5. Master Production Scheduling
Homework problems: 3,4,5,6,7,9.
1
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.
2
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.
3
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.
4
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.
5
An MPS Example
April
1
Ladder-back chair
2
May
3
Aggregate
production plan
for chair family
5
150
6
7
8
150
Kitchen chair
Desk chair
4
120
200
200
550
120
200
200
790
6
The MPS Process
Authorized
production
plan
Prospective master
production
schedule
No
Are resources
available?
Yes
Material
requirements
planning
Authorized master
production schedule
7
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 interfunctional trade-offs.
 Production
and sales
 Financial
budgets should be integrated with
MPS activities.
8
Fig. 5.1 MPS in the MPC System
Rough-cut capacity
planning
Sales and operations
planning
Master production
scheduling
Detailed material
planning
Demand
management
Front End
Engine
Enterprise Resource Planning (ERP) System
Resource
planning
9
2. MPS Techniques
Determine supply and demand
relationships over time (timephased record)
Prepare production schedule
according to strategy (chase,
level, mixed)
Calculate projected available
balance (for available-topromise activities)
Revise plans as time passes
(rolling through time)
10
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)
11
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)
Period
On hand
Forecast
Projected available balance
Master production schedule
20
1
2
3
4
5
5
5
8
10
15
25
30
32
32
27
10
10
10
10
10
12
2. MPS Techniques
Chase MPS strategy example
• Production (MPS) reflects the forecasted demand
• Constant projected available balance inventory
Period
On hand
Forecast
Projected available balance
Master production schedule
20
1
2
3
4
5
5
5
8
10
15
20
20
20
20
20
5
5
8
10
15
13
Lot Sizing strategy (Fig. 5.3)
Period 1 – 5 plan
Period
On hand
Forecast
Projected available balance
Master production schedule
Lot size = 30 Safety stock = 5
20
1
2
3
4
5
5
5
8
10
15
15
10
32
22
7
30
Rolling through time (Fig. 5.35.4)
Period 1 – 5 plan
Period
On hand
Forecast
Projected available balance
20
1
2
3
4
5
5
5
8
10
15
15
10
32
22
7
Master production schedule
30
Lot size = 30 Safety stock = 5
Period 2 – 6 plan
Period
On hand
Forecast
Projected available balance
Master production schedule
Lot size = 30 Safety stock = 5
10
2
3
4
5
6
20
20
20
15
20
-10
0
-20
-35
-55
30
Rolling through time (Fig. 5.35.4)
Period 2 – 6 plan
Period
On hand
Forecast
Projected available balance
Master production schedule
Lot size = 30 Safety stock = 5
10
2
3
4
5
6
20
20
20
15
20
-10
0
-20
-35
-55
30
Rescheduled MPS (Fig. 5.5)
Period 2 – 6 plan
Period
On hand
Forecast
Projected available balance
Master production schedule
Lot size = 30 Safety stock = 5
10
2
3
4
5
6
20
20
20
15
20
20
30
10
25
5
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

Discrete logic ATP treats each
period independently (Fig. 5.6)
Period
On hand
1
2
3
4
5
Forecast
5
5
8
10
15
Orders
5
3
2
0
0
15
10
32
22
7
Projected available balance
Available-to-promise
Master production schedule
20
12
28
30
Lot size = 30 Safety stock = 5
5-20

Cumulative logic ATP carries ATP
units forward (Fig.5.7)
Period
On hand
1
2
3
4
5
Forecast
5
5
8
10
15
Orders
5
3
2
0
0
15
10
32
22
7
Projected available balance
Available-to-promise
Master production schedule
20
12
40
30
Lot size = 30 Safety stock = 5
5-21
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
22
Consuming the Forecast

Assuming the following orders come in during
period 2:

Order #
1
2
3
4
Amount
5
15
35
10
Desired week
2
3
6
5
Can we accept all these orders?
To accept all these orders, we need to schedule MPS in 5 and
6.
23

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
7
20
10
-5
-40
7
-32
Projected available balance
Available-to-promise
Master production schedule
15
30
Lot size = 30 Safety stock = 5
5-24

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
7
20
10
25
20
7
13
20
-5
30
30
30
Projected available balance
Available-to-promise
Master production schedule
15
Lot size = 30 Safety stock = 5
5-25

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
Projected available balance
Available-to-promise
Master production schedule
30
35
10
20
3
0
-15
-30
30
Lot size = 30 Safety stock = 5
5-26
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
27
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
28
product
Fig. 5.11 The MPS Hourglass
End items
Establish MPS at
the subassembly
level
Components
29
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
30
Super Bill (of Materials) Fig. 5.12
5-31

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)
32
Using Available-to-Promise Logic
with Planning BOM (Fig. 5.13)
Common Parts
Available?
No
Yes
Gear
Available?
No
Try 1 period
later
Yes
Taylor
Available?
No
Yes
Book order
5-33
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
34
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
40
40
40
40
Orders
42
37
23
0
0
48
88
48
88
48
Available-to-promise
48
20
80
Master production schedule
80
80
80
Projected available balance
10
Lot size = 80 Safety stock = 10
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
0
0
0
0
0
Available-to-promise
0
28
46
100
100
Master production schedule
100
100
100
100
100
Projected available balance
0
Safety stock = 0
5-35
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
36
Freezing the Master Production Schedule
Inside the frozen
horizon no order
changes are allowed
Only occasional changes
Minor changes
Most changes
5-37
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.
38
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)
39
MPS example with demand and planning time fence
40
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
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
41
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)
42
Scheduling production using priority index
Product
A
B
C
D
Beginning
inventory
20
50
-30
25
Weekly
forecast
5
40
35
10
Lot
size
50
250
150
100
Hours per
lot size
20
80
60
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
A
B
C
D
P1
P2
P3
P4
P5
P6
P7
P8
Scheduling production using priority index
Product
P1
P2
A
4
3
B
1.25
C
D
P3
P4
P5
P6
P7
P8
0
-2
4.5
0.25
3.5
1.5
0.5
-0.86
0.64
-0.57
0.29
0.71
2.5
1.5
-1.5
6.5
5.5
35
30
Capacity= 35
hours a week
25
20
Hours
15
10
5
0
1
2
3
4
Week
5
6
7
8
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.
45
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).
46