Ch. 6 Master Production Scheduling

SCM 461Dr. Ron Tibben-LembkePages: 168-181, 183-188

Master Production Schedule Provides basis for:

– Making good use of manufacturing resources

– Making customer delivery promises– Resolving tradeoffs between sales

and manufacturing– Attaining strategic objectives in the

sales and operations plan

What is “Master Production Scheduling?” Start with Aggregate plan

– (Aggregate Sales & Ops Plan)– Output level designed to meet targets

Disaggregates Converts into specific schedule for

each item

S&OP vs MPS

“The role of the sales and operations plan is to balance supply and demand volume, while the MPS specifies the mix and volume of the output”

MPS shows when products will be available in future

Planned production, not forecast

Master Production Scheduling Techniques Available = inventory position at end

of week = starting inventory + MPS – forecast Plan to have positive inventory level

– Buffer in case production below plan– Or demand higher than anticipated

MPS row is amount to make, MRP system has to figure out how to make it

Figure 6.2

1 2 3 4 5 6 7 8 9 10 11 12

Forecast 10 10 10 10 10 10 10 10 10 10 10 10

Available (End) 20 20 20 20 20 20 20 20 20 20 20 20

MPS 10 10 10 10 10 10 10 10 10 10 10 10

On hand (start) 20

Level demand, level production plan

Figure 6.3

Figure 6.3 1 2 3 4 5 6 7 8 9 10 11 12Forecast 5 5 5 5 5 5 15 15 15 15 15 15Available (Ending) 25 30 35 40 45 50 45 40 35 30 25 20MPS 10 10 10 10 10 10 10 10 10 10 10 10On hand (starting) 20

Different sales forecast Same total: 120 units, starts lower,

goes higher Level production plan

Figure 6.4

Same demand as 6.3 Production adjusts to meet

demand “Chase” production strategy

1 2 3 4 5 6 7 8 9 10 11 12Forecast 5 5 5 5 5 5 15 15 15 15 15 15Available (Ending) 20 20 20 20 20 20 20 20 20 20 20 20MPS 5 5 5 5 5 5 15 15 15 15 15 15On hand (starting) 20

Figure 6.5

Lot size of 30 units Produce if projected balance falls below 5

units Extra on-hand inventory is “cycle stock” 5 unit “trigger” is safety stock

1 2 3 4 5 6 7 8 9 10 11 12Forecast 5 5 5 5 5 5 15 15 15 15 15 15Available (Ending) 15 10 5 30 25 20 5 20 5 20 5 20MPS 0 0 0 30 0 0 0 30 0 30 0 30On hand (starting) 20

Figure 6.5a – next week

1 2 3 4 5 6 7 8 9 10 11Forecast 10 10 10 10 10 10 15 15 15 15 15Available (Ending) 10 0 -10 10 0 -10 -25 -10 -25 -10 -25MPS 0 0 0 30 0 0 0 30 0 30 0On hand (starting) 20

Demand in week 1 was 10 Marketing decides forecast was

incorrect Raise forecasts to 10 for weeks 2-6 Ending Available for wk 2 projected to

be 0– Need to produce in week 2.

Figure 6.6

2 3 4 5 6 7 8 9 10 11 12 13Forecast 10 10 10 10 10 15 15 15 15 15 15 15Available (Ending) 0 -10 10 0 -10 -25 -10 -25 -10 -25 -10 -25MPS 0 0 30 0 0 0 30 0 30 0 30 0On hand (starting) 10

Roll forward one week Higher demand over weeks 1-12

– Total was 120, now is 155 Need to revise MPS

Figure 6.7

2 3 4 5 6 7 8 9 10 11 12Forecast 10 10 10 10 10 15 15 15 15 15 15Available (Ending) 30 20 10 30 20 5 20 5 20 5 20MPS 30 0 0 30 0 0 30 0 30 0 30On hand (starting) 10

Production planned for week 4 moved to 2 – can we do it?

Planned to do 4 batches in 12 weeks, now need 5 – feasible?

Changing schedule is expensive, maybe very expensive

Order Promising 6.8

Track # units ordered for each period More orders expected for periods 2,3 From on-hand, how many units not yet

spoken for?

ATP = 20 – (5+3+2) = 10

1 2 3 4 5 6 7 8 9 10 11 12Forecast 5 5 5 5 5 5 15 15 15 15 15 15Orders 5 3 2Available (Ending) 15 10 5 30 25 20 5 20 5 20 5 20ATP 10 30 30 30 30MPS 0 0 0 30 0 0 0 30 0 30 0 30On hand (starting) 20

Available to Promise ATP Backlog of 10 orders over first 3

weeks: 5,3,2 – Actual firm customer orders, not forecasts.– Total shipments expected to be 5 in early

weeks 20 units on hand. 10 units are available to promise 20 units on hand have to cover all

demands until next production

Week 1 Demand is 10

Suppose demand is 10 in week 1.– Orders for 5 week 1 units were

received in week 1.– Already had firm orders for 5 for wk

1. Increase forecasts of future week

shipments. Started period 1 with 20, demand

was 10, ended with 10.

Order Promising – Fig. 6.9

Received more orders for periods 2-4Period 2 ending inventory would be 0, so have

to produce in week 2.(10+30) – (5+5+2)=28Order backlog went from 10 to 12- factor in

revising forecasts?

2 3 4 5 6 7 8 9 10 11 12 13Forecast 10 10 10 10 10 15 15 15 15 15 15 15Orders 5 5 2Available (Ending) 30 20 10 30 20 5 20 5 20 5 20 5ATP 28 30 30 30 30MPS 30 0 0 30 0 0 30 0 30 0 30 0On hand (starting) 10

2 3 4 5 6 7 8 9 10 11 12 13Forecast 10 10 10 10 10 15 15 15 15 15 15 15Orders 5 5 2Available (Ending) 30 20 10 30 20 5 20 5 20 5 20 5ATP 28 30 30 30 30MPS 30 0 0 30 0 0 30 0 30 0 30 0On hand (starting) 10

Starting inventory plus production is 10+30 = 40.

We have orders for 5 in period 2 It looks like we could accept orders for up to

35 more units in week 2. But we can’t. We’ve promised 7 of those

units to weeks 3&4. Selling more would mean we have to

expedite another shipment, like we just did, but which we really, really don’t want to have to do.

So, not safe to assume we can easily expedite in short term

Calculating “Available”

Current batch plus on hand Minus the greater of Forecast and

confirmed orders Previous available + MPS –

(greater of forecast or orders)

Calculating ATP

Calculated in current week and any week with MPS>0– Current period: on-hand plus any

current period MPS, minus all orders in that and subsequent periods until next MPS

– Later periods: MPS – all orders until next MPS

– ATP = MPS in weeks 5, 8, 10, 12

ATP: Future Deficiencies Order for 35 in week 10. Wk 10 ATP goes to 0, 5 additional units

need to come from ATP for previous MPS

Week 8 MPS goes to 25 Set MPS for 11? We need to do

something.2 3 4 5 6 7 8 9 10 11 12 13Forecast 10 10 10 10 10 15 15 15 15 15 15 15Orders 5 5 2 35Available (Ending) 30 20 10 30 20 5 20 5 0 -15 0 -15ATP 28 30 25 0 30MPS 30 0 0 30 0 0 30 0 30 0 30 0On hand (starting) 10

Consuming the ForecastFig. 6.10 Go back to Fig. 6.9 Can we accept following orders?

1. 5 units week 22. 15 units week 33. 35 units week 64. 10 units week 5

5 in week 2?2 3 4 5 6 7 8 9 10 11 12 13

Forecast 10 10 10 10 10 15 15 15 15 15 15 15Orders 5 5 2Available (Ending) 30 20 10 30 20 5 20 5 20 5 20 5ATP 28 30 30 30 30MPS 30 0 0 30 0 0 30 0 30 0 30 0On hand (starting) 10

5 in week 2 – must come from ATP in week 2.

ATP in 2 is 28, so it works. Reduce ATP to 23, add order

5 in week 2? OK

2 3 4 5 6 7 8 9 10 11 12 13Forecast 10 10 10 10 10 15 15 15 15 15 15 15Orders 10 5 2Available (Ending) 30 20 10 30 20 5 20 5 20 5 20 5ATP 23 30 30 30 30MPS 30 0 0 30 0 0 30 0 30 0 30 0On hand (starting) 10

Reduced ATP to 23, add 5 to Orders

15 in week 3?

2 3 4 5 6 7 8 9 10 11 12 13Forecast 10 10 10 10 10 15 15 15 15 15 15 15Orders 10 5 2Available (Ending) 30 20 10 30 20 5 20 5 20 5 20 5ATP 23 30 30 30 30MPS 30 0 0 30 0 0 30 0 30 0 30 0On hand (starting) 10

15 in week 3 – needs to come from ATP in week 2.

ATP in 2 is 23, so it works

15 in week 3? OK2 3 4 5 6 7 8 9 10 11 12 13

Forecast 10 10 10 10 10 15 15 15 15 15 15 15Orders 10 20 2Available (Ending) 30 10 0 20 10 -5 10 -5 10 -5 10 -5ATP 8 30 30 30 30MPS 30 0 0 30 0 0 30 0 30 0 30 0On hand (starting) 10

Reduced ATP to 8, added 15 to “Orders” Notice all future ending levels went down

by 10 Consider moving MPS from 5 to 4.

– Depends on marketing’s beliefs about 4.– If no more than 10 will come, we might be OK.

35 in week 6?

2 3 4 5 6 7 8 9 10 11 12 13Forecast 10 10 10 10 10 15 15 15 15 15 15 15Orders 10 20 2Available (Ending) 30 10 0 20 10 -5 10 -5 10 -5 10 -5ATP 8 30 30 30 30MPS 30 0 0 30 0 0 30 0 30 0 30 0On hand (starting) 10

ATP in week 5 is only 30. How could this work?

35 in week 6? OK2 3 4 5 6 7 8 9 10 11 12 13

Forecast 10 10 10 10 10 15 15 15 15 15 15 15Orders 10 20 2 35Available (Ending) 30 10 0 20 -15 -30 -15 -30 -15 -30 -15 -30ATP 3 0 30 30 30MPS 30 0 0 30 0 0 30 0 30 0 30 0On hand (starting) 10

30 from ATP in week 5, which goes to 0. Need 5 more ATP from week 2, ATP in 2 goes down to 3. But it would only be prudent to approve it if:

You think this 35 represents all the demand you’ll see (Those forecasted other orders are not coming), OR You can adjust the MPS to meet forecasted demand

No room to accommodate 10 in w 5, could do in week 8

Fig. 6.10

3 4 5 6 7 8 9 10 11 12 13 14Forecast 10 10 10 10 15 15 15 15 15 15 15 15Orders 20 2 35 10Available (Ending) 10 0 20 -15 -30 -15 -30 -15 -30 -15 -30 -45ATP 3 0 30 30 30MPS 0 0 30 0 0 30 0 30 0 30 0 0On hand (starting) 30

Roll one week forward in time What to do about Available < 0?

– Maybe nothing. forecasted sales may not appear

– If they do, we’re in trouble – produce more, or earlier, depends on other products’ needs

Bill of Materials

Bill of Materials – Parent-child diagram that shows what goes into what.

Bike

FrameAssy

Wheel Assy

Components

Wheel Tires

Hubs &

Rims

Spokes

Frame

Used to make sure enough parts for production plan

Each part has LT, ordering policy

One BOM for every end product

BOM formats

Single-level BOM only shows one layer down.

Indented BOM Bike

– Frame Assembly Components Frame

– Wheel Assembly Wheel

– Hubs & Rims– Spokes

Tires

Wheel Tires

Spokes

Low-Level Code Numbers

Lowest level in structure item occurs

Top level is 0; next level is 1 etc.

Process 0s first, then 1s

Know all demand for an item

Where should blue be?

LLC

0

1

2

3

4

LLC Drawing

Item only appears in one level of LLC drawing

Easier to understand

Simplifies calculations

LLC

0

1

2

3

4

Final Assembly Schedule Master Production schedule is

anticipated build schedule FAS is actual build schedule

– Exact end-item configurations

Schedule Stability

Stable schedule means stable component schedules, more efficient

No changes means lost sales Frozen zone- no changes at all Time fences

– >24 wks, all changes allowed (water)– 16-23 wks substitutions, if parts there

(slush)– 8-16 minor changes only (slush)– < 8 no changes (ice)

HW

Pages 168-181, 183-188 DQ: 1,3,5 Problems: 1,4,6,8