
 Projected on-hand inventory
 The requirements from DRP become Forecasted Demand for the MPS.
 Item-level schedules need to be summed to assess availability of
materials, labour, machine capacity, other constraints…..“finite scheduling”
produces a “feasible MPS”, one that is expected to be attainable.

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 A sample MPS
Master Production Schedule for Make-to-Stock (MTS) Item - Dining Room Table
Week Starting Nov.2 Nov. 9 Nov.16 Nov.23 Nov.30 Dec. 7 Dec. 14 Dec. 21 Dec. 28
DEMAND 30 30 35 35 35 40 40 30 30
PRODUCTION 48 48 0 48 48 48 0
PAB (INVENTORY) 44 62 80 45 58 71 79 39
ATP 62 80 45 58 71 79 39
BACKLOG 0 0 0 0 0 0 0

TARGET MINIMUM
STOCK LEVEL 6 FDS 37 42 42 43 48 46 36
Working Days/Week 5
Lot Size 48 Demand Time Fence Planning Time Fence
Opening Inventory
FROZEN ZONE (FIXED)
SLUSHY ZONE (FLEXIBLE)
LIQUID ZONE (PLAN) Positions of time fences vary with flexibility of operation, leadtimes of raw materials.

PAB - Projected Available Balance

master production schedule.xls

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Where are we?
Production

Requirements

 Aggregate Plan  From Tactical to Operational

 Master Production Schedule  From Family to Item
(MPS)
 From Medium term to Short
 Shop Floor Control (SFC) Term

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What is Shop Floor Control (SFC)?
 SFC can be considered short term scheduling. Its objective:
 Allow MPS to be met.
 Keep labour costs low.

 Ensure effective utilization of equipment, people, facilities, etc. » load leveling

 Prioritize orders: production orders, rework, salvage, engineering samples (all consume
resources)

 SFC is the interface between planning and execution systems in near-term; it includes
feedback loop.
 SFC manages resources:
 Machine capacity and Tooling
 Labour and Materials
 Information (for example, time standards)
 Routing and alternate routings…sequencing and resources
 Rescheduling as a result of expedites, problems

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How we measure SFC: Schedule Attainment

Schedule Attainment KPI is a measure of shop floor effectiveness

Schedule Attainment = Orders Completed on Time /

Orders Scheduled
Quantity tolerance…plus and minus small percentages

Non-compliance requires Corrective Action Plan (CAP)

Why is schedule attainment important?

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Schedule Attainment Example
Production Week: 10 Workcentre #8

Tolerance: Plus 2%
Minus 3%
Upper Qty Lower Qty. Schedule
Order Sched. QTY. Allowed Allowed Transferred QTY. Attained

108 1800 1836 1746 1850 N

110 1400 1428 1358 1402 Y
105 900 918 873 890 Y
109 160 163 155 160 Y
117 800 816 776 800 Y
114 720 734 698 680 N
120 480 490 466 480 Y
107 2400 2448 2328 2360 Y
115 3600 3672 3492 3580 Y
104 400 408 388 0 N
12660 12202
Schedule Attainment 70%

Target 90%

In Compliance No

Consecutive Weeks not in

Compliance (Max.3) 4

CAP Required Yes

Example: Sa.xls
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Other Key Performance Measures for Shop
Floor Control

Raw material inventory accuracy

BOM accuracy

Schedule changes within fixed (frozen) zone

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Capacity Planning

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Capacity defined …

The capability of a system to perform its expected function.

(APICS – See citation in Appendix)

For a production environment, in quantitative terms, it is the

amount of product that can be produced in a given period of time.

For planning purposes we use EFFECTIVE CAPACITY

Capacity concepts apply in other areas of the

supply chain: automation, equipment, docks, …

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Design Capacity versus Effective Capacity

Design Capacity

Loss of capacity because not

fully utilized..maintenance, lunch
breaks, planned setups (Utilization)

Loss of capacity because of

quality problems, breakdowns,
interruptions (Efficiency)

Effective or Rated Capacity

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Measuring Capacity – Design Capacity
What is the maximum throughput we can achieve?

NxHxSxD
Design Capacity (for interval) =
T

Where N = number of resources (machines, operators)

H = hours worked per shift
S = shifts per day
D = days worked (in interval..days, weeks, months, or year
T = time in hours to make one unit of product
based on machine or operator speed (cycletime)

Design Capacity also known as Maximum Capacity.

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Example – Design Capacity

NxHxSxD
Design Capacity (for interval) =
T

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Example – Utilization in a 7/24 Operation

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Example - Efficiency

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 Example – Effective Capacity
What is the effective throughput we can achieve, allowing for
utilization and efficiency?

Using data from our previous calculations:

Effective Capacity = Design Capacity x Utilization(%) x Efficiency(%)

= 16,320 x 87% x 75%

= 10,649 Units/Year

Also known as Rated Capacity.

Why is effective capacity important?

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Capacity Planning

The process of determining the amount of capacity

required to produce in the future.
(APICS – See citation in Appendix)

Objective:

Match available capacity to forecasted demand over

the long, medium, and short terms.

Context:

Feasibility of the MPS and the MRP plans …

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Levels of capacity planning:
Strategic Capacity Planning

Strategic Decisions
Facility expansion, closure
Technology change
Major equipment acquisition

Long time horizon

Large expenditures

Sales forecasts are critical

This long range or strategic planning is sometimes called

resource planning or resource requirements planning (RRP).

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Levels of capacity planning:
Tactical and Operational
Typical Decisions required:
Number of shifts per day, length of shifts, number of
scheduled days per week
Overtime…when, number of extra hours, full or partial
crews
Equipment purchases…when, output rate
Sub-contracting…which products, how long to set up,
additional administrative and transportation costs

Rough Cut Capacity Planning (RCCP), driven from the MPS, tends
toward medium term, tactical view.

Capacity Requirements Planning (CRP), driven from MRP, tends

toward short term, operational view.

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Where does Capacity Planning fit?

Long Range Resource Sales and operations Demand

planning planning management
Resource planning
Master production
Rough-cut capacity
scheduling
planning

Medium Range
Detailed material
Capacity requirement planning
planning

Material and
Short Range
capacity plans
Finite Loading

Input/output analysis Shop-floor Supplier

systems systems

Vollmann, Thomas E. et al. (2005). Manufacturing Planning and Control Systems for Supply
Chain Management, 5th Edition. New York, NY: McGraw-Hill.
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Strategies for Adding Capacity
Decisions about Timing:
Lead the Demand
Match the Demand
Lag the Demand

Decisions about the Amount to Add:

Large
Small
Considerations:
Lost sales
Inefficient operations
Overtime costs
Disruptions to operations while capacity added
Cost of capital
Risk

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Recap

 The MPS is the link between production (supply) and the

demand of our distribution network.
 Through the MPS, item level production requirements are
specified.
 Shop Floor Control is the short term scheduling of
production requirements.
 In addition to materials, capacity must be planned in
order to meet our production requirements.
 Capacity planning is essential to ensure a feasible MPS.

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Appendix

References:
Blackstone Jr, John H. (Ed). (2008). APICS Dictionary 12th Edition.
Alexandria, VA: APICS – The Educational Society for Resource
Management.

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