1. LESSON 4 Master Production Scheduling
06January2014

2. Lesson Objectives
Upon completion of this lesson, you should be able to:
Distinguish the Master Production Scheduling (MPS) process as part of Production Planning and Control (PPC)
Describe MPS Integration
Explain key benefits of MPS process
Analyze pros/cons/differences of production strategies captured in an MPS
Given a scenario, demonstrate Rolling Through Time
Explain a stable MPS and Performance Measures
Explain the purpose of a Bill of Materials (BOM)

3. Lesson Topics This lesson will cover the following topics:
MPS within the PPC System Framework
MPS Inputs and Outputs
MPS Benefits
Production strategies captured in the MPS
Rolling Through Time
MPS Stability and Performance Measures
Bill of Materials (BOM)

4. What’s In It For Me?
Your ability to interpret a contractor’s MPS enables you to anticipate the specific times at which products will be manufactured and to verify the planned delivery schedule meets contract requirements

5. Lesson Introduction
How is an MPS tracked and measured?

6. MPS within the PPC System Framework
Lesson Topics:
MPS within the PPC System Framework
MPS Inputs and Outputs
MPS Benefits
Production strategies captured in the MPS
Rolling Through Time
MPS Stability and Performance Measures
Bill of Materials (BOM)

7. MPS within the PPC System Framework
Resource Planning
Material and Capacity Plans
Detailed Capacity Planning
Sales and Operations Planning
Demand Management
Master Production Scheduling
Detailed Material Planning
Shop-floor Systems
Supplier Systems
Enterprise Resource Planning (ERP) Systems
Front End (Strategic)
Engine (Tactical)
Back End (Operational)
Material Requirements Planning

8. MPS The MPS moves between all levels of the PPC.
This provides information to all functional areas before the final production schedule is released.
MPS adjustments can be based on:
capacity needs,
material order changes,
production requirements,
other
The PPC process is iterative in large part due to this.

9. Strategic Level
The MPS is a statement of an anticipated build schedule based indirectly on actual and forecasted future customer demand:
Includes the specific periods in which the planning process determined products should be manufactured
Provides information for coordination with sales
Forms the basis for promising customers delivery times for ordered items

10. Strategic Level (cont.)
The MPS document is developed to be compatible with the Materials Requirement Planning (MRP) system

11. Sales and Operations Planning Master Production Scheduling
PPC System Framework
Resource Planning
Sales and Operations Planning
Demand Management
Disaggregation
Front End
Master Production Scheduling
MPS is the disaggregated version (details end items by period) of the aggregate plan produced by the Sales and Operations Planning
(S&OP) process

12. MPS Inputs and Outputs Lesson Topics:
MPS within the PPC System Framework
MPS Inputs and Outputs
MPS Benefits
Production strategies captured in the MPS
Rolling Through Time
MPS Stability and Performance Measures
Bill of Materials (BOM)

13. MPS Inputs and Outputs
Using several variables as inputs, the MPS generates outputs used for decision making
MPS Inputs
Forecast Demand
Inventory Levels
Production Costs
Supply
Inventory Costs
Lot Size
Customer Orders
Capacity
Spare Part Orders
Scrap Rates
MRO Orders
Demo Orders
MPS Outputs
Anticipated Amounts to be Produced
Product Mix to be Produced
Quantity Available to Promise
Projected Available Delivery Date

14. MPS Benefits Lesson Topics: MPS within the PPC System Framework
MPS Inputs and Outputs
MPS Benefits
Production strategies captured in an MPS
Rolling Through Time
MPS Stability and Performance Measures
Bill of Materials (BOM)

15. MPS Benefits An effective MPS:
Gives information to plan and control production
Ties the overall business planning and forecasting to detail operations
Enables marketing to make legitimate delivery commitments
Increases the efficiency and accuracy of a company’s production
Takes into account inventory and safety stock. This means that manufacturing does not build exactly to customer orders or forecasts.
Has a planning horizon that considers longest cumulative lead time for end items.

16. Question and Answer The MPS states:
The aggregated items to be manufactured
Which end items or product options manufacturing will build in the future
The schedules for ordering of materials required for production

17. Question and Answer What is the relationship between MPS and S&OP?
MPS aggregates the plans produced by the S&OP process
MPS disaggregates the aggregate plan produced by the S&OP process
S&OP disaggregates the aggregate plan produced by the MPS process

18. Question and Answer What are the benefits of using an MPS?
Allows for shortages
Facilitates expediting
Facilitates last-minute scheduling
Promotes efficient allocation of resources

19. Exercise: MPS Integration
Small Group Exercise:
Find a partner or work in a trio
Refer to Module 2, Lesson 4, Exercise 1 CMM100_M2_L4_E1_Exercise_FINAL.docx
Read the directions in the exercise
Complete the activity; be prepared to share your responses
Time allowed: 30 minutes

20. Exercise 1: MPS Integration
SCENARIO
Using the cable manufacturing scenario, explain MPS concepts and benefits. Illustrate how they fit into PPC.
OBJECTIVES
Interpret the MPS process as part of the PPC.
Identify the MPS Integration.
Explain the key benefits of the MPS Process.
INSTRUCTIONS
Sketch how MPS fits into the PPC front end.
identify MPS inputs and outputs
Add bullet points identifying benefits

21. MPS Strategies Lesson Topics: MPS within the PPC System Framework
MPS Inputs and Outputs
MPS Benefits
Production strategies captured in the MPS
Rolling Through Time
MPS Stability and Performance Measures
Bill of Materials (BOM)

22. Make/Assemble-to-Order (MTO) Engineer-to-Order (ETO)
MPS Strategies
Make-to-Stock
(MTS)
Make/Assemble-to-Order (MTO)
Engineer-to-Order (ETO)
Usually built in advance of customer orders being placed
Final assembly is completed on a per-order basis
Builds each customer order as needed
Does not allow for customization
Allows for partial customization
Allows for customization
Shorter lead times
Lead times between MTS & ETO
Longer lead times

23. Make/Assemble-to-Order (MTO)
MPS Strategies (cont.)
Make-to-Stock
(MTS)
Make/Assemble-to-Order (MTO)
Engineer-to-Order
(ETO)
Large inventories of finished goods
No inventories of finished goods
May be some Inventories of raw material in anticipation of future demand
Higher inventory carrying costs
Lower inventory carrying costs
Long lead times
e.g., stock pampers
e.g., order dell computers
e.g., engineer unique/special equipment

24. Question and Answer
Which production strategy is most appropriate for the aircraft simulators?
Make-to-Stock
Make/Assemble-to-Order
Engineer-to-Order

25. Question and Answer
Which production strategy is most appropriate for cable adapters with common or interchangeable parts?
Make-to-Stock
Make/Assemble-to-Order
Engineer-to-Order

26. Question and Answer
Which production strategy is most appropriate for smart phones?
Make-to-Stock
Make/Assemble-to-Order
Engineer-to-Order

27. Case Study Activity Individual Activity
Refer to the Toyota: Demand Chain Management case study The Scion Experience section. (pages 14-18)
Identify which of the three MPS strategies are used to produce the Scion
Develop supporting justification of your selection
Be prepared to share your response

28. Rolling Through Time Lesson Topics:
MPS within the PPC System Framework
MPS Inputs and Outputs
MPS Benefits
Production strategies captured in the MPS
Rolling Through Time
MPS Stability and Performance Measures
Bill of Materials (BOM)

29. The MPS is a dynamic document
Rolling Through Time
MPS records are updated through time as products are completed and used to satisfy customer orders
Process called “Rolling through time”
Periodic review and potential update cycle
MPS may be changed to reflect emerging conditions in both supply and demand
The MPS is a dynamic document

30. Production Strategies – Level Forecast
Planning Horizon
Level Forecast
Wk 1
Wk 2
Wk 3
Wk 4
Wk 5
Wk 6
Wk 7
Sales Forecast 10
Available End of Week 20
MPS
On Hand

31. Seasonal Demand on Level Production Strategy
Planning Horizon
Seasonal demand with a level strategy
Wk 1
Wk 2
Wk 3
Wk 4
Wk 5
Wk 6
Wk 7
Sales Forecast 5 15
Available End of Week 25 30 35 40 45 50
MPS 10
On Hand 20
Seasonal demand using a level strategy results in inventory buildup/depletion cycles

32. Seasonal Demand on Chase Production Strategy
Planning Horizon
Seasonal demand with a chase strategy
Wk 1
Wk 2
Wk 3
Wk 4
Wk 5
Wk 6
Wk 7
Sales Forecast 5 15
Available End of Week 20
MPS
On Hand
Seasonal demand using a chase strategy eliminates the inventory buildup/depletion cycles

33. Lot-Sizing Planning Horizon Lot Sizing in the MPS Wk 1 Wk 2 Wk 3 Wk 4
Sales Forecast 5 15
Available End of Week 10 30 25 20
MPS
On Hand
MPS strategies frequently use “lot sizing” strategies to reduce the frequency of orders (at the expense of inventory buildup).

34. Lot-Sizing (cont.) Planning Horizon Lot-sizing with Forecast Change
Wk 1
Wk 2
Wk 3
Wk 4
Wk 5
Wk 6
Wk 7
Sales Forecast 10 15
Available End of Week
(-10)
(-25)
MPS 30
On Hand
Week 1 sales are 10 units – the Marketing group changes the weekly forecast for week 2 onward; forecast can not be met without changing the MPS

35. Lot-Sizing (cont.) Planning Horizon Lot-sizing with MPS Change Wk 2
Sales Forecast 10 15
Available End of Week 30 20 5
MPS
On Hand
The MPS lot-sizing rule changes the MPS from week 2 onward to reflect the new circumstances

36. Example: Lot Sizing Planning Horizon Exercise Week 1 Week 2 Week 3
Sales Forecast 5 10 20
Available End of Week
MPS
On Hand
Exercise Key 15
(-5)
Based on these rules, what corrections would you recommend in the MPS below?

37. MPS Stability and Performance Measures
Lesson Topics:
MPS within the PPC System Framework
MPS Inputs and Outputs
MPS Benefits
Production strategies captured in the MPS
Rolling Through Time
MPS Stability and Performance Measures
Bill of Materials (BOM)

38. MPS Stability and Performance Measures
A stable MPS translates into stable component schedules, which means improved performance in plant operations
Too Many Changes
Too Few Changes
Results in lower productivity
Results in lower customer service levels
Nervous MPS due to canceling existing setups, introducing new setups, and altering the production volumes
Unresponsive production systems

39. MPS Measures
Measure MPS performance in terms that reflect the firm’s internal fundamental goals—delivery times, costs, etc.
Measure customer service fill rates
Keep records of backorder supply time to set as benchmarks, then work to improve them
Compare actual production vs. planned production

40. Bill of Materials (BOM)
Lesson Topics:
MPS within the PPC System Framework
MPS Inputs and Outputs
MPS Benefits
Production strategies captured in the MPS
Rolling Through Time
MPS Stability and Performance Measures
Bill of Materials (BOM)

41. Bill of Materials (BOM)
Bill of Materials (BOM) – an engineering document that specifies the ingredients (or subordinate components) required to make each part number or assembly.

42. Bill of Materials (cont.)
Single-level BOM
Indented BOM
Specifies only those subordinate components that are immediately required (not the components of the components)
List of components from the end-item down to the raw materials (it does show components of the components)

43. Purpose of the BOM The BOM is used for various purposes:
To manufacture assemblies and sub-assemblies
To configure sales orders that deal with customers ordering replacement/service parts when they do not know the part number or possibly the name of the component needed
To calculate standard cost
To forecast (planning)
To document engineering builds

44. Question and Answer What may occur if the MPS is changed too often?
Reduced customer service levels
Reduced productivity
Unresponsive production systems

45. Question and Answer
What may result if the MPS is not changed often enough?
Altered production volumes
Reduced customer service levels
Reduced productivity

46. Question and Answer What does a BOM specify?
Components needed to make a given assembly
Quantities of components needed to fulfill an order
Sourcing information for a given component

47. Summary Having completed this lesson, you should now be able to:
Distinguish the MPS process as part of PPC
Describe MPS Integration
Explain key benefits of MPS process
Analyze pros/cons/differences of production strategies captured in an MPS
Given a scenario, demonstrate MPS using the Rolling Through Time process
Explain a stable MPS and Performance Measures
Explain the purpose of a BOM

48. Summary (cont.) Your understanding allows you to:
Determine when your contract production is anticipated,
See when changes occur over time,
Review BOMs,
Understand more fully what your contractor must accomplish.