5.

Master Production Scheduling

Homework problems: 3,4,5,6,7,9.

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.

1. The MPS Activity

MPS and the Business Environment

The MPS is stated in terms of product specificationsusually

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.

An MPS Example

April
1
Ladder-back chair

May
3

Aggregate
production plan
for chair family

150

150

Kitchen chair
Desk chair

120
200

200

120

200

200
790

550

The MPS Process

Authorized
production
plan

Prospective master
production
schedule

Are resources
available?
Yes

Material
requirements
planning

Authorized master
production schedule

No

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.

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

2. MPS Techniques
Determine supply and demand
relationships over time (time-phased
record)
Prepare production schedule according
to strategy (chase, level, mixed)
Calculate projected available balance
(for available-to-promise 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

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

10

15

20

20

20

20

20

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

10

15

15

10

32

22

30

Rolling through time (Fig. 5.35.4)

Period 1 5 plan

Period
On hand

Forecast
Projected available balance

20

10

15

15

10

32

22

Master production schedule

30

Lot size = 30 Safety stock = 5

Period 2 6 plan

Period
On hand

Forecast
Projected available balance

10

Master production schedule

Lot size = 30 Safety stock = 5

20

20

20

15

20

-10

-20

-35

-55

30

Rolling through time (Fig. 5.35.4)

Period 2 6 plan

Period
On hand

Forecast
Projected available balance

10

Master production schedule

Lot size = 30 Safety stock = 5

20

20

20

15

20

-10

-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

20

20

20

15

20

20

30

10

25

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

Forecast

10

15

Orders

15

10

32

22

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

Forecast

10

15

Orders

15

10

32

22

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 #

Amount Desired week

1
2

5
15
6

2
3
10

35
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

Forecast

10

15

20

Orders

3+5(new)

2+15

10

35

20

10

-5

-40

-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

Forecast

10

15

20

Orders

3+5(new)

2+15

10

35

20

10

25

20

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

Forecast

10

10

10

10

15

Orders

20

Projected available balance

Available-to-promise
Master production schedule

30

35

10

20

-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
DELLs 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
product
28

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

Forecast for model (40% of total)

40

40

40

40

40

Orders

42

37

23

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

Production Plan

100

100

100

100

100

Orders

100

72

54

Available-to-promise

28

46

100

100

Master production schedule

100

100

100

100

100

Projected available balance

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

10

Forecast

18

21

17

17

12

14

23

28

30

25

Orders

19

20

15

20

20

12

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

Beginnin
Hours
g
Weekly
Lot
per
inventor
Product
y
forecast
size
lot size
A
20
5
50
20
B
50
40
250
80
C
-30
35
150
60
Based on
priority
index
D the above
25 data, calculate
10
100
30for each product and
schedule production, where Priority index = weeks of supply = (beginning
inventory) / (weekly forecast)
Prioriti
P1
P2
P3
P4
P5
P6
P7
P8
Product es:
A
B
C
D

Scheduling production using priority index

Product

P1

P2

P3

P4

P5

P6

P7

P8

-2

4.5

1.5

0.5

1.25 0.25

3.5

-0.86 0.64

-0.57

2.5

1.5

0.29 0.71

-1.5

6.5

5.5

35

Hour
s

30

25

20

15

10

4
Week

Capacity=
35 hours a
week

Concluding Principles
The MPS unit should reflect the business
environment and the companys chosen
approach.
If a common ERP database is implemented,
the MPS function should use that data.
Regardless of the firms 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