1. 5. Master Production Scheduling
Homework problems: 3,4,5,6,7,9.

2. 1. The MPS Activity What is an MPS?
It is the output of the master scheduling process, which encompasses the variety of activities involved in the preparation and maintenance of the master schedule.
It is an anticipated build schedule, Not a forecast
It is a statement of Production, NOT a statement of Demand
It translates the SOP into a plan for producing specific products in the future. Figure 5.1
SOP is an aggregate statement of the manufacturing output required, but MPS is a statement of the specific products that make up that output.
As the statement of output, the MPS forms the basic communication link between the market and manufacturing.

3. 1. The MPS Activity MPS and the Business Environment
The MPS is stated in terms of product specifications–usually part numbers which have specific bills of materials (BOM)
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 assemble-to-order environments, the MPS may be stated in terms of an “average” final product.
In an assemble-to-order firm, the large number of possible product combinations is represented with a planning bill of materials.
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.

4. 1. The MPS Activity
An MPS is a detailed plan (a statement of planned future output) that states how many end item/products (or product options or group of models) will be produced within specified periods of time.
End items are either finished products or the highest level assemblies from which shippable products are built.
An MPS must be stated in terms used to determine component-part needs (e.g., BOM) and other requirements, but NOT in dollars.
Time periods are usually measured in weeks, although they may be measured in hours, days, or even months.

5. Constraints of MPS
a. Sum of the MPS quantities must equal those of PRODUCTION PLAN
b. Total requirements for a product must be allocated over time in an efficient manner. Considerations involved are:
Costs of production (and setups)
Inventory carrying costs
c. CAPACITY LIMITATION must be recognized.
Production may be delayed or take place before market demand in order to improve utilization, reduce cost, etc.

6. An MPS Example 200 Ladder-back chair Kitchen chair Desk chair 1 2
April
May
790 3 4 5 6 7 8
150
120
Aggregate
production plan
for chair family
550

7. The MPS Process No Yes Are resources available?
Authorized production plan
Prospective master production schedule
Material requirements planning
Authorized master production schedule

8. 1. The MPS Activity 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.

9. Fig. 5.1 MPS in the MPC System
Resource
planning
Sales and operations
Demand
management
Master production
scheduling
Detailed material
Enterprise Resource Planning (ERP) System
Front End
Engine
Rough-cut capacity

10. 2. MPS 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)

11. 2. MPS Techniques The time-phased record (Fig. 5.2)
Leveling strategy (Fig. 5.2)
Chase strategy (additional example)
Lot sizing strategy (Fig. 5.3)
Rolling through time (Figs. 5.3, 5.4, 5.5)
Order promising and ATP (Figs. 5.6, 5.7)
Consuming the forecast (Figs. 5.8,5.9,5.10)
Demand time fence and planning time fence (handouts)

12. 2. MPS Techniques
The time-phased record with level MPS strategy (Fig. 5.2)
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

13. 2. MPS Techniques Chase MPS strategy example
Production (MPS) reflects the forecasted demand
Constant projected available balance inventory
On hand
Period 1 2 3 4 5
Forecast 8 10 15
Projected available balance 20
Master production schedule

14. Lot Sizing strategy (Fig. 5.3)
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

15. Rolling through time (Fig. 5.35.4)
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
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

16. Rolling through time (Fig. 5.35.4)
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

17. Rescheduled MPS (Fig. 5.5) Period 2 – 6 plan Period On hand 2 3 4 5 6
Forecast 20 15
Projected available balance 10 30 25
Master production schedule
Lot size = 30 Safety stock = 5

18. Available-to-Promise (ATP)
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

19. Available-to-Promise (ATP) Calculation
ATP1 = beginning on-hand + MPS – sum of the orders before the next MPS receipt
For subsequent weeks (when MPS occurs):
Discrete logic:
ATPsubsequent weeks = MPS – sum of the orders before the next MPS receipt
Cumulative logic:
ATPsubsequent weeks = Previous ATP + MPS – sum of the orders before the next MPS receipt

20. Discrete logic ATP treats each period independently (Fig. 5.6)
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

21. Cumulative logic ATP carries ATP units forward (Fig.5.7)
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

22. 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
Hope that we will eventually sell at least the forecast quantity
Adjusts for periods where demand exceeds the forecast

23. Consuming the Forecast
Assuming the following orders come in during period 2:
Order # Amount Desired week
Can we accept all these orders?
To accept all these orders, we need to schedule MPS in 5 and 6.

24. Discrete logic ATP (Fig.5.8)
Period
On hand 2 3 4 5 6
Forecast 8 10 15 20
Orders
3+5(new)
2+15 35
Projected available balance 7 -5
-40
Available-to-promise
-32
Master production schedule 30
Lot size = 30 Safety stock = 5

25. Discrete logic ATP after update (Fig.5.9)
Period
On hand 2 3 4 5 6
Forecast 8 10 15 20
Orders
3+5(new)
2+15 35
Projected available balance 7 25
Available-to-promise 13 -5
Master production schedule 30
Lot size = 30 Safety stock = 5

26. Revising ATP due to negative ATP in subsequent week
Period
On hand 3 4 5 6 7
Forecast 10 15
Orders 20 2 35
Projected available balance 30
-15
-30
Available-to-promise
Master production schedule
Lot size = 30 Safety stock = 5

27. ATP
Compared to the discrete logic, cumulative ATP logic may look easier to use for order acceptance decisions, it might overstate the real availability.
The use of PAB and ATP is the key to effective master scheduling.
Negative PAB => potential problem
Negative ATP => real problem

28. 5.3 MPS in Assemble-to-Order Environments
In an assemble-to-order (ATO) environment, the possible combinations of end items (and thus MPS needed) can be huge (Fig and DELL’s PCs)
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

29. Fig. 5.11 The MPS Hourglass End items
Establish MPS at the subassembly level
Components

30. BOM Structuring for the MPS
Planning Bill (of Material): an artificial grouping of items or events in bill-of-material format used to facilitate master scheduling and material planning.
Super Bill (of Material): a type of planning bill, located at the top in the structure, that ties together various modular bills (and possibly a common parts bill) to define an entire product or product family. That is, it states the related modules/options that make up the average end item. The quantity per relationship of the super bill to its modules represents the forecasted percentage of demand of each module. The super bill is very useful for planning and (master) scheduling purposes. Figure 5.12

31. Super Bill (of Materials) Fig. 5.12

32. What are the pros and cons of super bill?
Reduce the large number of MPS needed.
But when orders are received, ATP must be applied to EACH option. That is, each of the affected modules must be checked (See Fig. 5.13)

33. Using Available-to-Promise Logic with Planning BOM (Fig. 5.13)
Common Parts Available? No
Yes No
Try 1 period later
Gear Available?
Yes No
Taylor Available?
Yes
Book order

34. 5.4 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

35. Two-Level Master Production Schedule with discrete ATP logic
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
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

36. 5.5 Master Production Schedule Stability
A stable MPS translates to stable component schedules
Stability allows improved plant performance
Failure to change the MPS can lead to reduced customer service and increased inventory (failure to react)
Excessive MPS changes can lead to reduced productivity

37. Freezing the Master Production Schedule
Inside the frozen horizon no order changes are allowed
Only occasional changes
Minor changes
Most changes

38. Demand & Planning Time Fence
Demand time fence:
The number of periods, beginning with period one, during which changes to the MPS are typically not accepted due to excessive cost caused by schedule disruption. Inside the demand time fence, the forecast is ignored in calculating the PAB, because customer orders, not the forecast, matter in the near term.
Planning time fence:
The number of periods, beginning with period one, during which the computer will not reschedule MPS orders. Usually the MPS is stated in terms of firm planned orders inside the planning time fence.
The planning time fence is typically at or outside the cumulative lead time for the master scheduled item. Example.

39. PAB with time fence
The projected available balance (PAB) is calculated in two ways, depending on whether the period is before or after the demand time fence.
Before: PAB = [prior period PAB] + [MPS] – [Customer Order]
After: PAB = [prior period PAB] + [MPS] – Max (Customer Order or Forecast)

40. MPS example with demand and planning time fence

41. H.W. MPS with demand and planning time fence
Update PAB, schedule MPS, and calculate ATP.
Onhand=40; Lost size=50
Demand time fence=4
Planning time fence=10
Period 1 2 3 4 5 6 7 8 9 10
Forecast 18 21 17 12 14 23 28 30 25
Orders 19 20 15
Projected available balance
Available-to-promise
Master production schedule

42. 5.6 Managing the Master Production Schedule
To be controlled, the MPS must be realistic
The MPS must not be overstated against the manufacturing budget and capacity constraints, and sum of the MPS should equal the production plan.
Performance Measures:
Against the schedule
Customer service (meeting due dates; lead time performance)

43. Scheduling production using priority index
Beginning
Weekly
Lot
Hours per
Product
inventory
forecast
size
lot size A 20 5 50 B 40
250 80 C
-30 35
150 60 D 25 10
100 30
Based on the above data, calculate priority index for each product and schedule production, where Priority index = weeks of supply = (beginning inventory) / (weekly forecast)
Priorities:
Product P1 P2 P3 P4 P5 P6 P7 P8 A B C D

44. Scheduling production using priority indexA 4 3 -2
4.5 B
1.25
0.25
3.5
1.5
0.5 C
-0.86
0.64
-0.57
0.29
0.71 D
2.5
-1.5
6.5
5.5 35 30 25 20 15 10 5 1 2 3 4 6 7 8
Week
Capacity= 35 hours a week
Hours

45. Concluding 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.

46. Concluding 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).