Master Scheduling and Rough-Cut Capacity Planning ISQA 459/559 Mellie Pullman.

Master Scheduling and Rough-Cut Capacity Planning

ISQA 459/559

Mellie Pullman

Learning Objectives

• Explain the role & objectives of a master production schedule

• Explain the organizational links to master production scheduling

• Develop a master production schedule• Explain rough-cut capacity planning• Calculate available-to-promise quantities • Describe time fence policies

Role of the MPS

• Aggregate plan:– Specifies the resources available (e.g.: regular

workforce, overtime, subcontracting, allowable inventory levels & shortages)

• Master production schedule:– Specifies the number & when to produce each end

item (the anticipated build schedule)– Disaggregates the aggregate plan

Business Planning Hierarchy

Planning Links to MPS

Objectives of MPS

• Maintain the desired customer service level

• Utilize resources efficiently

• Maintain desired inventory levels

Developing an MPS:

• Assume:– Make-to-stock environment– Production is in fixed quantities of 125

(MPS)– 110 units in beginning inventory (BI)

forecast - MPS BI available Projected

Sample Problem

• We start with 110 units in Beginning Inventory• Projected Available: How many units are available at the end of each time

period? • MPS: Replenishment Shipments that need to arrive at the beginning of the

time period

Projected Available =BI + MPS - Forecast

Period 1 2 3 4 5 6 7 8 9 10 11 12

Forecast 50 50 50 50 75 75 75 75 50 50 50 50

Projected

Available 110

MPS

Step 1

• Find first negative “projected available”Week BI 1 2 3 4 5 6 7 8 9 10 11 12

Forecast 50 50 50 50 75 75 75 75 50 50 50 50

Projected available 110 60 10 -40

MPS

We start with 110 units in Beginning InventoryProjected Available: How many units are available at the end

of each time period? (safety stock criteria could be in place > 5)

MPS: Replenishment Shipments that need to arrive at the beginning of the time period

Schedule Production

Week BI 1 2 3 4 5 6 7 8 9 10 11 12

Forecast 50 50 50 50 75 75 75 75 50 50 50 50

Projected available 110 60 10 85 35 -40

MPS 125

Repeat

Week BI 1 2 3 4 5 6 7 8 9 10 11 12

Forecast 50 50 50 50 75 75 75 75 50 50 50 50

Projected available 110 60 10 85 35 85 10 -65

MPS 125 125

Continue, Until Complete

Week BI 1 2 3 4 5 6 7 8 9 10 11 12

Forecast 50 50 50 50 75 75 75 75 50 50 50 50

Projected available 110 60 10 85 35 85 10 60 110 60 10 85 35

MPS 125 125 125 125 125

Evaluating the MPS

• Customer service issues:– Does “available-to-promise” inventory

satisfy customer orders?– What new orders can we take from

customers and when?

Available to Promise

• When a customer places an order, they do not expect immediate delivery (negotiable).

• The product will delivered by some later date.

• ATP = how many uncommitted units the company has available at a given time

New Calculation for Projected Available

Projected Available =

BI + MPS – Max (Customer Orders ; Forecast)

Period 1 2 3 4 5 6 7 8 9 10 11 12

Forecast 50 50 50 50 75 75 75 75 50 50 50 50

Customer Orders 35 25 25 20 0 15 0 0 10 0 0 10

Projected

Available 110


MPS

Available-to-Promise“Action Bucket”

• “Action Bucket” = the current period• Only calculate ATP during in Action Bucket and when

MPS occurs

ATP action bucket = BI +MPS-customer orders before next replenishment110 + 0 – (35+25) = 50

Period 1 2 3 4 5 6 7 8 9 10 11 12

Forecast 50 50 50 50 75 75 75 75 50 50 50 50

Customer Orders 35 25 25 20 0 15 0 0 10 0 0 10

Projected

Available 110

60 10 85 35 85 10 60 110 60 10 85 35

Available to Promise 50

MPS 125 125 125 125 125

Available-to-Promise“Replenishment periods”

• ATP for replenishment periodsATP = MPS - customer orders between current MPS

and next scheduled replenishment

ATP period 3 = 125 – (25 + 20)= 80

ATP period 5 = 125 – (0 + 15)= 110

Period 1 2 3 4 5 6 7 8 9 10 11 12

Forecast 50 50 50 50 75 75 75 75 50 50 50 50

Customer Orders 35 25 25 20 0 15 0 0 10 0 0 10

Projected

Available 110

60 10 85 35 85 10 60 110 60 10 85 35

Available to Promise 50 80 110 125 115 115

MPS 125 125 125 125 125

New Order

• Suppose we get an order for 200, can we accept this for delivery in period 5?

Worksheet for New Order for 200

Fit in the order for 200 (can’t change MPS)

Period 1 2 3 4 5 6 7 8 9 10 11 12

Forecast 50 50 50 50 75 75 75 75 50 50 50 50

Customer Orders 35 25 25 20 200 15 0 0 10 0 0 10

Projected

Available 110

60 10 85 35

Available to Promise 50 80

MPS 125 125 125 125 125

New Order for 200

• Negative number in Projected Available = might be a problem in the future

• Negative number in Available to Promise= always a problem

Solution?

Period 1 2 3 4 5 6 7 8 9 10 11 12

Forecast 50 50 50 50 75 75 75 75 50 50 50 50

Customer Orders 35 25 25 20 200 15 0 0 10 0 0 10

Projected

Available 110

60 10 85 35 -40 -115 -65 -15 -65 -115 -40 -90

Available to Promise 50 80 -90 125 115 115

MPS 125 125 125 125 125

Split up New Order for 200

Check to see if this is OK

Period 1 2 3 4 5 6 7 8 9 10 11 12

Forecast 50 50 50 50 75 75 75 75 50 50 50 50

Customer Orders 45 25 105 20 110 15 0 0 10 0 0 10

Projected

Available 110


MPS 125 125 125 125 125

Can you now take 2 more orders?

Period 1 2 3 4 5 6 7 8 9 10 11 12

Forecast 50 50 50 50 75 75 75 75 50 50 50 50

Customer Orders 45 25 105 20 110 15 0 50 10 0 0 40

Projected

Available 110

60 10 30 -20 -5 -80 -30

Available to Promise 40 0 0

MPS 125 125 125 125 125

• 50 units to be delivered in Period 8• 30 units to be delivered in Period 12

Time Fences

• Frozen: no changes are possible with a certain period of time (i.e. 8 weeks)

• Time Fence (length of period schedule is frozen, liquid, etc.)

• Demand Fence: MPS numbers do not change and focus is on orders not forecast

• Planning Fence: Master Production Scheduler is planning more MPS.

Rough-cut capacity planning

• An estimate of the plans’ feasibility

• Given the demonstrated capacity of critical resources (e.g.: direct labor & machine time), have we overloaded the system?

Rough-Cut Capacity Planning

• Determine required resources & proposed workload:

Planning Factors Model W Model M

Direct labor 0.40 0.30

Machine time 0.12 0.08

MPS QRT 1 QRT 2 QRT 3 QRT 4 Total

Model W 6,000 5,500 9,500 6,500 27,500

Model M 10,000 12,000 7,500 10,100 39,600

Hours/unit

Calculate RequiredLabor Hours

• Compare with hours available

Model Labor Factor QRT 1 QRT 2 QRT 3 QRT 4 Total

MPS Quantity 6,000 5,500 9,500 6,500 27,500

Hours Required 1,800 1,650 2,850 1,950 8,250

MPS Quantity 10,000 12,000 7,500 10,100 39,600

Hours Required 4,000 4,800 3,000 4,040 15,840

24,090Labor Capacity Required

Model M

0.30

0.40

Model W

Calculate RequiredMachine Hours

Model Machine Factor QRT 1 QRT 2 QRT 3 QRT 4 Total

MPS Quantity 6,000 5,500 9,500 6,500 27,500

Hours Required 480 440 760 520 2,200

MPS Quantity 10,000 12,000 7,500 10,100 39,600

Hours Required 1,200 1,440 900 1,212 4,752

6,952Machine Capacity Required

Model M 0.12

Model W 0.08

• Compare with hours available

Master Scheduling and Rough-Cut Capacity Planning ISQA 459/559 Mellie Pullman.

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