Master Scheduling

1
Master SchedulingThe Master Schedule
2
Introduction
Products into product groups.
They combine
Aggregate Production Capacity Plans
Demand into monthly totals.
Which alltogether reflect Top Management Decisions
.
Personnel Requirements across departments
Eventually, the time comes when individual end
item products and services must be scheduled at
specific work centers.
This is accomplished by master scheduling
Which means, producing a SUPPLY PLAN (a time
table including quantities) to produce specific
items or provide specific services within a
given time period.
3
Master Scheduling the Master Production
Schedule (MPS)
The master schedule (MS) is a presentation of the
demand, including the forecast and the backlog
(customer orders received), the master production
schedule (the supply plan), the projected on hand
(POH) inventory, and the available-to-promise
(ATP) quantity.
Example A simple MS for an MPS item (end
product)
The master production schedule (MPS) is the
primary output of the master scheduling
process.It is the plan for providing the supply
to meet the demand.
Table 1
4
Relationship of Master Scheduling to other MPC
activities
The master schedule (MS) is a key link in the
manufacturing planning and control chain.
The MS interfaces with marketing, distribution
planning, production planning, and capacity
planning.
The MS drives the material requirements planning
(MRP) system.
Master scheduling calculates the quantity
required to meet demand requirements from all
sources (see the example case on next page).
Figure 1
5
Example A case in which the distribution
requirements are the gross requirements
for the MS
Here, the MS
enables marketing to make legitimate delivery
commitments to field warehouses and final
customers.
enables production to evaluate capacity
requirements in a more detailed manner.
provides to management the opportunity to
ascertain whether the business plan and its
strategic objectives will be achieved.
Table 2
Net Requirements are calculated by MRP logic.
6
Understanding THE ENVIRONMENT in which master
scheduling takes place.
Before describing the activities involved in
creating and managing the MS, we need to examine
the different organizational environments in
which master scheduling takes place.
THESE ENVIRONMENTS ARE DETERMINED BY the
companys STRATEGIC RESPONSES to
the INTERESTS of CUSTOMERS
the ACTIONS of COMPETITORS
and
Thus, a COMPETETIVE STRATEGY evolves...
7
FOR A SPECIFIC PRODUCT (end item), THIS
COMPETETIVE STRATEGY MAY BE ONE OF THE FOLLOWING
Make finished items to stock (sell from finished
goods inventory)
Assemble final products to order and make/buy
subassemblies and lower level detail parts to
stock.
It is not unusual for an organization to have
different strategies for different product
lines and, thus, use different MS approaches.
Custom design and make to order.
8
Make-to-stock Strategy
Basic characteristics of this strategy/environmen
t
This strategy emphasizes immediate delivery of
reasonably priced off-the-shelf standard items.
In this environment the MPS is the anticipated
build schedule of the items required to maintain
the finished goods at the desired level.
Quantities on the schedule are based on
manufacturing economics, the forecasted demand
and desired safety stock levels.
In this environment, an end item bill of material
(BOM) is used. Items may be produced either on a
mass production (continuous or repetitive) line
or in batch production.
9
Assemble-to-order Strategy
Basic characteristics of this strategy/environmen
t
In this environment, subassemblies and lower
level detail parts/components are either produced
or purchased to stock.
The competitive strategy is to be able to supply
a large variety of final product configurations
from standard components and subassemblies within
a relatively short lead time.
This environment requires a forecast of options
as well as the total demand of the end item.
Thus, there is an MPS for the options,
accessories, and common components as well as
final assembly schedule (FAS). Here, examples of
options can be given as an automobile may be
ordered with or without air conditioning or a
fast-food restaurant may deliver your hamburger
with or without lettuce.
The advantage of this approach is that many
different final products can be produced from
relatively few subassemblies and components. This
reduces inventory substantially (see example on
following page).
10
Example Advantages of Assemble-to-order Strategy
Figure 2
The number of alternative final product
configurations 4x2x4x3x5 480 The number of
different items to stock 42435 18
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Custom Design Make-to-Order Strategy
In many situations the final design of an item is
part of what is purchased. The final product is
usually a combination of standard items and items
custom designed to meet the special needs of the
customer. Combined material handling and
manufacturing processing systems, special trucks
for off-the-road work on utility lines and
facilities are examples of such final
products. Thus, there is one MPS for the raw
material and the standard items that are
purchased, fabricated, or built to stock and
another MPS for the custom engineering,
fabrication, and final assembly.
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Relationships between competetive strategies
Figure 3
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Understanding the Bill of Material its uses
An inclusive definition of a final product
includes a list of the items, ingredients, or
materials needed to assemble, mix, or produce
that end product. This list is called a bill of
material (BOM) and created as part of the design
process .
A single level BOM is sufficient when final
product is assembled or manufactured from a
set of purchased parts and raw materials.
Table 3
14
A multilevel (indented) BOM is required when
final product has make subassemblies in its
structure.
Figure 4
Table 4
15
If the finished shaft and wiring assembly
shown in Table 4 were subassemblies, then their
components would be listed in the multilevel
(indented) BOM of Lamp LA01.
As one can easily see, the multilevel product
structure is really made up of building blocks
of single level product trees.
Table 5
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COMPLEXITIES IN REAL LIFE
What happens if we manufacture alternate lamps by
using

• three different shades,
• two alternate base plates, and
• two types of sockets

Then we have (3x2x2) 12 different models having
some common components.
To make the planning task more understandable, we
can prepare the common parts bill.
Some parts are common to all models
Some parts are not common to all models
Table 6
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Inorder to ease up the planning task, we can
reduce the number of items in BOM by grouping
part 1100 (finished shaft) and part 1700 (wiring
assembly) which are common parts to all products,
and assign a new part number (such as 3000) to
this group.
Since part no 3000 will never be stocked, it will
be a pantom number.
18 items
19 items
18
From Table 6, a simplified product structure
diagram can be created for the family of lamps
which consists of modular pseudo subassemblies
Figure 5
In this kind of diagram, instead of the quantity
for each unit assembled, the percentage split for
each type of component is stated.
Furthermore, if we decide to change from 15
cream shade to, say, a 16 green shade, we need
to alter only this single BOM (modular bill).
If we plan for a total of 10,000 lamps for each
month, this planning bill can be used to derive
the number of each type of component to build.
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Understanding the Planning Horizon
A Principle of Planning
A plan must cover a period at least equal to the
time required to accomplish it.
That is, the MS planning horizon must be at least
as long as the lead time required to fabricate
the MS items. This includes production and
procurement time as well as engineering time in
a custom design environment.
Figure 6
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Minimum Planning Horizon
According to the principle of planning, Minimum
Planning Horizon is, the time period in which
the MPS can not be changed. This period is also
called as frozen zone.
Committed Backlog (IN PRODUCTION) (frozen
schedule/zone)
Production Hours
Forecasted Backlog
Committed Backlog (NOT in PROD)
Committed Backlog (NOT in PROD)
1
2
6
3
4
5
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
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Figure 7
Minimum planning horizon
Planning horizon which is under the authority of
master schedular
Weeks
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A Sample Time Fencing for MS Planning Horizon
Table 7
Only top management can change the MPS.
PERIOD A
PERIOD B
Any additions to the schedule must be
counterbalanced by comparable deletions or
increases in capacity. Changes are usually
negotiated between marketing and manufacturing
with the master scheduler determining their
feasibility before the final decision. The
product mix may change but not the production
rate.
PERIOD C
The MPS is consistent with the production plan.
Preparation of the MS is straightforward in this
time frame.
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DESIGNING, CREATING MANAGING THE MASTER SCHEDULE
Master Scheduling activities are carried out in
three main steps
SUBSTEPS
Designing the master schedule (MS)
1. Select the items that is, select the levels
in the BOM structure to be represented by
the items scheduled (both components and final
assemblies may be included). 2. Organize the MS
by product groups. 3. Determine the planning
horizon, the time fences, and the related
operational guides. 4. Select the method for
calculating and presenting the available-to-promis
e (ATP) information.
STEP 1
1. Obtain the necessary informational inputs,
including the forecast, the backlog
(customer commitments), and the inventory on
hand. 2. Prepare the initial draft of the master
production schedule (MPS). 3. Develop the rough
cut capacity requirements plan (RCCR'). 4. If
required, increase capacity or revise the initial
draft of the MPS to obtain a feasible
schedule.
Creating the master schedule (MS)
STEP 2
1. Track actual production and compare it to
planned production to determine if the
planned MPS quantities and delivery promises are
being met. 2. Calculate the
available-to-promise to determine if an incoming
order can be promised in a specific
period. 3. Calculate the projected on hand to
determine if planned production is
sufficient to fill expected future orders. 4. Use
the results of the preceding activities to
determine if the MPS or capacity should be
revised.
Controlling the master schedule (MS)
STEP 3
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Designing The Master Schedule
Suppose that we are going to create a MS in a
make-to-stock environment with no safety stock.
Figure 8
Our planning horizon will be 4 weeks (weeks 32,
33, 34 35). Calculation method for ATP
(available-to-promise) quantities will be
discrete.
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Creating The Master Schedule
When we examine the available information for
PG1, we see that
For MPS Item1, the POH quantity of week 31 does
not meet the forecasted requirement of week 32.
So, we need to schedule this item for week 32.
For MPS Item2, the POH quantity of week 33 does
not meet the forecasted requirement of week 34.
So, we need to schedule this item for week 34.
For MPS Item3, the POH quantity of week 34 does
not meet the forecasted requirement of week 35.
So, we need to schedule this item for week 35.
Table 8
Some companies may use a safety stock level. Item
is rescheduled when POH drops down to the safety
stock level.
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Based on a weighted average capacity of 180 units
per week, we create our initial (first) plan
The POH for the first week equals the beginning
inventory plus the MPS quantity minus the
forecast requirements.
For each week we expect to complete a total of
180 units of PG1 products.
Table 9
Now the question is, whether do we have
sufficient capacity to carry out this plan?
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Brief summary of Capacity management

• Figure 9 shows an overview of the entire
• Manufacturing Planning Control (MPC)
• process under MRP.
• In this approach, capacity management
• techniques usually are separated into four
• categories
• resource requirements planning (RRP),
• rough cut capacity planning (RCCP),
• capacity requirements planning (CRP), and
• input / output control.

Remember MRP is insensitive to capacity.
A problem commonly encountered in operating MRP
systems is the existence of an overstated MPS.
Figure 9
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Table 10
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An overstated master production schedule is the
one which orders more than the production can
complete. It causes

• raw materials and WIP inventories to increase
  because
• more materials are purchased and released to
  the shop
• than are completed and shipped.
• a buildup of queues on the shop floor resulting
  an
• increase in actual lead times which yields to
  ship dates
• to be missed.

Overstated MPS causes a chain reaction which
flows down to the lowest level components.
Figure 10
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Revising the MPS
Lets go back to the initial MPS developed for
product group PG1 which covers products MPS
Item1, MPS Item2, and MPS Item3 according to the
production plan dictated by management.
Capacity required by this initial MPS is shown in
following page.
Table 11
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Table 12
The comparison of capacity requirements to
available capacity gives the master scheduler
the following options
1. Increase capacity in Weeks 32 and
33. 2. Reduce production quantities in Weeks 32
and 33 and increase production quantities in
Weeks 34 and 35. 3. Some combination of Options 1
and 2,
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In this case the choice is Option 2
The revised MPS quantities were obtained by
scheduling the maximum possible quantity of MPS
Item1 in Weeks 32 and 33 and completing those
requirements in Week 34. The remaining
requirements for MPS Item2 and MPS Item3 were
roughly balanced between Weeks 34 and 35,
producing MPS Item2 first.
Copy of Table 11
Table 13
32
POH values reveal that sufficient units will be
available to cover forecast demand for PG1
Remember that the Production Plan and the
MPS were based on the Forecasts and customer
commitments /backlog. For this reason, it may be
necessary to revise the MPS again if actual
orders are substantially different from the
forecast.
Table 14
Once the initial revised feasible MPS is
developed, creating the master schedule is
completed.
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Controlling the MPS
The MASTER SCHEDULE (MS) itself serves as a
control device in three distinct ways
Actual production is compared to the MPS to
determine if the plan is being met.
The projected on hand (POH) is calculated to
determine if the supply is sufficient to fill
expected future orders.
The available-to-promise (ATP)is calculated to
determine if an incoming order can be promised
for delivery in a specific period.
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The Available to Promise Quantity (ATP)
Definition of ATP as given by APICS Dictionary is
as follows
"The uncommitted portion of a company's inventory
or planned production. This figure is normally
calculated from the master production schedule
and is maintained as a tool for customer order
promising."

• However, when we say that
• there are 25 units available-to-promise in Week
  7 and
• there are20 units available-to-promise in Week
  8,
• the meanings are not clear until the method of
  calculation for ATP values is known.

35
There are three methods of computing the ATP
DISCRETE (ATPD)
CUMULATIVE
With look ahead (ATPWL)
Without look ahead (ATPWOL)
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A. Calculation of Discrete ATP (ATPD)
Table 15
Computation method is as follows

• For the first period
• If there is a scheduled MPS quantity
• ATPD Beginning inventory Scheduled MPS
  qty for the first period Backlog for the period
  (committed qty).
• If there is NO scheduled MPS quantity
• ATPD 0

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WHY ATPD0 for the second case?
Because in this case, the beginning inventory is
supposed to compensate the backlogs of the first
period and the consecutive periods (if there are
any)which does not have scheduled MPS
quantities.
Because in this case, the beginning inventory is
supposed to compensate the backlogs of the first
period and the consecutive periods (if there are
any)which does not have scheduled MPS
quantities. For this reason, the
beginning inventory has no significance for the
first period. Thus, the formula yields to a
negative or zero value for ATPD. Since
there can not be a negative available
to promise quantity, ATPD value becomes 0.
Example - ATPD quantities for week 32
MPS Item1 ? ATPD 10169-110 69
Table 15
MPS Item2 ? ATPD 00-35 -35 ? 0
MPS Item3 ? ATPD 00-13 -13 ? 0
38

• For the second period and on
• If there is a scheduled MPS quantity
• ATPD Scheduled MPS qty for the period
  Backlog for the period (committed qty).
• If there is NO scheduled MPS quantity
• ATPD 0

What happens to ATPD values of MPS Item1 if we
receive an additional order of 30 units for week
32?
Example - ATPD quantities for MPS Item1 for
weeks 33, 34 and 35
Example - ATPD quantities for MPS Item1 for
weeks 33, 34 and 35
For week 33 ? ATPD 169-80 89
For week 34 ? ATPD 22-5 17
For week 35 ? ATPD 0-15 -15 ? 0
Example - ATPD quantities for MPS Item2 for
weeks 33, 34 and 35
For week 33 ? ATPD 0-20 -20 ? 0 Remember
that, since there is no scheduled MPS for this
period, respective backlog should be associated
with an MPS quantity prior to week 32.
Table 15
For week 34 ? ATPD 160-45 115
The ATPD of week 32 changes from 69 to 39. ATPD
quantities for other weeks remain same as before.
For week 35 ? ATPD 56-24 32
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WHY we DO NOT have Forecast and POH values in
Master Schedule when computing ATPD?
Note that in computing the ATP D, it is not
necessary to have the forecast and the projected
on hand inventory in the master schedule. This is
because at this time the master scheduler is not
creating a master schedule, but, instead, is
managing an existing schedule.
The master scheduler is promising the delivery of
units to customers which will be available either
from units already on hand when construction of
the master schedule began, or from units
scheduled to be built in accordance with the
master production schedule. Therefore, the
forecast and POH are not included in the tables
that follow.
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B. Calculation of Cumulative ATP without
lookahead (ATPWOL)
Computation method is as follows

• For the first period
• ATPWOL Beginning inv Scheduled
• MPS qty Backlog

• For the following periods
• ATPWOL ATPWOL of preceeding
• period Scheduled
  MPS qty
• Backlog

Example - ATPWOL quantities for MPS Item1 for
weeks 32, 33, 34 and 35
For week 32 ? ATPWOL 10169-110 69
For week 33 ? ATPWOL 69169-80 158
For week 34 ? ATPWOL 15822-5 175
For week 35 ? ATPWOL 1750-15 160
Table 16
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Difference between ATPWOL ATPD methods
The most obvious difference between ATPWOL and
the ATPD methods is that, the ATP in any period
is likely to include units also included in the
ATP of other periods. For example, For MPS
Item1, the 158 unit ATPWOL of Week 33 includes
the 69 units in the ATP of Week 32, which are
also included in the ATP of all other weeks.
Furthermore, in ATPWOL procedure, the ATP for
a week may include units committed to fill
requirements for a later week. For example, 15
of the units in the ATP of Week 34 are committed
to customer orders promised in Week 35.
Table 16
The data becomes misleading
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B. Calculation of Cumulative ATP with lookahead
(ATPWL)
The look-ahead approach resolves the misleading
data problem of ATPWOL method of calculation.
Computation method is as follows
The ATPWL of a period (the ATPWL of the
preceding period) (the MPS of the period)
(the backlog of the period) (the sum of the
differences between the production MPS qty and
backlog of all future periods until, but not
including, the period at which point production
exceeds the backlog).
Example - ATPWL quantities for MPS Item1 for
week 34
For week 34 ? ATPWL 15822-5-15 160
Table 17
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Detailed Calculation
MPS Item1
ATPWL for week 32
ATPWL which is prior to week 32 is 10 units. MPS
for week 32 is 169 units. Backlog for week 32 is
110 units.
In the following week (week 33), production (MPS
qty of 133 units) exceeds the backlog (of 80
units). Therefore we will not consider week 33.
Accordingly ATPWL quantity of week 32
10169-110 69 units.
ATPWL for week 33
Is calculated exactly in the same way since, in
the following week (week 34), production (MPS qty
of 22 units) exceeds the backlog (of 5 units).
Accordingly ATPWL quantity of week 33
69169-80 158 units.
ATPWL for week 34
In the following week (week 35), production (MPS
qty of 0 units) does not exceed the backlog (of
15 units). So, we have to look ahead and say
that, this difference of 15 units between
production and backlog of week 35 will be covered
by the ATP of week 34. Accordingly ATPWL
quantity of week 34 15822-5-(15) 160 units.
ATPWL for week 35 remains as 160 units since we
had already excluded 15 units of difference qty.
44
Resolution of the misleading data problem
The ATP quantity of 175 for week 34 includes
comitted quantity of 15 units for the following
week (week 35).
The ATP quantity of 160 for week 34 does not
include the comitted quantity of 15 units for the
following week (week 35).
Week in which we do not have enough production to
meet the existing backlog.
Week in which we do not have enough production to
meet the existing backlog.
Also read the following supplementary handouts
for Rough Cut Capacity Planning from the IE434
web page Reading 03-ROUGH CUT CAPACiTY
PLANNiNG_supplement for MPS_2009.doc