Aggregate Planning &
Master Scheduling
The Planning Process
Long-range plans (over one year)
Capacity decisions critical to long range plans
Issues:
Research and Development
New product plans
Capital investments
Facility location/expansion
Top
executives
Operations
managers with
sales and
operations
planning team
Operations
managers,
supervisors,
foremen
Responsibility
Intermediate-range plans (3 to 18 months)
Issues:
Sales and operations planning
Production planning and budgeting
Setting employment, inventory,
subcontracting levels
Analyzing operating plans
Short-range plans (up to 3 months)
Scheduling techniques
Issues:
Job assignments
Ordering
Job scheduling
Dispatching
Overtime
Part-time help
Planning tasks and time horizons
Sales and Operations Planning
• A process of balancing resource and
forecasted demand, aligning an organization’s
competing demands from supply chain to
final customer, while linking strategic
planning with operations over all planning
horizons.
Sales and Operations Planning
▶ Coordination of demand forecasts with functional
areas and the supply chain
▶ Typically done by cross-functional teams
▶ Determine which plans are feasible
▶ Limitations must be reflected
▶ Provides warning when resources do not match
expectations
▶ Output is an aggregate plan
S&OP
and the
Aggregate
Plan
Aggregate Planning
• An S&OP team builds an aggregate plan that
satisfies forecasted demand by adjusting production
rates, labor levels, inventory levels, overtime work,
subcontracting rates, and other controllable
variables.
The objective of aggregate planning is usually
to meet forecast demand while minimizing
cost over the planning period
Aggregate planning has certain inevitable pre-required
inputs as follows:
• Demand forecast for the period for which the
planning has to be made.
• Information about the resources and the facilities
available.
• Cost of various alternatives and resources such as cost of holding inventory, ordering cost, cost of
production through various production alternatives
like subcontracting, backordering and overtime.
• Organizational policies regarding the usage of above
alternatives.
7
• Aggregate planning is concerned with matching supply
and demand of output over the medium time range, up
to approximately 3 to 18 months into the future.
• The goal of aggregate planning is to achieve a
production plan that will effectively utilize the
organization’s resources to satisfy expected demand.
• Planners must make decision on output rates,
employment levels and changes, inventory levels and
changes, back orders and subcontracting in or out.
8
• Aggregate planning is actually a ‘big picture’ approach
to planning. Planners usually try to avoid focusing on
individual product or service-unless the organization
has only one major product or service. Instead, they
focus on overall demand and the overall capacity they
want to provide.
• Aggregate planning decisions are strategic decisions
that define the framework within which operating
decisions will be made.
• The Aggregate plan will guide the more detailed
planning that eventually leads to a master schedule.
The Figure below illustrates the planning sequence.
9
Planning Sequences
Corporate
strategies
and policies
Economic,
competitive,
and political
conditions
Business plan
Aggregate plan
Master schedule
Aggregate
demand
forecasts
Establishes operations
and capacity strategies
Establishes
Operations capacity
Establishes schedules for
specific products
10
Aggregate Planning
▶ Combines appropriate resources into
general terms
▶ Part of a larger production planning
system
▶ Disaggregation breaks the plan down
into greater detail
▶ Disaggregation results in a master
production schedule
Aggregate Planning
QUARTER 1
Jan.
Feb.
March
150,000
120,000
110,000
QUARTER 2
April
May
June
100,000
130,000
150,000
QUARTER 3
July
Aug.
Sept.
180,000
150,000
140,000
Importance of Aggregate Planning
• Generally speaking, aggregate planning is connected to
the budgeting process. Most organizations plan their
financial requirements annually on a department-bydepartment basis.
• Aggregate planning is important because it can help to
synchronize flow throughout the supply chain.
• Aggregate planning helps to achieve rough balance
between demand and capacity.
13
Aggregate Planning Strategies
1. Should inventories be used to absorb changes in
demand?
2. Should changes be accommodated by varying
the size of the workforce?
3. Should part-timers, overtime, or idle time be
used to absorb changes?
4. Should subcontractors be used and maintain a
stable workforce?
5. Should prices or other factors be changed to
influence demand?
Capacity Options
1. Changing inventory levels
▶ Increase inventory in low demand periods to meet
high demand in the future
▶ Increases costs associated with storage, insurance,
handling, obsolescence, and capital investment
▶ Shortages may mean lost sales due to long lead
times and poor customer service
Capacity Options
2. Varying workforce size by hiring or layoffs
▶ Match production rate to demand
▶ Training and separation costs for hiring and laying off
workers
▶ New workers may have lower productivity
▶ Laying off workers may lower morale and productivity
Capacity Options
3. Varying production rates through overtime or
idle time
▶ Allows constant workforce
▶ May be difficult to meet large increases in demand
▶ Overtime can be costly and may drive down
productivity
▶ Absorbing idle time may be difficult
Capacity Options
4. Subcontracting
▶ Temporary measure during periods of peak
demand
▶ May be costly
▶ Assuring quality and timely delivery may be
difficult
▶ Exposes your customers to a possible competitor
Capacity Options
5. Using part-time workers
▶ Useful for filling unskilled or low skilled
positions, especially in services
Demand Options
1. Influencing demand
– Use advertising or promotion to increase demand
in low periods
– Attempt to shift
demand to slow
periods
– May not be
sufficient to
balance demand
and capacity
Demand Options
2. Back
ordering
during
high-demand
periods
▶ Requires customers to wait for an order without
loss of goodwill or the order
▶ Most effective when there are few if any
substitutes for the product or service
▶ Often results in lost sales
Demand Options
3. Counter seasonal product and service
mixing
▶ Develop a product mix of counterseasonal
items
▶ May lead to products or services outside the
company’s areas of expertise
Aggregate Planning Options
TABLE 13.1 Aggregate Planning Options
OPTION
Changing
inventory
levels
ADVANTAGES
DISADVANTAGES
Changes in human
resources are
gradual or none; no
abrupt production
changes.
Inventory holding cost
may increase.
Shortages may result
in lost sales.
Applies mainly to
production, not
service,
operations.
Hiring, layoff, and
training costs may be
significant.
Used where size of
labor pool is large.
Varying
Avoids the costs of
workforce
other alternatives.
size by hiring
or layoffs
COMMENTS
Aggregate Planning Options
TABLE 13.1 Aggregate Planning Options
OPTION
ADVANTAGES
DISADVANTAGES
COMMENTS
Varying
production
rates
through
overtime or
idle time
Matches seasonal Overtime premiums;
fluctuations
tired workers; may
without hiring/
not meet demand.
training costs.
Allows flexibility
within the
aggregate plan.
Subcontracting
Permits flexibility
and smoothing of
the firm’s output.
Applies mainly in
production
settings.
Loss of quality
control; reduced
profits; loss of future
business.
Aggregate Planning Options
TABLE 13.1 Aggregate Planning Options
OPTION
ADVANTAGES
DISADVANTAGES
COMMENTS
Using parttime
workers
Is less costly and
more flexible than
full-time workers.
High turnover/
training costs;
quality suffers;
scheduling difficult.
Good for
unskilled jobs in
areas with large
temporary labor
pools.
Influencing
demand
Tries to use
excess capacity.
Discounts draw
new customers.
Uncertainty in
demand. Hard to
match demand to
supply exactly.
Creates
marketing ideas.
Overbooking
used in some
businesses.
Aggregate Planning Options
TABLE 13.1 Aggregate Planning Options
OPTION
ADVANTAGES
DISADVANTAGES
COMMENTS
Back
May avoid
ordering
overtime. Keeps
during high- capacity constant.
demand
periods
Customer must be
willing to wait, but
goodwill is lost.
Many companies
back order.
CounterFully utilizes
seasonal
resources; allows
product and stable workforce.
service
mixing
May require skills or
equipment outside
the firm’s areas of
expertise.
Risky finding
products or
services with
opposite demand
patterns.
Mixing Options to Develop a Plan
▶ A mixed strategy may be the best way
to achieve minimum costs
▶ There are many possible mixed
strategies
▶ Finding the optimal plan is not always
possible
Mixing Options to Develop a Plan
▶ Chase strategy
▶ Match output rates to demand forecast for
each period
▶ Vary workforce levels or vary production
rate
▶ Favored by many service organizations
Mixing Options to Develop a Plan
▶ Level strategy
▶ Daily production is uniform
▶ Use inventory or idle time as buffer
▶ Stable production leads to better quality and
productivity
▶ Some combination of capacity options, a
mixed strategy, might be the best solution
Aggregate Planning Inputs and Output
Inputs
Outputs
Resources:
Total cost of a plan
Projected levels of
inventory
Output
Employment
Subcontracting
Backordering
Workforce/production rates
Facilities and equipments
Demand forecast
Policies on workforce changes
Subcontracting
Overtime
Inventory levels/changes
Backorders
Costs:
Inventory carrying, Back orders, Hiring
/firing, overtime, inventory changes and
subcontracting
30
Methods for Aggregate Planning
▶ Graphical Methods
▶ Popular techniques
▶ Easy to understand and use
▶ Trial-and-error approaches that do not
guarantee an optimal solution
▶ Require only limited computations
Graphical Methods
1. Determine the demand for each period
2. Determine the capacity for regular time,
overtime, and subcontracting each period
3. Find labor costs, hiring and layoff costs,
and inventory holding costs
4. Consider company policy on workers and
stock levels
5. Develop alternative plans and examine
their total cost
Example
A Juarez, Mexico, manufacturer of roofing supplies has
developed monthly forecasts for a family of products. Data for
the 6-month period January to June are presented in Table
below . The firm would like to begin development of an
aggregate plan.
Monthly Forecasts
MONTH
Jan
Feb
Mar
Apr
May
June
EXPECTED DEMAND
900
700
800
1,200
1,500
1,100
PRODUCTION
DAYS
22
18
21
21
22
20
Roofing Supplier Example
Monthly Forecasts
MONTH
Jan
Feb
Mar
Apr
May
June
EXPECTED DEMAND
900
700
800
1,200
1,500
1,100
6,200
Average
requirement
PRODUCTION
DAYS
22
18
21
21
22
20
124
Total expected demand
=
Number of production days
6,200
=
= 50 units per day
124
DEMAND PER DAY
(COMPUTED)
41
39
38
57
68
55
Roofing Supplier Example
Production rate per working day
Forecast demand
70 –
60 –
Level production using average
monthly forecast demand
50 –
40 –
30 –
0 –
Jan
Feb
Mar
Apr
May
June
22
18
21
21
22
20






= Month
= Number of
working days
Alternatives
• Plan 1: To maintain a constant workforce
throughout the 6-month period.
• Plan 2: To maintain a constant workforce at
a level necessary to meet the lowest
demand month (March) and to meet all
demand above this level by subcontracting.
• Plan 3: To hire and lay off workers as
needed to produce exact monthly
requirements
PLAN 1 FOR THE ROOFING SUPPLIER—A CONSTANT WORKFORCE
Cost Information
Inventory carrying cost
Subcontracting cost per unit
Average pay rate
Overtime pay rate
Labor-hours to produce a unit
Cost of increasing daily production rate (hiring
and training)
Cost of decreasing daily production rate
(layoffs)
$ 5 per unit per month
$20 per unit
$10 per hour ($80 per day)
$17 per hour
(above 8 hours per day)
1.6 hours per unit
$300 per unit
$600 per unit
assume that
• 50 units are produced per day (8 hr) and that we have a constant
workforce, no overtime or idle time, no safety stock, and no
subcontractors.
• The firm accumulates inventory during the slack period of
demand, January through March, and depletes it during the
higher-demand warm season, April through June.
• Beginning inventory = 0 and planned ending inventory = 0.
Roofing Supplier Plan 1
MONTH
PRODUCTION
DAYS
PRODUCTION
AT 50 UNITS
PER DAY
Jan
22
1,100
900
+200
200
Feb
18
900
700
+200
400
Mar
21
1,050
800
+250
650
Apr
21
1,050
1,200
–150
500
May
22
1,100
1,500
–400
100
June
20
1,000
1,100
–100
0
DEMAND
FORECAST
MONTHLY
INVENTORY
CHANGE
ENDING
INVENTORY
1,850
Total units of inventory carried over from one
month to the next = 1,850 units
Workforce required to produce 50 units per day = 10 workers
Roofing Supplier Plan 1
COST
PRODUCTION
MONTHLY
CALCULATIONS
AT 50 UNITS
DEMAND
INVENTORY
ENDING
PER $9,250
DAY
FORECAST
INVENTORY
(= 1,850 unitsCHANGE
carried x $5
per
MONTH
Inventory
PRODUCTION
DAYS
carrying
Jan
22
1,100
900
unit)
+200
200
Feb
18
900
700
+200
400
Mar
21
Apr
21
1,050
1,200
–150
500
1,100
1,500
–400
100
1,000
1,100
–100
0
Regular-time labor
Other
May costs (overtime,
22
hiring, layoffs,
June
20
subcontracting)
Total cost
99,200 (= 10 workers x $80 per day x 124
1,050
800
+250
650
days)
0
$108,450
1,850
PLAN 2 FOR THE ROOFING SUPPLIER—USE OF
SUBCONTRACTORS WITHIN A CONSTANT WORKFORCE
In-house production
= 38 units per day
x 124 days
= 4,712 units
Subcontract units
COST
Regular-time labor
Subcontracting
Total cost
= 6,200 – 4,712
= 1,488 units
CALCULATIONS
$75,392 (= 7.6 workers x $80 per day x
124 days)
29,760 (= 1,488 units x $20 per unit)
$105,152
Roofing Supplier Plan 2
Production rate per working day
Forecast demand
70 –
Level production
using lowest monthly
forecast demand
60 –
50 –
40 –
30 –
0 –
Jan
Feb
Mar
Apr
May
June
22
18
21
21
22
20






= Month
= Number of
working days
Roofing Supplier Plan 3
Cost Computations for Plan 3
MONTH
FORECAST
(UNITS)
DAILY
PROD
RATE
BASIC
PRODUCTI
ON COST
(DEMAND
X 1.6 HRS
per UNIT
X $10/HR)
EXTRA COST
OF
INCREASING
PRODUCTIO
N (HIRING
COST)
EXTRA COST
OF
DECREASING
PRODUCTIO
N (LAYOFF
COST)
TOTAL
COST
Jan
900
41
$ 14,400
—
—
$ 14,400
Feb
700
39
11,200
—
$1,200
(= 2 x $600)
12,400
Mar
800
38
12,800
—
$600
(= 1 x $600)
13,400
Apr
1,200
57
19,200
$5,700
(= 19 x $300)
—
24,900
May
1,500
68
24,000
$3,300
(= 11 x $300)
—
24,300
June
1,100
55
17,600
—
$7,800
(= 13 x $600)
25,400
$99,200
$9,000
$9,600
$117,800
Roofing Supplier Plan 3
Production rate per working day
Forecast demand and
monthly production
70 –
60 –
50 –
40 –
30 –
0 –
Jan
Feb
Mar
Apr
May
June
22
18
21
21
22
20






= Month
= Number of
working days
Comparison of Three Plans
Comparison of the Three Plans
COST
PLAN 1
Inventory carrying
$ 9,250
Regular labor
99,200
Overtime labor
0
Hiring
0
Layoffs
0
Subcontracting
0
Total cost
$108,450
PLAN 2
$
0
75,392
0
0
0
29,760
$105,152
Plan 2 is the lowest cost option
PLAN 3
$
0
99,200
0
9,000
9,600
0
$117,800
An Example of an Aggregate Planning
• Planners for a company that makes several models of
skateboards are about to prepare the aggregate plan
that will cover 6 periods. They have the following
information:
•
•
•
•
•
•
•
•
•
Period
1
2
3
4
5
6
Forecast 200
200
300 400
500
200
Costs
Output
Regular time = $2 per skateboard
Overtime
= $3 per skateboard
Subcontract = $6 per skateboard
Inventory
= $1 per skateboard per period on average inventory
Backorders = $5 per skateboard per period
45
An Example of an Aggregate Planning
• They want to evaluate a plan that calls for a steady rate of
regular output, mainly using inventory to absorb the uneven
demand but allowing some backlog.
• Overtime and subcontracting are not used because they
want steady output.
• They intend to start with 0 inventory on hand in the first
period.
• Prepare an aggregate plan and determine its cost using
information provided. Assume a level of output rate of 300
units per period with regular time (1800/6 = 300).
• Note that the planned ending inventory is 0. There are 15
workers, and each of them can produce 20 units per period.
46
Solution to the Problem
•
•
•
•
•
•
•
•
•
•
•
•
Period
1
Forecast
200
Output
Regular
300
Overtime
-Subcontract
-Output – Forecast 100
Inventory
Beginning
0
Ending
100
Average
50
Backorder
0
2
200
300
--100
100
200
150
0
3
300
300
--0
200
200
200
0
4
400
5
500
300 300
-----100 -200
200
100
150
0
100
0
50
100
6
200
300
--100
0
0
0
0
Total
1800
1800
0
600
100
47
Solution to the Problem
• Period
• Cost
• Output
•
Regular
•
Overtime
•
Subcontract
•
Hire/Layoff
• Inventory
• Backorder
•
Total
1
2
600
---50
0
650
600
---150
0
750
3
600
---200
0
800
4
5
6
Total
600
---150
0
750
600
---50
500
1150
600 3600
---0
600
0
500
600 4700
48
Extension of the Previous Example Problem
• After reviewing the plan developed in the preceding
example, the planners have decided to develop an
alternative plan.
• They have learnt that one person is about to retire from
the company.
• Rather than replacing that person, they would like to
stay with smaller workforce and use overtime to make
up for the lost output.
• The reduced regular time output is 280 units per
period. The maximum amount of overtime output per
period is 40 units.
• Develop a plan and compare it with the previous one.
49
Solution to the Extended Problem
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
Period
Forecast
Output
Regular
Overtime
Subcontract
Output – Forecast
Inventory
Beginning
Ending
Average
Backorder
Cost
Output
Regular
Overtime
Subcontract
Hire/Layoff
Inventory
Backorder
Total
1
200
2
200
3
300
4
400
5
500
6
200
Total
1800
280
0
-80
280
0
-80
280 280
40
40
--20 -80
280
40
--180
280
0
-80
1680
120
0
80
40
0
80
160
120
0
160
180
170
0
100
0
50
80
0
0
0
0
560
0
--40
0
600
560
0
--120
0
680
560 560
120 120
----170 140
0
0
850 820
180
100
140
0
560
120
--50
400
1130
560
0
--0
0
560
0
520
80
3360
360
520
400
4640
50
Minimal Cost Solution to an Aggregate Plan by
Transportation Modeling
•
•
•
•
•
•
•
•
•
•
•
•
•
Period
1
2
Demand
550
700
Capacity
Regular
500
500
Overtime
50
50
Subcontract
120
120
Beginning Inventory 100
Costs
Regular
60 per unit
Overtime
80 per unit
Subcontract
90 per unit
Inventory carrying cost 1 per unit
Backorder cost
3 per unit
3
750
500
50
100
• Set up this problem in a transportation table and solve for the
minimum cost plan
51
Solution to the problem by transportation modeling
Demand for
Supply from
Period
1
2
3
Period 1
Period 2
Beginning
inventory
100
Regular time
450 60
Overtime
Period 3
Total
capacity
available
(supply)
Unused
capacity
1
2
0
100
50
61
62
0
500
80
50
81
82
0
50
subcontract
90
30
91
92
0
120
Regular time
63
500
60
61
0
500
Overtime
83
50
80
81
0
50
subcontract
93
20
90
100
91
0
120
Regular time
66
63
500
60
0
500
Overtime
86
83
50
80
0
50
subcontract
96
93
100
90
0
100
Demand
550
0
700
750
90
90
2090
52
Aggregate Planning in Services
• Aggregate planning for services takes into account projected
customer demand, equipment capacities, and labor
capabilities. The resulting plan is a time based projection.
• In this category of planning,
• 1. Services occur when they are rendered. Unlike
manufacturing output, most services can’t be inventoried.
• 2. Demand for service can be difficult to predict. Demand for
services is often quite variable.
• 3. Capacity availability can be difficult to predict. Processing
requirements for services can sometimes be quite variable.
• 4. Labor flexibility can be an advantage in services. Labor
often comprise a significant portion of service compared to
manufacturing.
•
53
Some Examples of Aggregate Planning in Services
• Hospitals: Hospitals use aggregate planning to allocate
funds, staff, and supplies to meet demand of medical
services of patients.
• Airlines: Aggregate planning in Airline is quite complex due
to wide range of factors such as planes, flight personnel,
ground personnel, multiple routs, landing/departure sites,
seat allocation etc.
• Restaurants: Aggregate planning deals with smoothing the
service rate, determining the size of the workforce,
managing demand to match a fixed capacity. The general
approach usually involves building inventory during slack
period and depleting it during peak period.
• Other services: Financial, hospitality, transportation,
recreation etc. provide a high volume , intangible output.
They involve managing demand and HR requirements.
54
Disaggregating the Aggregate Planning
• Disaggregating the aggregate plan means breaking down the
aggregate plan into specific product requirement in order to
determine requirements of labor (skills, size of workforce),
materials and inventory.
• The result of disaggregating the aggregate plan is a master
schedule showing the quantity and timing of requirement of the
specific end items for a scheduled horizon.(usually 6 to 8 weeks
ahead).
• The master schedule contains important information for
marketing as well as for production. An overview of the context
of disaggregation is shown below:
Aggregate Planning
Disaggregation
Master Schedule
Moving from the aggregate plan to a master schedule
55
An example of a master schedule
• Aggregate Plan
Month
January
February
March
Output
200
300
400
• Master schedule
Month
January
February
March
Push
100
100
100
Self- propelled
75
150
200
Riding
25
50
100
Total
200
300
400
Output
Category
56
Master Scheduling
• A master schedule indicates the quantity and delivery times
for a product or a group of products, but it does not show
planned production.
• Tasks of master scheduling are as follows:
• 1. Evaluating impacts of new orders.
• 2. Providing delivery dates for orders
• 3. Dealing with problems as follows:
•
a. Evaluating the impact of production delays or late
•
•
•
•
•
•
deliveries of purchased goods.
b. Revising the master schedule when necessary
because of insufficient supplies or capacity.
c. Bringing instances of insufficient capacity to the attention
of production and marketing personnel so that they can
resolve them.
57
Master Scheduling
• Once a tentative master schedule has been developed,
it must be validated. This is an extremely important
step. Validation is referred to as rough-cut-capacity
(RCCP) planning.
• RCCP is a approximate balancing of capacity and
demand to test the feasibility of a master schedule.
• Inputs: The beginning inventory, forecast for each
scheduled period, and committed customers orders.
• Output: Determination of the projected inventory,
production requirements, and the resulting
uncommitted inventory (Available-to-promise
inventory, ATP)
58
An Example of Master Scheduling
• A company that makes industrial pumps wants to prepare
master production schedule for June and July. Marketing
has forecasted demand of 120 pumps for June and 160 for
July. These have been evenly distributed over the four
weeks in each month as shown in the table below:
Weekly forecast for industrial pump
June
Period
Forecast
1
30
2
30
3
30
July
4
30
5
40
6
40
7
40
8
40
• Beginning inventory is 64 units.
•
59
An Example of Master Scheduling
8-Week schedule showing forecast, customers orders, beginning inventory and
projected on-hand inventory
Beginning inventory = 64
June
July
Period
1
2
3
4
5
6
7
8
Forecast
30
30
30
30
40
40
40
40
Customer
orders
33
20
10
4
2
Projected
on-hand
inventory
31
1
-29
• Projected on-hand inventory = Available Inventory (AI) - larger of the forecast
and customer order
60
An Example of Master Scheduling
Determination of the Master Production Schedule (MPS) and
projected on-hand inventory
Week
Inventory from
previous week
Requirements
Net inventory
before MPS
1
2
3
4
5
6
7
8
64
31
1
41
11
41
1
31
33
30
30
30
40
40
40
40
31
1
-29
11
-29
1
-39
-9
MPS
(70)
Projected
inventory
70
70
70
70
31
1
41
11
41
1
31
61
• Requirements = larger of the forecast and customer order
61
An Example of Master Scheduling
Projected on-hand inventory and MPS
Beginning inventory = 64
June
•
July
Period
1
2
3
4
5
6
7
8
Forecast
30
30
30
30
40
40
40
40
Customer
orders
33
20
10
4
2
Projected
on-hand
inventory
31
1
41
11
41
1
31
61
70
70
MPS
70
70
Requirement = larger of the forecast and customer order
62
An Example of Master Scheduling
The available-to-promise inventory
Beginning inventory = 64
June
July
Period
1
2
3
4
5
6
7
8
Forecast
30
30
30
30
40
40
40
40
Customer
orders
33
20
10
4
2
Projected
on-hand
inventory
31
1
41
11
41
1
31
61
MPS
ATP
inventory
11
70
70
70
70
56
68
70
70
• ATP = AI - Sum of customers orders in weeks until an MPS quantity appears
63
Time Fences in Master Scheduling
• Changes to a master schedule can be disruptive.
• Time fences points in time that separate phases of a
master schedule planning horizon.
• Time fences divide a scheduling time horizon into three
sections as shown in the figure below:
Master scheduled periods
1
2
3
Frozen
(firm or fixed)
4
5
6
slushy
(somewhat firm)
7
8
9
liquid
(open)
64
Time Fences in Master Scheduling
• Frozen Periods: The near-term phase where the delivery of
a new product is impossible, or only possible incurring a
very high cost or with an extraordinary options such as
delaying another order.
• Slushy periods: This phase is next to the frozen phase, may
be extend to few periods. Order entry in this phase
necessitates trade-offs, but is less costly or disruptive than
in the frozen phase.
• Liquid periods: They are farthest out of on the master
scheduling horizon. New orders or cancellations are easier
here.
• A key element in the success of MPS is the strict
adherence to the time fence policies and rules.
65