Ch. 6 Master Production Scheduling SCM 461 Dr. Ron Tibben-Lembke Pages: 168-181, 183-188

Master Production Schedule Provides basis for: Making good use of manufacturing resources Making customer delivery promises Resolving tradeoffs between sales and manufacturing Attaining strategic objectives in the sales and operations plan

What is “Master Production Scheduling?” Start with Aggregate plan (Aggregate Sales & Ops Plan) Output level designed to meet targets Disaggregates Converts into specific schedule for each item

S&OP vs MPS “The role of the sales and operations plan is to balance supply and demand volume, while the MPS specifies the mix and volume of the output” MPS shows when products will be available in future Planned production, not forecast

Master Production Scheduling Techniques Available = inventory position at end of week = starting inventory + MPS – forecast Plan to have positive inventory level Buffer in case production below plan Or demand higher than anticipated MPS row is amount to make, MRP system has to figure out how to make it

Figure 6.2 Level demand, level production plan 1 2 3 4 5 6 7 8 9 10 11 12 Forecast Available (End) 20 MPS On hand (start)

Figure 6.3 Different sales forecast Same total: 120 units, starts lower, goes higher Level production plan

Figure 6.4 Same demand as 6.3 Production adjusts to meet demand “Chase” production strategy

Figure 6.5 Lot size of 30 units Produce if projected balance falls below 5 units Extra on-hand inventory is “cycle stock” 5 unit “trigger” is safety stock

Figure 6.5a – next week Demand in week 1 was 10 Marketing decides forecast was incorrect Raise forecasts to 10 for weeks 2-6 Ending Available for wk 2 projected to be 0 Need to produce in week 2.

Figure 6.6 Roll forward one week Higher demand over weeks 1-12 Total was 120, now is 155 Need to revise MPS

Figure 6.7 Production planned for week 4 moved to 2 – can we do it? Planned to do 4 batches in 12 weeks, now need 5 – feasible? Changing schedule is expensive, maybe very expensive

Order Promising 6.8 Track # units ordered for each period More orders expected for periods 2,3 From on-hand, how many units not yet spoken for? ATP = 20 – (5+3+2) = 10

Available to Promise ATP Backlog of 10 orders over first 3 weeks: 5,3,2 Actual firm customer orders, not forecasts. Total shipments expected to be 5 in early weeks 20 units on hand. 10 units are available to promise 20 units on hand have to cover all demands until next production

Week 1 Demand is 10 Suppose demand is 10 in week 1. Orders for 5 week 1 units were received in week 1. Already had firm orders for 5 for wk 1. Increase forecasts of future week shipments. Started period 1 with 20, demand was 10, ended with 10.

Order Promising – Fig. 6.9 Received more orders for periods 2-4 Period 2 ending inventory would be 0, so have to produce in week 2. (10+30) – (5+5+2)=28 Order backlog went from 10 to 12- factor in revising forecasts?

Starting inventory plus production is 10+30 = 40. We have orders for 5 in period 2 It looks like we could accept orders for up to 35 more units in week 2. But we can’t. We’ve promised 7 of those units to weeks 3&4. Selling more would mean we have to expedite another shipment, like we just did, but which we really, really don’t want to have to do. So, not safe to assume we can easily expedite in short term

Calculating “Available” Current batch plus on hand Minus the greater of Forecast and confirmed orders Previous available + MPS – (greater of forecast or orders)

Calculating ATP Calculated in current week and any week with MPS>0 Current period: on-hand plus any current period MPS, minus all orders in that and subsequent periods until next MPS Later periods: MPS – all orders until next MPS ATP = MPS in weeks 5, 8, 10, 12

ATP: Future Deficiencies Order for 35 in week 10. Wk 10 ATP goes to 0, 5 additional units need to come from ATP for previous MPS Week 8 MPS goes to 25 Set MPS for 11? We need to do something.

Consuming the Forecast Fig. 6.10 Go back to Fig. 6.9 Can we accept following orders? 5 units week 2 15 units week 3 35 units week 6 10 units week 5

5 in week 2? 5 in week 2 – must come from ATP in week 2. ATP in 2 is 28, so it works. Reduce ATP to 23, add order

5 in week 2? OK Reduced ATP to 23, add 5 to Orders

15 in week 3? 15 in week 3 – needs to come from ATP in week 2. ATP in 2 is 23, so it works

15 in week 3? OK Reduced ATP to 8, added 15 to “Orders” Notice all future ending levels went down by 10 Consider moving MPS from 5 to 4. Depends on marketing’s beliefs about 4. If no more than 10 will come, we might be OK.

35 in week 6? ATP in week 5 is only 30. How could this work?

35 in week 6? OK 30 from ATP in week 5, which goes to 0. Need 5 more ATP from week 2, ATP in 2 goes down to 3. But it would only be prudent to approve it if: You think this 35 represents all the demand you’ll see (Those forecasted other orders are not coming), OR You can adjust the MPS to meet forecasted demand No room to accommodate 10 in w 5, could do in week 8

Fig. 6.10 Roll one week forward in time What to do about Available < 0? Maybe nothing. forecasted sales may not appear If they do, we’re in trouble – produce more, or earlier, depends on other products’ needs

Bill of Materials Bill of Materials – Parent-child diagram that shows what goes into what. Used to make sure enough parts for production plan Each part has LT, ordering policy One BOM for every end product Bike Frame Assy Wheel Assy Wheel Tires Components Frame Hubs & Rims Spokes

BOM formats Single-level BOM only shows one layer down. Indented BOM Bike Frame Assembly Components Frame Wheel Assembly Wheel Hubs & Rims Spokes Tires Spokes Wheel Tires

Low-Level Code Numbers LLC 1 2 3 4 Lowest level in structure item occurs Top level is 0; next level is 1 etc. Process 0s first, then 1s Know all demand for an item Where should blue be?

LLC Drawing Item only appears in one level of LLC drawing 1 2 3 4 Item only appears in one level of LLC drawing Easier to understand Simplifies calculations

Final Assembly Schedule Master Production schedule is anticipated build schedule FAS is actual build schedule Exact end-item configurations

Schedule Stability Stable schedule means stable component schedules, more efficient No changes means lost sales Frozen zone- no changes at all Time fences >24 wks, all changes allowed (water) 16-23 wks substitutions, if parts there (slush) 8-16 minor changes only (slush) < 8 no changes (ice)

HW Pages 168-181, 183-188 DQ: 1,3,5 Problems: 1,4,6,8