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M&DC Purchasing & Supply Chain: Material Management

 

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Master Scheduling

 

Contents

1. Introduction

  • Master production schedule MPS is the next step in MPC the manufacturing planning and control process


  • MPS is a means of  Communication, a Link  or Contract between Marketing and Manufacturing.

    • The MPS report includes an ATP Available to Promise figure to enable realistic, achievable delivery promises to be made to customers.

    • It is a plan of what is to be produced and when

    • It is an agreed upon plan between marketing and manufacturing.

    • The MPS is a Priority Plan for Manufacturing.

    • It is not meant to be rigid. It is the basis to make changes that are consistent with the demands of the marketplace and the capacity of manufacturing.


  • It breaks down the PP into the Requirements for Individual End Items, in each family, by date and quantity.

  • The sum of all Family MPS items must equal the agreed SOP Sales and Operations Plan for that Family over each planning period (normally a month or 4 week period).

  •  MPS application usually depends on production environment (MTS, ATO, and MTO)


  • The MPS drives the Material Requirements Plan MRP

    Items planned at the MPS level are exploded by MRP to produce the detail material and capacity requirements.

  • As a schedule of items to be built, the MPS and BOM Bills Of Material determine what components are needed from manufacturing and purchasing.

2. Definition

“The MPS is a line on the master schedule grid (MPS Matrix) that reflects the anticipated build schedule for those items assigned to the master scheduler.

The master scheduler maintains this schedule, and in turn, it becomes a set of planning numbers that drives MRP Material Requirements Planning.

It represents what the company plans to produce expressed in specific configurations, quantities, and dates.

The MPS is not a sales item forecast that represents a statement of demand.

The MPS must take into account the forecast, the production plan, and other important considerations such as backlog, availability of material, availability of capacity, and management policies and goals.” (APICS)

3. Objectives

  • MPS  Objective is to Balance the Demand (Priorities) set by the marketplace with the availability of materials, labor, and equipment (Capacity) of manufacturing.

  • The Objective in developing an MPS are:

    • to Maintain the desired level of Customer Service by

      • maintaining finished-goods Inventory Levels or

      • by Scheduling to meet customer delivery requirements,

    • to make the best use of material, labor, and equipment, and

    • to maintain inventory investment at the required levels.

  • Constraints  the plan must be within the capacity of manufacturing, and be within the guidelines of the production plan.

4. Purposes of MPS

  •  Development of Master Production Schedule (MPS)

  • Projects Inventory / Backlog levels

  • Drives Detailed Scheduling & planning

  •  Order Promising

  • Assists in assigning job Priorities on Facility floor

 

5. Inputs for MPS

The Information Needed to develop an MPS is provided by:

  • The Production Plan PP,

  • Forecasts for individual end items,

  • Actual Orders received from customers and for stock replenishment,

  • Inventory Levels for individual end items, and

  • Capacity Restraints


More Detailed

  • Inventory Level and Targets (for MTS)

  • Backlog Levels and Targets (for ATO)

  • Time Fence policies

  • Interplant and intra-plant orders

  • Service parts orders and forecasts

  • Distribution Requirements

  • Planning Bills Of Materials BOM

  • Actual production and supply levels

6. Outputs

  • Master Production Schedule MPS

  • Project Inventory levels PAB (for MTS)

  • Projected Backlog levels (for ATO)

  •  Future availability of products ATP

  •  Information for promising future customer orders

7. Constraints

  • Sum of MPS Master Production Schedule quantities equals PP Production Plan.

  • Efficient allocation, recognizing

    • Setup Costs and

    • Inventory Holding Costs.

  • Capacity Limitations

8. Relationship to Production Plan PP (Aggregate Planning)

  • MPS is the Bridge between the strategic plan expressed as the PP Production Plan (aggregate planning process) and the execution of that plan through detailed material and capacity plans.

  •  MPS takes Input from PP Production Plan.

  • MPSDisaggregates” the PP Production Plan

  • MPS is stated in items (end item, end item groups, options) in order to figure out the Materials and Capacity needs.

 

Aggregate Plan

Master Scheduling

Objective

Supply Rate by Product Family

Anticipate Build Schedule

Item Planned

Product Family

End item or Planning of BOM

Planning Horizon

Longest lead time Resource

Longest cumulative lead time for End Items

Constraints

Resource capacity

Critical work centers

Time Periods

Monthly

Weekly or monthly

Planning Focus

Product volume

Product Mix

Process output

Production Plan PP

Master Production Schedule MPS

 

Example Problem

1. Production Plan: Family of two products

 

Week  1 2 3 4 Total 
Forecast  300 350 300 250 1200
Projected Available  500 450 350 300 300  
Production Plan  250 250 250 250 1000
Given Data  

Total Production Plan          = Total Forecast + Ending Inventory - Beginning Inventory

Total Production Plan          =        1200        +         300            -          500                  =  1000 Unit

Production Plan per Week  =                               1000 / 4                                           =  250   Unit

Projected Available             = Production Plan + Previous Projected Available - Forecast

Projected Available      1      =         250           +               500                      -    300      = 450   Unit

Projected Available      2      =         250           +               450                      -    350      = 350   Unit

Projected Available      3      =         250           +               350                      -    300      = 300   Unit

Projected Available      4      =         250           +               300                      -    250      = 300   Unit

 

2. Master Schedule: Product  A

 

Week  1 2 3 4 Total 
Forecast  200 300 100 100 700
Projected Available  200 250 200 100 100  
Production Plan  250 250   100 600
Given Data  

Total Production Plan          = Total Forecast + Ending Inventory - Beginning Inventory

Total Production Plan          =        700        +         100            -          200                   =  600 Unit

Projected Available             = Production Plan + Previous Projected Available - Forecast

Projected Available      1      =         250           +               200                      -    200      = 250   Unit

Projected Available      2      =         250           +               250                      -    300      = 200   Unit

Projected Available      3      =          0             +               200                      -    100      = 100   Unit

Projected Available      4      =         100           +               100                      -    100      = 100   Unit

 

2. Master Schedule: Product  B

 

Week  1 2 3 4 Total 
Forecast  100 50 200 150 500
Projected Available  300 200 150 200 200  
Production Plan      250 150 400
Given Data  

Total Production Plan          = Total Forecast + Ending Inventory - Beginning Inventory

Total Production Plan          =        500        +         200            -          300                   =  400 Unit

Projected Available             = Production Plan + Previous Projected Available - Forecast

Projected Available      1      =          0             +               300                      -    100      = 200   Unit

Projected Available      2      =          0             +               200                      -     50      =  150     Unit

Projected Available      3      =         250          +               150                       -    200      = 200   Unit

Projected Available      1      =         150           +              200                       -    150      = 200   Unit

 

 

9. Developing a Master Production Schedule

  1. Develop a Preliminary MPS.

  2. Check the preliminary MPS against Critical available capacity in the Potentially Constraining Work Center (Rough Cut Capacity Planning ) RCCP

  3. Resolve differences between the preliminary MPS and capacity availability.

a. Preliminary Master Production Schedule

On hand = 80 units

Lot size = 100 units

 

Period    1 2 3 4 5 6
Forecast    60 60 60 60 60 60
Projected Available 
80
20 60  0 40 80 20
MPS      100   100 100  

 

If       Previous Projected Available ≥ Forecast               Then        MPS = 0

If       Previous Projected Available < Forecast               Then        MPS = 100

 

Projected Available       =  Previous Projected Available +   MPS   -  Forecast   

Projected Available   1  =                  80                       +   0          -  60            =  20

Projected Available   2  =                  20                       +   100      -  60            =  60

Projected Available   3  =                  60                       +   0         -  60             =    0

Projected Available   4  =                    0                       +  100      -  60             =  40

Projected Available   5  =                  40                       +  100      -  60             =  80

Projected Available   6  =                  80                       +  0         -  60             =  20

 


b. Rough-Cut Capacity Planning RCCP

  • Checks whether critical resources are available to support the preliminary MPS

  • Critical resources may include:

    • Bottleneck operations

    • Labor

    • Critical materials

  • It is similar to resource requirements planning used in the production planning process, except we now work with a product and not a family or products.

  • The resource bill is for a single product

Example Problem

Master Production Schedule

Week

1

2

3

4

Total

Product A

40

25

40

15

120

Product B

20

10

30

20

80

Resources Bill for  Bottleneck Work Center WC20

 

Hours per Unit

work Center A B
WC 20 0.5 1.2

Answer: Required Capacity in working hours on WC20

Week

1

2

3

4

Total

A

20

12.5

20

7.5

60

B

24

12

36

24

96

Total Hours

44

24.5

56

31.5

156


c. Resolution of Differences

  • Compare the total time required to the available capacity of the work center.

  • If available capacity is greater than the required capacity, the MPS is workable.

  • If not, methods of increasing capacity have to be investigated

    • overtime,

    • additional workers,

    • routing through alternate work centers, or

    • subcontracting

  • If not, revise the MPS and decrease demand

 

10. Evaluating the MPS

  • Resource Use:

    • Is the MPS within capacity restraints in each period?

  • Customer Service:

    • Will due dates be met?

    • Will delivery performance be acceptable?

  • Cost

    • Is the plan economical?

    • Will excess costs be incurred?
      OT, subcontracting, expediting, transportation, etc.

 

 

11. Master Schedule Decisions

a. MPS Decision Level

  • If too many items are included, it will lead to difficulties in forecasting and managing the MPS.

  • In each of the Manufacturing Environments --- Make To Stock MTS, Make To Order MTO, and Assemble To Order ATO --- Master scheduling should take place where the smallest number of product options exists

b. Different MPS environments

  • MTS Make-To-Stock products "A" Structure

    • A limited number of standard items are assembled from many components.

    • Televisions and other consumer products are examples.

    • The MPS is usually a schedule of finished-goods items.

    • Focus on Forecasting, Service Level, fill rate (unit, line, or order fill rate) and Resource Utilization.

    • Use Manufacturing Based MPS-Matrix (finished products level)

Item no:   Lead Time: 2 periods   Demand Time Fence DTF: 3
Description:   Safety Stock       Planning Time Fence PTF: 8
On Hand 20  Lot Sizing: 50                
  PTF      
DTF                
Period 1 2 3 4 5 6 7 8 9 10 11
Forecast 20 21 20 22 24 26 28 28 25 25 20
Customer Orders 19 20 21 21 25 24 20 18 16 12 10
Projected Available Balance PAB 20 1 31 10 38 13 37 9 31 6 31 11
Available To Promise 1 9 4 6 16 28
Cumulative Available to Promise 1 10 14 20 36 64
Master Production Schedule   50   50   50   50   50  
  • MTS Make-To-Order products/ ETO Engineer-To-Order "V" Structure

  • Many different end items are made from a small number of components.

  • Custom-tailored clothes are an example.

  • The MPS is usually a schedule of the actual customer orders.

  • Focus on Delivery Time and Product Option

  • Use Gross Requirements MPS-Matrix is Based on Raw Material (Single Level MPS Record Processing)

 

  Period
Product A 1 2 3 4 5 6
Gross requirements 30 30 30 30 30 30
Scheduled receipts 30          
Projected available balance 50 50 20 10 10 10 10
Planned order release     20 30 30 30
Q = lot for lot; LT = 0; SS = 10
  • ATO Assemble-To-Order products. "X" Structure

    • Many end items can be made from combinations of basic components and subassemblies.

    • We have very small amount of modules enable a large amount of end products.

    • Instead of end products, fewer modules (options) are forecasted and controlled.

    • Through this, better forecast accuracy is achieved.

    • Focus on Delivery Time and Product Option, Forecasting, Service Level, fill rate (unit, line, or order fill rate) and Resource Utilization

    • Use Tow Level MPS-Matrix

    • Example company manufactures paint from a base color and adds tints to arrive to many final colors.

    • Production is planned at the level of the base color and the ten tints.

    • Once a customer's order is received, the base color and the required tints can be combined (assembled) according to the order.

 

Family

Week

1

2

3

4

5

6

7

8

S&OP

40

 

40

 

40

 

40

 

Customer Orders

20

16

12

10

8

4

 

 

ATP

4

18

28

40

 

 

Item no:

 

 

Lead Time:

 

Demand Time Fence DTF:

 

2

Description:

 

Buffer:

 

Planning Time Fence DTF:

6

 

 

 

Lot Sizing:

LFL

 

 

 

 

 

 

 

 

PTF

 

 

 Week

1

2

3

4

5

6

7

8

Item Forecast

 

 

 

 

 

 

 

 

Product Forecast = 60% S&OP

 

 

 

 

 

 

 

 

Actual Demand = 60% Car CO

 

 

 

 

 

 

 

 

Total Demand

 

 

 

 

 

 

 

 

Projected Available Balance PAB

0

 

 

 

 

 

 

 

 

Available To Promise

 

 

 

 

 

 

 

 

Cumulative Available to Promise

 

 

 

 

 

 

 

 

Master Production Schedule

 

 

 

 

 

 

 

 

 

c. Final assembly schedule (FAS).

  • This is a schedule of what will be assembled.

  • It is used when there are many options and it is difficult to forecast which combination the customers will want.

  • Master production scheduling is done at the component level

  • The final assembly takes place only when a customer order is received.

  • The FAS schedules customer orders as they are received and is based on the components planned in the MPS.

  • It is responsible for scheduling from the MPS through final assembly and shipment to the customer.

 

 

 

The planning horizon is the time span which covers a period at least equal to the time required to accomplish the plan (see figure 3.5). The planning horizon is usually longer because the longer the horizon, the greater the visibility and the better management’s ability to avoid future problems or to take advantage of special circumstances. As a minimum, the planning horizon for a final assembly schedule must include time to assemble a customer’s order. It does not need to include the time necessary to manufacture the components. That time will be included in the planning horizon of the MPS.

 

 

8. Planning Horizon

The amount of time the master schedule extends into the future. This is normally set to cover a minimum of cumulative lead time plus time for lot sizing low-level components and for capacity changes of primary work centers or of key suppliers. AIPCS

 

Planning Horizon > Minimal Cumulative Lead Planning Horizon > Minimal Cumulative Lead Time

  • Minimum = Manufacturing lead time (=Cumulative lead time)

  • Planning horizon is usually longer to allow visibility

  • Inside the cumulative lead time orders are considered as firm, i.e. changes can only be made after thorough analysis

 

Production Planning, Master Scheduling, and Sales

  •  The production plan reconciles total forecast demand with available resources.

  • The MPS is built from forecasts and actual demands for individual end items. It reconciles demand with the production plan and with available resources to produce a plan that manufacturing can fulfill. The MPS is a plan for what production can and will do.

  • In a make-to-stock environment, customer orders are satisfied from inventory. However, in make-to-order or assemble-to-order environments, demand is satisfied from productive capacity. Sales and distribution need to know what is available to satisfy customer demand. As orders are received, they “consume” the available inventory or capacity. Any part of the plan that is not consumed by actual customer orders is available to promise to customers.

  • Available to promise (ATP) is that portion of a firm’s inventory and planned production that is not already committed and is available to the customer (see examples on 57, 58 & 59). The ATP is calculated by adding scheduled receipts to the beginning inventory and subtracting actual orders scheduled before the next scheduled receipt.

  • A scheduled receipt is an order that has been issued either to manufacturing or to a supplier. If customer orders are greater than the scheduled receipts, then the previous ATP is reduced by the amount needed.

  • Projected available balance (PAB) is calculated based on the larger of actual customer orders and the forecast. The PAB is calculated in one of two ways, depending on whether the period is before or after the demand time fence. For periods before the demand time fence:

    PAB = prior period PAB or on-hand balance + MPS – customer orders

    For periods after the demand time fence, forecast will influence the PAB so it is calculated using the greater of the forecast or customer orders.
     

    PAB = prior period PAB + MPS – greater of customer orders or forecast

    The demand time fence is the number of periods, beginning with period 1, in which changes are not excepted due to excessive cost caused by schedule disruption.

  • The planning horizon must be at least as long as the cumulative lead-time for the product structure. The cost of making a change increases and the company’s flexibility decreases as production gets closer to the delivery time. Far off changes can be made with minimal cost or disruption to manufacturing, but the nearer to delivery date, the more disruptive and costly changes will be.

  • Changes to the MPS will occur due to customer order cancellation or change, changing capacity, supplier problems, and excessive process scrap.

  • Changes to production schedules can result in cost increases due to rerouting, rescheduling, extra setups, expediting, and buildup of WIP inventory; decreased customer service; and loss of credibility for the MPS and the planning process. Changes to the MPS must be managed and decisions made with full knowledge of the costs involved.

  • Frozen zone – capacity and materials are committed to specific orders, changes result in excessive costs, and so senior management approval is required to make changes. The extent of the frozen zone is defined by the demand time fence.

  • Slushy zone – capacity and materials are committed to less extent. Sales and manufacturing negotiate changes. The extent of the slushy zone is defined by the planning time fence.

  • Liquid zone – Any change can be made to the MPS as long as it is within the limits set by the production plan.