Advanced Production Management

Chapter 4:
Master Schedule
Technical Management
25.04.2014
M.Eng. Maria J. Aragn S.
maria.aragon.sandoval@hs-emden-leer.de
2
Content
1. Introduction to the Master Schedule
2. Time Horizon & Time Fences
3. Master Production Schedule (MPS)
4. Available to Promise (ATP)
5. Approaches in different environments
6. Demand Management

3
Introduction
Sales & Operations Planning is done on a product family
level on a strategic time horizon that allows for general
middle-term planning
Master
Schedule
A higher level of detail is needed
for the every-day operations:
+ For specific products
+ On a shorter time frame
4
Master Schedule Introduction
The Master Schedule shows:
+ What should be produced
+ How much should be produced
+ When should it be ready

Every company has one!
+ Even if its informal
+ Even if is not called Master Schedule
+ Even if its only inside somebodys head
5
Master Schedule Introduction
The Master Schedule allows a company to:

Break-down the aggregated plans made in S&OP, into
specific products
Sever as a plan that uses actual customer orders in
addition to forecast data
Develop much more specific capacity and resource plans
Translate customer orders in to effectively time production
orders for the facility
Plan inventory levels (specially at the finished good level)
6
Master Schedule Horizon
It MUST be at least as long as the cumulative
lead time of the product to be planned

Cumulative Lead Time
7
Master Schedule Horizon
Example: Bicycle
https://www.cbsi-corp.com/wp-
content/uploads/2012/02/NA50_03_Bill_of_Materials2.pdf
8
Bicycle Assembly
Wheel Manufacturing
Frame Manufacturing
Master Schedule Horizon - Bicycle Example
5d
6d
6d
Assemble
Frame & Fork
Attach
handlebars,
brakes, saddle
Assemble
wheels,
pedals, chain
Final finishing
Manufacturing
tubes
Welding and
gluing
Finishing &
Painting
Spoke
lacing
Tensioning
and truing
Tire & valve
assembly
Based on this
information, can
you determine
the minimum
time horizon
needed for
scheduling?
9
Frame Manufacturing
Bicycle Assembly
Master Schedule Horizon - Bicycle Example
6d
Assemble
Frame & Fork
Attach
handlebars,
brakes, saddle
Assemble
wheels,
pedals, chain
Final finishing
5d
Manufacturing
tubes
Welding and
gluing
Aligning and
finishing the
frame
Wheel Manufacturing
6d
Spoke lacing
Tensioning
and truing
Tire & valve
assembly
12d
10
Master Schedule Horizon - Bicycle Example
Level 3
Level 2
(Sub assemblies)
Level 1
(Sub assemblies)
Level 0
(Finished Good)
Bicycle
( 1 pc.)
Wheel
(2 pcs.)
Rim
(2 pcs.)
Tire
(2 pcs.)
Tire Valve
(2 pcs.)
Spokes
(72 pcs.)
Frame
(1 pc.)
Color
(1 l)
Tubes
(4,5 m)
https://www.cbsi-corp.com/wp-
content/uploads/2012/02/NA50_03_Bill_of_Materials2.pdf
Bicycle Bill of Material (BOM)
Purchased Parts also have a lead time
that must be considered in the
Scheduling Horizon!
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Master Schedule Horizon - Bicycle Example
Level 3
Level 2
(Sub assemblies)
Level 1
(Sub assemblies)
Level 0
(Finished Good)
Bicycle
( 1 pc.)
Wheel
(2 pcs.)
Rim
(2 pcs.)
Tire
(2 pcs.)
Tire Valve
(2 pcs.)
Spokes
(72 pcs.)
Frame
(1 pc.)
Color
(1 l)
Tubes
(4,5 m)
https://www.cbsi-corp.com/wp-
content/uploads/2012/02/NA50_03_Bill_of_Materials2.pdf
Bicycle Bill of Material (BOM)
6d
5d
6d
2d 3d 2d 2d 3d
2d
6+6+3+2 = 17d
6d
6d
3d
2d
12
Example Exploded View of a Pump
13
Time Fences
Since forecasts are almost always wrong, how to
use them for specific scheduling?

Time Fences
Demand Time Fence Planning Time Fence
14
Time Fences
Time Fences
Demand Time Fence
Shorter
Frozen
Only real demand data is considered
Forecast is ignored
Planning Time Fence
Approximately the cumulative lead
time
Flexible
Demand & Forecast data is combined
15
Master Production Schedule (MPS)
Period 1 2 3 4 5 6 7 8 9 10
Demand 40 50 45 50 50 50 50 50 50 50
Projected Available 30 60 15 45 75 25 55 5 35 65
MPS (completion time) 80 80 80 80 80 80
A Sample Master Schedule (Fig 4.4)

On hand = 70 no planned inventory level
Lot size = 80
The entire planning tool is
called Master Schedule,
the specific schedule production
quantities and times are called
Master Production Schedule (MPS)
16
MPS Impact of Production Environment
MTS
Orders are supplied
from Stock
MPS can also be
seen as a final
assembly schedule
or inventory
replenishment
schedule
ATO
The customer
chooses various
optional
subassemblies or
features
Too many options to
be individually
scheduled
The MPS focuses
therefore on
scheduling the
options, not the
finished goods
MTO
Customer has a
strong influence on
the design, so its
very difficult to
master schedule the
finished good
But the raw
materials might be
common to most of
the products
The MPS focuses on
the raw material
requirements
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MPS Impact of Production Environment
MTS

ATO

MTO









Finished Goods
Raw Materials
MPS
Finished Goods
Raw Materials
MPS
Finished Goods
Raw Materials
MPS
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MPS Impact of Production Environment
MTS

Finished goods


ATO
Options


MTO

Raw Materials









19
Available To Promise (ATP)
Quantities from the master production schedule
that are available on a given period for additional
customer orders
Or: the quantity that has not yet been promised
to any specific customer order

Benefits of calculating the ATP :
+ It provides visibility of the actual circumstances
+ Gives the ability to communicate immediately and
honestly with customers when new requests come in
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Available To Promise (ATP) - Example
Product: A
Lead time: 2 weeks
Lot size: 60
On-hand: 56
Demand Time Fence: 2 weeks
Period 0 1 2 3 4 5 6 7 8 9 10 11 12
Forecast 22 25 20 20 18 18 32 30 28 28 29 23
Customer Orders 24 23 17 22 15 14 17 16 12 16 13 11
Forecast or Real Demand? 24 23 20 22 18 18 32 30 28 28 29 23
Projected Available Balance 56 32 9 49 27 9 51 19 49 21 53 24 1
MPS 60 60 60 60
Promised until next MPS
Available to Promise
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Available To Promise (ATP) - Example
What options do you have if a customer requests 35 units for period 7 ?

Period 0 1 2 3 4 5 6 7 8 9 10 11 12
Forecast 22 25 20 20 18 18 32 30 28 28 29 23
Customer Orders 24 23 17 22 15 14 17 16 12 16 13 11
Forecast or Real Demand? 24 23 20 22 18 18 32 30 28 28 29 23
Projected Available Balance 56 32 9 49 27 9 51 19 49 21 53 24 1
MPS 60 60 60 60
Promised until next MPS 47 54 31 28 40
Available to Promise 9 6 29 32 20
22
Planning Options in an ATO Environment
How to plan for the options?
Bicycle
Frame
(x3)
Regular
(55%)
Heavy Duty
(32%)
Light (21%)
Speeds
(x5)
3 Speeds
(12%)
7 Speeds
(5%)
10 Speeds
(60%)
12 Speeds
(20%)
15 Speeds
(10%)
Handle bars
(x3)
Regular
(55%)
Comfort
Curve (25%)
Racing (33%)
Water bottle
(yes/no)
Yes (70%)
Common parts
A Super Bill is created
Each option is planned based on the
historical % of the finished good
Percentages can add up to more than
100% (Hedge or over planning)
Two-Level master schedule is used
23
Two-Level Master Schedule - Example
Week 1 2 3 4 5 6 7 8 9
B
i
c
y
c
l
e

M
a
s
t
e
r

S
c
h
e
d
u
l
e

F
i
n
i
s
h
e
d

G
o
o
d

(
L
e
v
e
l

0
)

Forecast
100 100 100 100 100 100 100 100 100
Customer orders
100 82 70 52 23 12 0 0 0
Projected available
0 50 100 0 50 100 0 50 100
MPS
150 150 150 150 150 150
Available to promise
0 68 28 127 138 150 150
R
e
g
u
l
a
r

F
r
a
m
e

O
p
t
i
o
n

M
a
s
t
e
r

S
c
h
e
d
u
l
e


(
L
e
v
e
l

1
)

-

5
5
%

Finished Good (Forecast Orders)
0 18 30 48 77 88 100 100 100
Option Forecast
0 10 17 26 42 48 55 55 55
Booked orders
51 49 15 20 15 9 0 0 0
Projected available
69 10 78 32 75 18 63 8 53
MPS
100 100 100 100 100
Available to promise
20 65 76 100 100
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Exercise (p. 95 Chapter 4 - Exercise 5)
25
Demand Management
There must be further alignment and coordination between
Marketing, Sales and Operations (other than S&OP & MPS).
Two main reasons:
Service, repairs
Engineering & Prototype requirements
Quality Assurance Testing
Some Demand is
Internal
Changing Equipment & tooling capacity
Changing human capacity (training & hiring)
Submitting changes to suppliers can be costly and time consuming
Phase in/out of designs
Operations are
not as flexible as
Marketing &
Sales
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Demand Management - Elements
Forecast method selection
Forecast tracking & evaluation
Methods to cope with the expected error
Prediction
Order reception
Order delivery date promising
Customer order servicing
Communication
Sales & Marketing must work close together
with operations
Understand constraints and opportunities
Influence
Allocation of resources according to order
priorities
Prioritization rules must be clearly defined
Prioritization
Coping with Error
Communication
Influence
Lead time reduction
Production
Flexibility
Policies for higher-
level plans
Safety Stock or Over
planning
27
Further Reading
Chapter 4
28
THANK YOU.
Next Session: Inventory Management