9/1/2015 Introduction Material Management

http://www.mdcegypt.com/Pages/Purchasing/Material%20Management/MPS.asp 1/8

Management & Development Center Tuesday, September 01, 2015 10:51:57 PM About Us | Our Services | Training | Consulting |

M&DC Purchasing & Supply Chain: Material Management

Master Scheduling

Contents

1. Introduction2. Definition3. Objectives4. Purposes of MPS5. Inputs for MPS6.

1. Introduction

Master production schedule MPS is the next step in MPC the manufacturing planning and controlprocess

MPS is a means of Communication, a Link or Contract between Marketing and Manufacturing.

The MPS report includes an ATP Available to Promise figure to enable realistic, achievabledelivery promises to be made to customers.

It is a plan of what is to be produced and when

It is an agreed upon plan between marketing and manufacturing.

The MPS is a Priority Plan for Manufacturing.

It is not meant to be rigid. It is the basis to make changes that are consistent with thedemands of the marketplace and the capacity of manufacturing.

It breaks down the PP into the Requirements for Individual End Items, in each family, by dateand quantity.

The sum of all Family MPS items must equal the agreed SOP Sales and Operations Plan for thatFamily over each planning period (normally a month or 4 week period).

MPS application usually depends on production environment (MTS, ATO, and MTO)

The MPS drives the Material Requirements Plan MRPItems planned at the MPS level are exploded by MRP to produce the detail material and capacityrequirements.

As a schedule of items to be built, the MPS and BOM Bills Of Material determine whatcomponents are needed from manufacturing and purchasing.

2. Definition

“The MPS is a line on the master schedule grid (MPS Matrix) that reflects the anticipatedbuild schedule for those items assigned to the master scheduler.The master scheduler maintains this schedule, and in turn, it becomes a set of planningnumbers that drives MRP Material Requirements Planning.It represents what the company plans to produce expressed in specific configurations,quantities, and dates.The MPS is not a sales item forecast that represents a statement of demand.The MPS must take into account the forecast, the production plan, and other importantconsiderations such as backlog, availability of material, availability of capacity, andmanagement policies and goals.” (APICS)

3. Objectives

MPS Objective is to Balance the Demand (Priorities) set by the marketplace with the availabilityof materials, labor, and equipment (Capacity) of manufacturing.

The Objective in developing an MPS are:

to Maintain the desired level of Customer Service by

عربى

Introduction to Material Management

Master Scheduling

Material Requirements Planning

Capacity Management

Production Activity Control

Purchasing

Forecasting

Inventory Fundamentals

Order Quantities

Independent Demand Ordering Systems

Physical Inventory and Warehouse Management

Physical Distribution

9/1/2015 Introduction Material Management

http://www.mdcegypt.com/Pages/Purchasing/Material%20Management/MPS.asp 2/8

maintaining finished­goods Inventory Levels or

by Scheduling to meet customer delivery requirements,

to make the best use of material, labor, and equipment, and

to maintain inventory investment at the required levels.

Constraints the plan must be within the capacity of manufacturing, and be within the guidelines ofthe production plan.

4. Purposes of MPS

Development of Master Production Schedule (MPS)

Projects Inventory / Backlog levels

Drives Detailed Scheduling & planning

Order Promising

Assists in assigning job Priorities on Facility floor

5. Inputs for MPS

The Information Needed to develop an MPS is provided by:

The Production Plan PP,

Forecasts for individual end items,

Actual Orders received from customers and for stock replenishment,

Inventory Levels for individual end items, and

Capacity Restraints

More Detailed

Inventory Level and Targets (for MTS)

Backlog Levels and Targets (for ATO)

Time Fence policies

Interplant and intra­plant orders

Service parts orders and forecasts

Distribution Requirements

Planning Bills Of Materials BOM

Actual production and supply levels

6. Outputs

Master Production Schedule MPS

Project Inventory levels PAB (for MTS)

Projected Backlog levels (for ATO)

Future availability of products ATP

Information for promising future customer orders

7. Constraints

Sum of MPS Master Production Schedule quantities equals PP Production Plan.

Efficient allocation, recognizing

Setup Costs and

Inventory Holding Costs.

Capacity Limitations

8. Relationship to Production Plan PP (Aggregate Planning)

MPS is the Bridge between the strategic plan expressed as the PP Production Plan (aggregateplanning process) and the execution of that plan through detailed material and capacity plans.

MPS takes Input from PP Production Plan.

MPS “Disaggregates” the PP Production Plan

9/1/2015 Introduction Material Management

http://www.mdcegypt.com/Pages/Purchasing/Material%20Management/MPS.asp 3/8

MPS is stated in items (end item, end item groups, options) in order to figure out the Materials andCapacity needs.

Aggregate Plan Master Scheduling

Objective Supply Rate by Product Family Anticipate Build Schedule

Item Planned Product Family End item or Planning of BOM

Planning Horizon Longest lead time Resource Longest cumulative lead time for End Items

Constraints Resource capacity Critical work centers

Time Periods Monthly Weekly or monthly

Planning Focus Product volume Product Mix

Process output Production Plan PP Master Production Schedule MPS

Example Problem

1. Production Plan: Family of two products

Week 1 2 3 4 Total Forecast 300 350 300 250 1200ProjectedAvailable 500 450 350 300 300 Production Plan 250 250 250 250 1000

Given Data

Total Production Plan = Total Forecast + Ending Inventory ­ Beginning Inventory

Total Production Plan = 1200 + 300 ­ 500 = 1000 Unit

Production Plan per Week = 1000 / 4 = 250 Unit

Projected Available = Production Plan + Previous Projected Available ­ Forecast

Projected Available 1 = 250 + 500 ­ 300 = 450 Unit

Projected Available 2 = 250 + 450 ­ 350 = 350 Unit

Projected Available 3 = 250 + 350 ­ 300 = 300 Unit

Projected Available 4 = 250 + 300 ­ 250 = 300 Unit

2. Master Schedule: Product A

Week 1 2 3 4 Total Forecast 200 300 100 100 700ProjectedAvailable 200 250 200 100 100 Production Plan 250 250 100 600

Given Data

Total Production Plan = Total Forecast + Ending Inventory ­ Beginning Inventory

Total Production Plan = 700 + 100 ­ 200 = 600 Unit

Projected Available = Production Plan + Previous Projected Available ­ Forecast

Projected Available 1 = 250 + 200 ­ 200 = 250 Unit

Projected Available 2 = 250 + 250 ­ 300 = 200 Unit

Projected Available 3 = 0 + 200 ­ 100 = 100 Unit

Projected Available 4 = 100 + 100 ­ 100 = 100 Unit

2. Master Schedule: Product B

Week 1 2 3 4 Total Forecast 100 50 200 150 500ProjectedAvailable 300 200 150 200 200 Production Plan 250 150 400

Given Data

Total Production Plan = Total Forecast + Ending Inventory ­ Beginning Inventory

Total Production Plan = 500 + 200 ­ 300 = 400 Unit

Projected Available = Production Plan + Previous Projected Available ­ Forecast

Projected Available 1 = 0 + 300 ­ 100 = 200 Unit

Projected Available 2 = 0 + 200 ­ 50 = 150 Unit

Projected Available 3 = 250 + 150 ­ 200 = 200 Unit

Projected Available 1 = 150 + 200 ­ 150 = 200 Unit

9/1/2015 Introduction Material Management

http://www.mdcegypt.com/Pages/Purchasing/Material%20Management/MPS.asp 4/8

9. Developing a Master Production Schedule

a. Develop a Preliminary MPS.

b. Check the preliminary MPS against Critical available capacity in the PotentiallyConstraining Work Center (Rough Cut Capacity Planning ) RCCP

c. Resolve differences between the preliminary MPS and capacity availability.

a. Preliminary Master Production Schedule

On hand = 80 unitsLot size = 100 units

Period 1 2 3 4 5 6Forecast 60 60 60 60 60 60Projected Available 80 20 60 0 40 80 20MPS 100 100 100

If Previous Projected Available ≥ Forecast Then MPS = 0If Previous Projected Available < Forecast Then MPS = 100 Projected Available = Previous Projected Available + MPS ­ Forecast Projected Available 1 = 80 + 0 ­ 60 = 20Projected Available 2 = 20 + 100 ­ 60 = 60Projected Available 3 = 60 + 0 ­ 60 = 0Projected Available 4 = 0 + 100 ­ 60 = 40Projected Available 5 = 40 + 100 ­ 60 = 80Projected Available 6 = 80 + 0 ­ 60 = 20

b. Rough­Cut Capacity Planning RCCP

Checks whether critical resources are available to support the preliminary MPS

Critical resources may include:

Bottleneck operations

Labor

Critical materials

It is similar to resource requirements planning used in the production planning process, except wenow work with a product and not a family or products.

The resource bill is for a single product

Example ProblemMaster Production Schedule

Week 1 2 3 4 TotalProduct A 40 25 40 15 120Product B 20 10 30 20 80

Resources Bill for Bottleneck Work Center WC20

Hours per Unitwork Center A BWC 20 0.5 1.2

Answer: Required Capacity in working hours on WC20

Week 1 2 3 4 TotalA 20 12.5 20 7.5 60B 24 12 36 24 96Total Hours 44 24.5 56 31.5 156

c. Resolution of Differences

Compare the total time required to the available capacity of the work center.

If available capacity is greater than the required capacity, the MPS is workable.

If not, methods of increasing capacity have to be investigated

overtime,

additional workers,

routing through alternate work centers, or

subcontracting

If not, revise the MPS and decrease demand

9/1/2015 Introduction Material Management

http://www.mdcegypt.com/Pages/Purchasing/Material%20Management/MPS.asp 5/8

10. Evaluating the MPS

Resource Use:

Is the MPS within capacity restraints in each period?

Customer Service:

Will due dates be met?

Will delivery performance be acceptable?

Cost

Is the plan economical?

Will excess costs be incurred?OT, subcontracting, expediting, transportation, etc.

11. Master Schedule Decisions

a. MPS Decision Level

If too many items are included, it will lead to difficulties in forecasting and managing the MPS.

In each of the Manufacturing Environments ­­­ Make To Stock MTS, Make To Order MTO, andAssemble To Order ATO ­­­ Master scheduling should take place where the smallest number ofproduct options exists

b. Different MPS environments

MTS Make­To­Stock products "A" Structure

A limited number of standard items are assembled from manycomponents.

Televisions and other consumer products are examples.

The MPS is usually a schedule of finished­goods items.

Focus on Forecasting, Service Level, fill rate (unit, line,or order fill rate) and Resource Utilization.

Use Manufacturing Based MPS­Matrix (finished products level)

Item no: Lead Time: 2 periods Demand Time Fence DTF: 3

Description: Safety Stock Planning Time Fence PTF: 8

On Hand 20 Lot Sizing: 50

PTF

DTF

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

Forecast 20 21 20 22 24 26 28 28 25 25 20

Customer Orders 19 20 21 21 25 24 20 18 16 12 10

Projected Available Balance PAB 20 1 31 10 38 13 37 9 31 6 31 11

Available To Promise 1 9 4 6 16 28

Cumulative Available to Promise 1 10 14 20 36 64Master Production Schedule 50 50 50 50 50

MTS Make­To­Order products/ ETO Engineer­To­Order "V" Structure

Many different end items are made from a small number ofcomponents.

Custom­tailored clothes are an example.

The MPS is usually a schedule of the actual customerorders.

Focus on Delivery Time and Product Option

Use Gross Requirements MPS­Matrix is Based on RawMaterial (Single Level MPS Record Processing)

PeriodProduct A 1 2 3 4 5 6Gross requirements 30 30 30 30 30 30Scheduled receipts 30

9/1/2015 Introduction Material Management

http://www.mdcegypt.com/Pages/Purchasing/Material%20Management/MPS.asp 6/8

Projected available balance 50 50 20 10 10 10 10Planned order release 20 30 30 30Q = lot for lot; LT = 0; SS = 10

ATO Assemble­To­Order products. "X" Structure

Many end items can be made from combinations ofbasic components and subassemblies.

We have very small amount of modules enable a largeamount of end products.

Instead of end products, fewer modules (options) areforecasted and controlled.

Through this, better forecast accuracy is achieved.

Focus on Delivery Time and Product Option,Forecasting, Service Level, fill rate (unit, line, ororder fill rate) and Resource Utilization

Use Tow Level MPS­Matrix

Example company manufactures paint from a base color and adds tints to arrive to many finalcolors.

Production is planned at the level of the base color and the ten tints.

Once a customer's order is received, the base color and the required tints can be combined(assembled) according to the order.

Family

Week 1 2 3 4 5 6 7 8

S&OP 40 40 40 40

Customer Orders 20 16 12 10 8 4

ATP 4 18 28 40

Item no: Lead Time: Demand Time FenceDTF: 2

Description: Buffer: Planning Time Fence DTF: 6

Lot Sizing: LFL

PTF Week 1 2 3 4 5 6 7 8Item Forecast Product Forecast = 60% S&OP Actual Demand = 60% Car CO Total Demand Projected Available BalancePAB 0 Available To Promise Cumulative Available to Promise Master Production Schedule

c. Final assembly schedule (FAS).

This is a schedule of what will be assembled.

It is used when there are many options and it is difficult to forecast which combination thecustomers will want.

Master production scheduling is done at the component level

The final assembly takes place only when a customer order is received.

The FAS schedules customer orders as they are received and is based on the components plannedin the MPS.

It is responsible for scheduling from the MPS through final assembly and shipment to the customer.

9/1/2015 Introduction Material Management

http://www.mdcegypt.com/Pages/Purchasing/Material%20Management/MPS.asp 7/8

The planning horizon is the time span which covers a period at least equal to the time required toaccomplish the plan (see figure 3.5). The planning horizon is usually longer because the longer the horizon,the greater the visibility and the better management’s ability to avoid future problems or to take advantageof special circumstances. As a minimum, the planning horizon for a final assembly schedule must includetime to assemble a customer’s order. It does not need to include the time necessary to manufacture thecomponents. That time will be included in the planning horizon of the MPS.

8. Planning Horizon

The amount of time the master schedule extends into the future. This is normally set to cover aminimum of cumulative lead time plus time for lot sizing low­level components and for capacitychanges of primary work centers or of key suppliers. AIPCS

Planning Horizon > Minimal Cumulative Lead Planning Horizon > Minimal CumulativeLead Time

Minimum = Manufacturing lead time (=Cumulative lead time)

Planning horizon is usually longer to allow visibility

Inside the cumulative lead time orders are considered as firm, i.e. changes can only bemade after thorough analysis

Production Planning, Master Scheduling, and Sales

The production plan reconciles total forecast demand with available resources.

The MPS is built from forecasts and actual demands for individual end items. Itreconciles demand with the production plan and with available resources to produce aplan that manufacturing can fulfill. The MPS is a plan for what production can and willdo.

In a make­to­stock environment, customer orders are satisfied from inventory.However, in make­to­order or assemble­to­order environments, demand is satisfiedfrom productive capacity. Sales and distribution need to know what is available tosatisfy customer demand. As orders are received, they “consume” the availableinventory or capacity. Any part of the plan that is not consumed by actual customerorders is available to promise to customers.

Available to promise (ATP) is that portion of a firm’s inventory and plannedproduction that is not already committed and is available to the customer (seeexamples on 57, 58 & 59). The ATP is calculated by adding scheduled receipts tothe beginning inventory and subtracting actual orders scheduled before the nextscheduled receipt.

A scheduled receipt is an order that has been issued either to manufacturing or to asupplier. If customer orders are greater than the scheduled receipts, then theprevious ATP is reduced by the amount needed.

9/1/2015 Introduction Material Management

http://www.mdcegypt.com/Pages/Purchasing/Material%20Management/MPS.asp 8/8

Projected available balance (PAB) is calculated based on the larger of actualcustomer orders and the forecast. The PAB is calculated in one of two ways,depending on whether the period is before or after the demand time fence. Forperiods before the demand time fence:

PAB = prior period PAB or on­hand balance + MPS – customer orders

For periods after the demand time fence, forecast will influence the PAB so it iscalculated using the greater of the forecast or customer orders.

PAB = prior period PAB + MPS – greater of customer orders or forecast

The demand time fence is the number of periods, beginning with period 1, in whichchanges are not excepted due to excessive cost caused by schedule disruption.

The planning horizon must be at least as long as the cumulative lead­time for theproduct structure. The cost of making a change increases and the company’sflexibility decreases as production gets closer to the delivery time. Far off changescan be made with minimal cost or disruption to manufacturing, but the nearer todelivery date, the more disruptive and costly changes will be.

Changes to the MPS will occur due to customer order cancellation or change,changing capacity, supplier problems, and excessive process scrap.

Changes to production schedules can result in cost increases due to rerouting,rescheduling, extra setups, expediting, and buildup of WIP inventory; decreasedcustomer service; and loss of credibility for the MPS and the planning process.Changes to the MPS must be managed and decisions made with full knowledge ofthe costs involved.

Frozen zone – capacity and materials are committed to specific orders, changesresult in excessive costs, and so senior management approval is required to makechanges. The extent of the frozen zone is defined by the demand time fence.

Slushy zone – capacity and materials are committed to less extent. Sales andmanufacturing negotiate changes. The extent of the slushy zone is defined by theplanning time fence.

Liquid zone – Any change can be made to the MPS as long as it is within the limitsset by the production plan.