Chapter 5 Master Production Scheduling

1. Chapter 5Master Production Scheduling

2. Master Production Scheduling An effective Master Production Schedule (MPS) provides the basis for making good use of manufacturing resources, making customer delivery promises, resolving trade-offs between sales and manufacturing, and attaining the firm’s strategic objectives, as reflected in the Sales and Operations Plan.

3. MPS and MPC System • The MPS is a statement of the specific products that make up manufacturing output • The MPS is a translation of the sales and operations plan into producible products with their timing and quantities determined • The MPS shows when products will be available in the future

4. Attributes of the Master Production Schedule • The MPS is a statement of production, not of demand • The MPS is not a forecast • The MPS considers factors such as capacity constraints, costs of production, resource limitations, and the sales and operations plan • The MPS is stated in terms of product specifications–usually part numbers which have specific bills of materials (BOM) • In assemble-to-order environments, the MPS may be stated in terms of an “average” final product

5. MPS and the Business Environment • 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 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 • In an assemble-to-order firm, the large number of possible product combinations is represented with a planning bill of materials

6. MPS in the MPC System Enterprise Resource Planning (ERP) System Resource planning Sales and operations planning Demand management Master production scheduling Rough-cut capacity planning Front End Engine Detailed material planning

7. 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

8. MPS Process and Techniques

9. Time-Phased Record • A means of gathering and displaying critical scheduling information (Forecast, available stock, production schedule)

10. MPS Process–with Lot Sizing Order size driven by lot sizing constraint, order timing/quantity driven by safety stock constraint On hand stock = On hand – actual demand + production = (20 + 0 – 10) As time progresses, new information becomes available Updated forecast for periods 2 – 6 changes projected available balancing, prompting rescheduling

11. Revising the MPS Additional production orders in periods 2 and 5 to meet safety stock requirements

12. Available-to-Promise • 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

13. Available-to-Promise Logic–Discrete • Discrete ATP treats each period independently Period 3: Total customer demand before next production = 2 units Period 1: Total customer demand before next production = 8 units Period 1: Projected available = Previous available + MPS – MAX(Forecast, Orders) Period 3: ATP = MPS – customer orders = 30 -2 Period 1: ATP = available balance – customer orders = 20 -8

14. Available-to-Promise Logic–Cumulative • Cumulative ATP carries ATP units forward Period 3: Total customer demand before next production = 2 units Period 1: Total customer demand before next production = 8 units Period 1: Projected available = Previous available + MPS – MAX(Forecast, Orders) Period 3: ATP3 = ATP1 + MPS – customer orders = 12+ 30 - 2 Period 1: ATP1 = available balance – customer orders = 20 - 8

15. ATP–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 • Assumes that we will eventually sell at least the forecast quantity • Adjusts for periods where demand exceeds the forecast

16. MPS in Assemble-to-Order Environments • In an assemble-to-order (ATO) environment, the possible combinations of end items can be huge • 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

17. Super Bill of Materials Mutually exclusive option sets are listed together, with a usage probability for each option Parts used in all configurations are listed with usage probability of 1.0 Safety stock absorbs variations in actual mix

18. Available-to-Promise Logic with Planning BOM Are the common parts on the BOM available? Common Parts Available? No Yes Is the requested gear option available? No Try 1 period later Gear Available? Yes No Is the requested Taylor option available? Taylor Available? Yes Book order

19. 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

20. Discrete ATP with a Two-Level Master Production Schedule Normal ATP logic applies to FAS items Planning BOM orders are the sum of FAS orders For planning BOM items projected available balance is always zero because the item doesn’t actually exist

21. Master Production Schedule Stability • A stable MPS translates to stable component schedules • Stability allows improved plant performance • Excessive MPS changes can lead to reduced productivity • Failure to change the MPS can lead to reduced customer service and increased inventory (failure to react)

22. Freezing the MPS Demand Time Fence Planning Time Fence Inside the frozen horizon no order changes are allowed Only occasional changes Most changes Minor changes

23. Managing the MPS • To be controlled, the MPS must be realistic • People should only be held accountable for attainable performance levels • Stability and buffering are important • The MPS must not be overstated • Sum of the MPS should equal the production plan

24. 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.

25. 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).