1. Chapter 5 Master Production Scheduling

2. Master Production Scheduling
An effective Master Production Schedule (MPS) provides the basis for making good use of manufacturing resources, making customer delivery promises, resolving trade-offs between sales and manufacturing, and attaining the firm’s strategic objectives, as reflected in the Sales and Operations Plan.

3. MPS and MPC System
The MPS is a statement of the specific products that make up manufacturing output
The MPS is a translation of the sales and operations plan into producible products with their timing and quantities determined
The MPS shows when products will be available in the future

4. Attributes of the Master Production Schedule
The MPS is a statement of production, not of demand
The MPS is not a forecast
The MPS considers factors such as capacity constraints, costs of production, resource limitations, and the sales and operations plan
The MPS is stated in terms of product specifications–usually part numbers which have specific bills of materials (BOM)
In assemble-to-order environments, the MPS may be stated in terms of an “average” final product

5. MPS and the Business Environment
In a make-to-stock company, the MPS is a statement of how much of each end item to be produced and when it will be available
In a make-to-order (or engineer-to-order) firm, the MPS is usually defined as the specific end item(s) that make up an actual customer order
In an assemble-to-order firm, the large number of possible product combinations is represented with a planning bill of materials

6. Enterprise Resource Planning (ERP) System
MPS in the MPC System
Enterprise Resource Planning (ERP) System
Resource
planning
Sales and operations
planning
Demand
management
Master production
scheduling
Rough-cut capacity
planning
Front End
Engine
Detailed material
planning

7. Master Production Scheduling Linkages
The MPS is the driver of all detailed manufacturing activities need to meet output objectives
The MPS is the basis for key inter-functional trade-offs
Production and sales
Financial budgets should be integrated with MPS activities

8. MPS Process and Techniques
Determine supply and demand relationships over time (time-phased record)
Prepare production schedule according to strategy (chase, level, mixed)
Calculate projected available balance (for available-to-promise activities)
Revise plans as time passes (rolling through time)

9. Time-Phased Record
A means of gathering and displaying critical scheduling information (Forecast, available stock, production schedule)
On hand
Period 1 2 3 4 5
Forecast 8 10 15
Projected available balance 20 25 30 32 27
Master production schedule

10. MPS Process–with Lot Sizing
Period 1 – 5 plan
Period
On hand 1 2 3 4 5
Forecast 8 10 15
Projected available balance 20 32 22 7
Master production schedule 30
Lot size = 30 Safety stock = 5
Order size driven by lot sizing constraint, order timing/quantity driven by safety stock constraint
On hand stock =
On hand – actual demand + production
= ( – 10)
As time progresses, new information becomes available
Period 2 – 6 plan
Period
On hand 2 3 4 5 6
Forecast 20 15
Projected available balance 10
-10
-20
-35
-55
Master production schedule 30
Lot size = 30 Safety stock = 5
Updated forecast for periods 2 – 6 changes projected available balancing, prompting rescheduling

11. Revising the MPS Period 2 – 6 plan Period On hand 2 3 4 5 6 Forecast20 15
Projected available balance 10 30 25
Master production schedule
Lot size = 30 Safety stock = 5
Additional production orders in periods 2 and 5 to meet safety stock requirements

12. Available-to-Promise
When immediate delivery is not expected (or is not possible due to stockouts), a promised delivery date must be established
The order promising task is to determine when the shipment can be made
Available-to-promise (ATP) procedures coordinate order promising with production schedules

13. Available-to-Promise Logic–Discrete
Discrete ATP treats each period independently
Period 3: Total customer demand before next production = 2 units
Period 1: Total customer demand before next production = 8 units
Period
On hand 1 2 3 4 5
Forecast 8 10 15
Orders
Projected available balance 20 32 22 7
Available-to-promise 12 28
Master production schedule 30
Lot size = 30 Safety stock = 5
Period 1: Projected available = Previous available + MPS – MAX(Forecast, Orders)
Period 3: ATP = MPS – customer orders = 30 -2
Period 1: ATP = available balance – customer orders = 20 -8

14. Available-to-Promise Logic–Cumulative
Cumulative ATP carries ATP units forward
Period 3: Total customer demand before next production = 2 units
Period 1: Total customer demand before next production = 8 units
Period
On hand 1 2 3 4 5
Forecast 8 10 15
Orders
Projected available balance 20 32 22 7
Available-to-promise 12 40
Master production schedule 30
Lot size = 30 Safety stock = 5
Period 1: Projected available = Previous available + MPS – MAX(Forecast, Orders)
Period 3: ATP3 = ATP1 + MPS – customer orders =
Period 1: ATP1 = available balance – customer orders =

15. ATP–Consuming the Forecast
In the ATP calculation, demand is considered to be the maximum of forecast and actual customer orders
This is a conservative approach
Assumes that we will eventually sell at least the forecast quantity
Adjusts for periods where demand exceeds the forecast

16. MPS in Assemble-to-Order Environments
In an assemble-to-order (ATO) environment, the possible combinations of end items can be huge
Specific end item bills of materials (BOM) are replaced with a planning bill of materials, which represents the potential product combinations
One type of planning BOM is the super bill, which describes the usage of options and components that make up the average product

17. Super Bill of Materials
Mutually exclusive option sets are listed together, with a usage probability for each option
Parts used in all configurations are listed with usage probability of 1.0
Safety stock absorbs variations in actual mix

18. Available-to-Promise Logic with Planning BOM
Are the common parts on the BOM available?
Common Parts Available? No
Yes
Is the requested gear option available? No
Try 1 period later
Gear Available?
Yes
Is the requested Taylor option available? No
Taylor Available?
Yes
Book order

19. Two-Level Master Production Schedules
When a planning BOM is used, a final assembly schedule (FAS) is often used
States the set of end products to be built over a time period
Two-level MPS coordinates component production and the FAS
Component production is controlled by aggregate production plan in the FAS
Final assembly is controlled by the FAS
Either discrete or cumulative ATP logic can apply

20. Discrete ATP with a Two-Level Master Production Schedule
Taylor Brand 4-HP Tillers (FAS)
Period
On hand 1 2 3 4 5
Forecast for model (40% of total) 40
Orders 42 37 23
Projected available balance 10 48 88
Available-to-promise 20 80
Master production schedule
Lot size = 80 Safety stock = 10
Normal ATP logic applies to FAS items
Planning BOM orders are the sum of FAS orders
4-Horsepower Tillers (Aggregate)
Period
On hand 1 2 3 4 5
Production Plan
100
Orders 72 54
Projected available balance
Available-to-promise 28 46
Master production schedule
Safety stock = 0
For planning BOM items projected available balance is always zero because the item doesn’t actually exist

21. Master Production Schedule Stability
A stable MPS translates to stable component schedules
Stability allows improved plant performance
Excessive MPS changes can lead to reduced productivity
Failure to change the MPS can lead to reduced customer service and increased inventory (failure to react)

22. Freezing the MPS
Demand Time Fence
Planning Time Fence
Inside the frozen horizon no order changes are allowed
Only occasional changes
Minor changes
Most changes

23. Managing the MPS To be controlled, the MPS must be realistic
People should only be held accountable for attainable performance levels
Stability and buffering are important
The MPS must not be overstated
Sum of the MPS should equal the production plan

24. Principles
The MPS unit should reflect the business environment and the company’s chosen approach.
If a common ERP database is implemented, the MPS function should use that data.
Regardless of the firm’s environment, effective scheduling is facilitated by common systems, time-phased processing, and MPS techniques.
Customer order processing should be closely linked to MPS.

25. Principles
ATP information should be derived from the MPS and provided to the sales department.
An FAS should be used to convert the anticipated build schedule into the final build schedule.
The master production scheduler should ensure that the sum of the parts (the MPS) is equal to the whole (the operations plan).