Master Scheduling Chapter 3

Master Production Schedule 3 months - 1 year - timeframe What will manufacturing build? How many? When? What other components are needed? What capacity constraints exist? What material constraints exist? It keeps priorities valid

Master Production Schedule Deals with end items requirements Drives the integrated Materials Requirements Plan It is a priority plan for manufacturing MPS has three functions: to interlock the business plans and day-to-day operating plans to provide a “control handle” for management on daily operations to drive the formal, integrated planning and control system

Master Production Schedule Information needed to create an MPS Production Plan (Previously completed) Forecasts for individual items Actual orders received from customers & for stock replenishment Inventory levels for individual items Capacity constraints

Grand Scheme of Things Strategic Business Plan Production Plan Master Plan Production Plan Planning Master Production Schedule Material Requirements Plan Production Activity Control & Purchasing Implementation

Developing an MPS Objectives Steps Maintain desired level of customer service Make best use of material, labor and equipment Maintain inventory investment $$ at required levels Steps Develop a preliminary MPS Check preliminary MPS against available capacity (rough-cut capacity planning) Resolve any differences

Preliminary MPS Page 52-53. Do on Board.

Preliminary MPS Page 53. Walk Through Week 1: 50 + 100 - 75 = 75 (Projected Available + MPS - Forecast = Current Week Projected Available) Week 1: 50 + 100 - 75 = 75 Week 2: 75 + 0 - 50 = 25 Week 3: 25 + 100 - 30 = 95 Week 4: 95 + 0 - 40 = 55 Week 5: 55 + 100 - 70 = 85 Week 6: 85 + 0 - 20 = 65 The MPS of 100 units was added at Week 1,3 & 5 to avoid a negative number Week 1 2 3 4 5 6 Forecast 75 50 30 40 70 20 Projected available 25 95 55 85 65 MPS 100  

Preliminary MPS MPS & Production Plan must match Go back to Example on Page 51. Do on Board.

Rough-Cut Capacity Planning Looks at whether critical resources (capacity) are available to support “preliminary” MPS Look at Example on page 54 Look at Example on page 55.

Rough-Cut Capacity Planning Resolution of Differences Total Time VS Available Capacity Three more items to look at Resource use Customer Service $ (cost)

MPS Scheduled to finished-goods items Make-to-Stock Make-to-Order Assemble to Order MPS Bottom of BOM MPS Top Assy of BOM MPS FAS FAS Few items; many components Ships, Buses, Large Machine Tools Many items; Many components; good commonality Small Home Appliances, Electric Motors, Food products Many items; many components; few modules; many options Automobiles, computers, machine tools MPS Scheduled to finished-goods items MPS Scheduled to customer orders

Final Assembly Schedule (FAS) Used in “Assemble to Order” & “Make to Order” MPS MPS FAS FAS

Planning Horizon Time span for the plan (how far into the future) Shown: 26 weeks is the time span for this product B A C D E Lead Time = 6 weeks = 2 weeks = 5 weeks = 8 weeks = 16 weeks

Time Fences B A C D E Lead Time = 6 weeks = 2 weeks = 5 weeks = 8 weeks = 16 weeks Lead times determine when a part will be available for delivery to the customer Critical lead times determine the minimum planning period that must be used As you get closer to the delivery date production becomes more inflexible Changes to the MPS should only occur when Customers cancel or change orders Machine breakdowns, etc. Supply problems Higher scrap than anticipated

Zones and Time Fences Frozen zone Slushy zone Liquid zone Actual Orders (Emergency Changes Only) Frozen Slushy Liquid Actual and Forecast (Trade-offs) Forecast Only Due Date Demand Time Fence Planning 2 weeks 26 weeks Frozen zone Capacity and materials are committed to specific orders Requires senior management approval to change Slushy zone Commitment is to a lesser extent Changes are easier to make Liquid zone Changes can easily be made

MPS & Sales MPS is not a sales forecast, it is instead, a forecast of production. It may not necessarily be what we want; it should be what we can do. MPS must be realistic & achievable; otherwise, the plan fails, deliveries are not met, & manufacturing has to react to circumstances rather than planning for them (Proactive VS Reactive)

MPS and Delivery Promises As orders are received, they “consume” available production and inventory Any part not consumed is Available-To-Promise "Available To Promise" (ATP) simply means that a product is in stock and can be promised to a buyer. With Available To Promise (ATP) it is possible to see how much inventory or projected inventory is not committed to current customer orders and is therefore available for order promising. Customer Orders Available-To- Promise Time Units Production Capacity or Inventory

Available-To-Promise Customer Order Can it be filled from existing inventory without changing schedule? Looks ahead for availability of product

Available-To-Promise Go over Figure 3.8 page 60 Also Figure 3.8 (bottom of page 61)

Available-To-Promise

Projected Available Balance Forecast is not always accurate PAB takes both Forecast & Customer Order into account Two methods Prior Demand Time Fence PAB = prior period PAB or on-hand balance + MPS - customer orders After Demand Time Fence PAB = prior period PAB + MPS – [greater of customer orders or forecast]

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. Before Demand Time Fence (prior period PAB or on-hand balance + MPS - customer orders) Week 1: 40 + 0 - 39 = 1 Week 2: 1 + 100 - 42 = 59 Week 3: 59 + 0 - 39 = 20 After Demand Time Fence (prior period PAB + MPS – [greater of customer orders or forecast]) Weed 4: 20 + 100 - 40 = 80 Week 5: 80 + 0 - 40 = 40 Week 1 2 3 4 5 Forecast 40 Customer orders 39 42 33 32 Week   1 2 3 4 5 Projected Available Balance 40 1 59 20 80 40 MPS     100   100  

Summary MPS Major Functions Forms the link between APP & what manufacturing builds Plans capacity requirements - the MPS determines the capacity required Plans material requirements - the MPS drives the (MRP) Keeps priorities valid - the MPS is a priority plan for manufacturing

Summary MPS Links Sales & Production Aids in making order promises - the MPS is a plan for what is to be produced & when Informs sales & manufacturing when goods will be available for delivery Creates a contract between marketing & manufacturing - an agreed-upon plan

Summary The MPS must be realistic & based on what production can & will do, if not, Resource overloads or underloads do occur Unreliable schedules result & delivery performance suffers High levels of work-in-process (WIP) inventory build-up Customer service is poor Planning system loses credibility