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

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5. Master Production Scheduling

Homework problems: 3,4,5,6,7,9.

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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.

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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.

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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.

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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.

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An MPS Example

200

Ladder-back chair

Kitchen chair

Desk chair

1 2

April May

790

3 4 5 6 7 8

200

150

120

200

150

200

120

Aggregate production plan for chair family

550

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The MPS Process

No

Yes

Are resources available?

Authorized production

plan

Prospective master production schedule

Material requirements

planning

Authorized master production schedule

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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.

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Fig. 5.1 MPS in the MPC System

Resourceplanning

Sales and operationsplanning

Demandmanagement

Master productionscheduling

Detailed materialplanning

Enterprise R

esource Planning (E

RP

) System

Front End

Engine

Rough-cut capacityplanning

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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)

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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)

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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 5 5 8 10 15

Projected available balance 20 25 30 32 32 27

Master production schedule 10 10 10 10 10

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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




Lot Sizing strategy (Fig. 5.3)

Period 1 – 5 plan Period

On hand 1 2 3 4 5



Master production schedule 30

Lot size = 30 Safety stock = 5

Rolling through time (Fig. 5.35.4)Period 1 – 5 plan Period

On hand 1 2 3 4 5






On hand 2 3 4 5 6

Forecast 20 20 20 15 20

Projected available balance 10 -10 0 -20 -35 -55



Rolling through time (Fig. 5.35.4)


On hand 2 3 4 5 6

Forecast 20 20 20 15 20

Projected available balance 10 -10 0 -20 -35 -55



Rescheduled MPS (Fig. 5.5)


On hand 2 3 4 5 6

Forecast 20 20 20 15 20


Master production schedule 30 30 30


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

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

5-20

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

Period

On hand 1 2 3 4 5


Orders 5 3 2 0 0


Available-to-promise 12 28



5-21

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

Period

On hand 1 2 3 4 5


Orders 5 3 2 0 0





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Consuming the Forecast

In the ATP calculation, demand is considered to be the maximum of forecast and actual customer ordersThis is a conservative approachHope that we will eventually sell at least

the forecast quantityAdjusts for periods where demand exceeds

the forecast

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Consuming the Forecast

Assuming the following orders come in during period 2:

Order # Amount Desired week1 5 2

2 15 3 3 356 4 10

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Can we accept all these orders?

To accept all these orders, we need to schedule MPS in 5 and 6.

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Discrete logic ATP (Fig.5.8)

Period

On hand 2 3 4 5 6

Forecast 5 8 10 15 20

Orders 3+5(new) 2+15 0 10 35

Projected available balance 15 7 20 10 -5 -40

Available-to-promise 7 -32



5-25

Discrete logic ATP after update (Fig.5.9)

Period

On hand 2 3 4 5 6

Forecast 5 8 10 15 20

Orders 3+5(new) 2+15 0 10 35


Available-to-promise 7 13 20 -5



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Revising ATP due to negative ATP in subsequent week

Period

On hand 3 4 5 6 7

Forecast 10 10 10 10 15

Orders 20 2 35

Projected available balance 30 10 20 -15 -30




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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

ATP

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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. 5.11 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

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Fig. 5.11 The MPS Hourglass

Establish MPS at the subassembly level

End items

Components

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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

5-31

Super Bill (of Materials) Fig. 5.12

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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)

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Using Available-to-Promise Logic with Planning BOM (Fig. 5.13)

Common Parts Available?

Gear Available?

Taylor Available?

Book order

Try 1 period later

No

No

No

Yes

Yes

Yes

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5.4 Two-Level Master Production Schedules

When a planning BOM is used, a final assembly schedule (FAS) is often usedStates 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

5-35

Two-Level Master Production Schedule with discrete ATP logic

4-Horsepower Tillers (Aggregate) Period

On hand 1 2 3 4 5

Production Plan 100 100 100 100 100

Orders 100 72 54 0 0


Available-to-promise 0 28 46 100 100


Safety stock = 0

Taylor Brand 4-HP Tillers (FAS) Period

On hand 1 2 3 4 5

Forecast for model (40% of total) 40 40 40 40 40

Orders 42 37 23 0 0


Available-to-promise 48 20 80



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5.5 Master Production Schedule Stability

A stable MPS translates to stable component schedulesStability 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

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Freezing the Master Production Schedule

Inside the frozen horizon no order changes are allowed

Only occasional changes Minor changes Most changes

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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.

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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)

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MPS example with demand and planning time fence

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H.W. MPS with demand and planning time fence

Onhand=40; Lost size=50Demand time fence=4Planning time fence=10

Period

1 2 3 4 5 6 7 8 9 10

Forecast 18 21 17 17 12 14 23 28 30 25

Orders 19 20 15 20 6 20 4 6 12 0

Projected available balance

Available-to-promise

Master production schedule

Update PAB, schedule MPS, and calculate ATP.

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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)

Scheduling production using priority index

Beginning Weekly Lot Hours perProduct inventory forecast size lot size

A 20 5 50 20B 50 40 250 80C -30 35 150 60D 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)

Product P1 P2 P3 P4 P5 P6 P7 P8

A

B

C

D

Priorities:

Scheduling production using priority index

Product P1 P2 P3 P4 P5 P6 P7 P8

A 4 3 0 -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 -1.5 6.5 5.5

35

30

25

20

15

10

5

0

1 2 3 4 5 6 7 8Week

Hours

Capacity= 35 hours a week

Concluding Principles

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• 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.

Concluding Principles

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• 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).

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

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