Materials Management Systems

Materials Management Systems Master Production Scheduling Chapter 3 MGMT 3750

Ch.3: Master Production SchedulingPurpose • The master production schedule states the requirements for individual end items by date and quantity. It is limited by the production plan and must “disaggregate” the production plan. • Master planning seeks to plan and control the impact of independent demand on material and capacity. MGMT 3750

Ch.3: Master Production SchedulingPurpose • The master production schedule is a vital link between sales and production • It makes possible valid order promises • It represents a contract between sales and production. MGMT 3750

Ch.3: Master Production SchedulingInputs • Inputs to the master production schedule include • The production plan • The forecast • Orders from customers • Additional independent demand • Inventory levels • Capacity constraints MGMT 3750

Ch.3: Master Production SchedulingObjectives • The objectives of a master production schedule are to • Maintain the desired level of customer service • Make the best use of resources • Keep inventories at the desired level MGMT 3750

Ch.3: Master Production SchedulingPreparing an MPS • Make a preliminary MPS • Perform rough-cut capacity planning • Resolve differences MGMT 3750

Ch.3: Master Production SchedulingRough-cut Capacity Planning • Rough-cut capacity planning checks whether critical resources are available to support the preliminary master schedule. • A resource bill shows the time required for individual items on a critical resource. • What are some possible critical resources? MGMT 3750

Ch.3: Master Production SchedulingResolving Differences • The third step in developing an MPS is to resolve any differences between the priority plan and available capacity. Available capacity must be equal to or greater than required capacity • If required capacity exceeds available capacity • Capacity must be increased or • Plan must be altered • How can capacity be increased or demand be decreased? MGMT 3750

Ch.3: Master Production SchedulingResolving Differences • The master production schedule must be judged by three criteria • Resources use. Is the MPS within capacity restraints in each period of the plan? Does it make the best use of resources? • Customer service. Will due dates be met and will delivery performances be acceptable? • Cost. Is the plan economical, or will excess cost be incurred for overtime, subcontracting, expediting, or transportation? MGMT 3750

Ch.3: Master Production Schedulingand Sales • An MPS is not a sales forecast, it is instead a forecast of production. It may not necessarily be what we want; it should be what we can do. • The MPS must be realistic and achievable. Otherwise, the plan fails, deliveries are not met, and manufacturing has to react to circumstances rather than planning for them. MGMT 3750

Production Capacity or Inventory Units Available-to- Promise Customer Orders Time Ch.3: Master Production SchedulingMPS and Delivery Promises • As orders are received, they “consume” available production and inventory • Any part not consumed is available-to-promise MGMT 3750

Ch.3: Master Production SchedulingAvailable-to-Promise • Available-to-Promise is • the uncommitted portion of a company’s inventory and planned production, maintained in the master schedule to support customer order promising. The ATP quantity is the uncommitted inventory balance in the first period and is normally calculated for each period in which an MPS receipt is scheduled APICS Dictionary, 8th edition MGMT 3750

Ch.3: Master Production SchedulingAvailable-to-Promise • The ATP calculation assumes that the entire ATP will be sold before the next scheduled receipt. When calculating ATP, consider all orders until the next scheduled receipt. ATP for period 1 = on hand - customer orders due before next MPS scheduled receipt ATP for periods 2, 4, and 6 = MPS scheduled receipt - customer orders due before next MPS scheduled receipt MGMT 3750

Ch.3: Master Production SchedulingAvailable-to-Promise On hand = 200 units MGMT 3750

Ch.3: Master Production SchedulingPlanning Horizon The planning horizon is defined as the amount of time the master schedule extends into the future. This is normally set to cover a minimum of cumulative lead time plus time for lot sizing low-level components and for capacity changes of primary work centers or of key suppliers. APICS Dictionary, 8th edition MGMT 3750

Lead Time = 2 weeks A Lead Time = 6 weeks Lead Time = 5 weeks Lead Time = 8 weeks B C D Lead Time = 16 weeks E Ch.3: Master Production SchedulingPlanning Horizon • What is the minimum planning horizon in this example? MGMT 3750

2 weeks 26 weeks Frozen Slushy Liquid Actual Orders (Emergency Changes Only) Actual and Forecast (Trade-offs) Forecast Only (Changes constrained by production plan Demand Time Fence Planning Time Fence Due Date Ch.3: Master Production SchedulingTime Fences and Zones 0 MGMT 3750

Ch.3: Master Production SchedulingSummary • MPS Major Functions • To form the link between production planning and what manufacturing builds. • To plan capacity requirements. The MPS determines the capacity required. • To plan material requirements. The MPS drives the material requirements plan. • To keep priorities valid. The MPS is a priority plan for manufacturing. MGMT 3750

Ch.3: Master Production SchedulingSummary • MPS Links Between Sales and Production • To aid in making order promises. The MPS is a plan for what is to be produced and when. As such, it tells sales and manufacturing when goods will be available for delivery. • To be a contract between marketing and manufacturing. It is an agreed-upon plan. MGMT 3750

Ch.3: Master Production SchedulingSummary • The MPS must be realistic and based on what production can and will do. If not, the following may be the results • Overload or underload of plant resources. • Unreliable schedules resulting in poor delivery performance. • High levels of work-in-process (WIP) inventory. • Poor customer service. • Loss of credibility in the planning system. MGMT 3750

Ch.3: Master Production SchedulingQuestions • The following questions are for test preparation. • 1-4, 6, 10, 12-13 MGMT 3750

Materials Management Systems