Master Scheduling and Rough-Cut Capacity Planning ISQA 459/559 Mellie Pullman

Learning Objectives Explain the role & objectives of a master production schedule Explain the organizational links to master production scheduling Develop a master production schedule Explain rough-cut capacity planning Calculate available-to-promise quantities Describe time fence policies

Role of the MPS Aggregate plan: Master production schedule: Specifies the resources available (e.g.: regular workforce, overtime, subcontracting, allowable inventory levels & shortages) Master production schedule: Specifies the number & when to produce each end item (the anticipated build schedule) Disaggregates the aggregate plan

Business Planning Hierarchy

Planning Links to MPS

Objectives of MPS Maintain the desired customer service level Utilize resources efficiently Maintain desired inventory levels

Developing an MPS: Assume: Make-to-stock environment Production is in fixed quantities of 125 (MPS) 110 units in beginning inventory (BI)

Sample Problem We start with 110 units in Beginning Inventory Period 1 2 3 4 5 6 7 8 9 10 11 12 Forecast 50 75 Projected Available 110 MPS We start with 110 units in Beginning Inventory Projected Available: How many units are available at the end of each time period? MPS: Replenishment Shipments that need to arrive at the beginning of the time period Projected Available =BI + MPS - Forecast

Step 1 Find first negative “projected available” We start with 110 units in Beginning Inventory Projected Available: How many units are available at the end of each time period? (safety stock criteria could be in place > 5) MPS: Replenishment Shipments that need to arrive at the beginning of the time period

Schedule Production

Repeat

Continue, Until Complete

Evaluating the MPS Customer service issues: Does “available-to-promise” inventory satisfy customer orders? What new orders can we take from customers and when?

Available to Promise When a customer places an order, they do not expect immediate delivery (negotiable). The product will delivered by some later date. ATP = how many uncommitted units the company has available at a given time

New Calculation for Projected Available Period 1 2 3 4 5 6 7 8 9 10 11 12 Forecast 50 75 Customer Orders 35 25 20 15 Projected Available 110 Available to Promise MPS Projected Available = BI + MPS – Max (Customer Orders ; Forecast)

Available-to-Promise “Action Bucket” Period 1 2 3 4 5 6 7 8 9 10 11 12 Forecast 50 75 Customer Orders 35 25 20 15 Projected Available 110 60 85 110 Available to Promise MPS 125 “Action Bucket” = the current period Only calculate ATP during in Action Bucket and when MPS occurs ATP action bucket = BI +MPS-customer orders before next replenishment 110 + 0 – (35+25) = 50

Available-to-Promise “Replenishment periods” 1 2 3 4 5 6 7 8 9 10 11 12 Forecast 50 75 Customer Orders 35 25 20 15 Projected Available 110 60 85 110 Available to Promise 80 125 115 MPS ATP for replenishment periods ATP = MPS - customer orders between current MPS and next scheduled replenishment ATP period 3 = 125 – (25 + 20)= 80 ATP period 5 = 125 – (0 + 15)= 110

New Order Suppose we get an order for 200, can we accept this for delivery in period 5?

Worksheet for New Order for 200 Period 1 2 3 4 5 6 7 8 9 10 11 12 Forecast 50 75 Customer Orders 35 25 20 200 15 Projected Available 110 60 85 Available to Promise 80 MPS 125 Fit in the order for 200 (can’t change MPS)

New Order for 200 Period 1 2 3 4 5 6 7 8 9 10 11 12 Forecast 50 75 Customer Orders 35 25 20 200 15 Projected Available 110 60 85 -40 -115 -65 -15 -90 Available to Promise 80 125 115 MPS Negative number in Projected Available = might be a problem in the future Negative number in Available to Promise= always a problem Solution?

Split up New Order for 200 Check to see if this is OK Period 1 2 3 4 5 6 7 8 9 10 11 12 Forecast 50 75 Customer Orders 45 25 105 20 110 15 Projected Available 110 Available to Promise MPS 125 Check to see if this is OK

Can you now take 2 more orders? Period 1 2 3 4 5 6 7 8 9 10 11 12 Forecast 50 75 Customer Orders 45 25 105 20 110 15 40 Projected Available 110 60 30 -20 -5 -80 -30 Available to Promise MPS 125 50 units to be delivered in Period 8 30 units to be delivered in Period 12

Time Fences

Frozen: no changes are possible with a certain period of time (i. e Frozen: no changes are possible with a certain period of time (i.e. 8 weeks) Time Fence (length of period schedule is frozen, liquid, etc.) Demand Fence: MPS numbers do not change and focus is on orders not forecast Planning Fence: Master Production Scheduler is planning more MPS.

Rough-cut capacity planning An estimate of the plans’ feasibility Given the demonstrated capacity of critical resources (e.g.: direct labor & machine time), have we overloaded the system?

Rough-Cut Capacity Planning Determine required resources & proposed workload: Hours/unit

Calculate Required Labor Hours Compare with hours available

Calculate Required Machine Hours Compare with hours available