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Master Production Scheduling (MPS) – Basic Techniques

• MPS: Role in the MPC System• MPS Defined• MPS Approaches• Single Level MPS Time-Phased Record• Customer Order Processing• Rolling through Time (Transactions)

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Manufacturing Planning and Control System

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MPS Defined• Anticipated Build Schedule – a statement of production not

market demand

• The MPS is:

– Stated in terms of product specifications

– Concerned with product mix while Sales and Operations Planning is concerned with volume

• The MPS is the basis for:

– Making customer delivery promises– Utilizing plant capacity effectively– Attaining the strategic objectives in the sales and operations

plan– Resolving trade-offs between manufacturing and marketing

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MPS Approaches

• Make – to – Stock

• Make – to – Order

• Assemble – to – Order

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Single Level MPS Record Example• The Zero Manufacturing Company ships Product A from the firm's plant

warehouse to satisfy East Coast demand. Currently, the sales forecast for Product A at the Murphysboro plant is 30 units per period.

• Product A is considered a make-to-stock item.– Plant warehouse on hand inventory = 50 units– Safety Stock = 10 units– Lot Size = L4L– Open Order for 30 units due in period 1

• The master production scheduler has heard that an MRP record which uses the forecast for gross requirements and has a lead time of zero can be used for master production scheduling. Complete the following MRP record. How can this be used for master production scheduling?

1 2 3 4 5 6

Projected available balancePlanned order releaseQ = lot for lot; LT = 0; SS = 10

PeriodProduct AGross requirementsScheduled receipts

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Single Level MPS Record Processing

1 2 3 4 5 630 30 30 30 30 3030

Projected available balance 50 50 20 10 10 10 1020 30 30 30Planned order release

Q = lot for lot; LT = 0; SS = 10

PeriodProduct AGross requirementsScheduled receipts

One way viewing an MPS is as the set of planned order releases and scheduled receipts in a record such as above. The problem is that any errors in forecast will be reflected in the on-hand balance. All changes will come in the planned orders. Use of firm planned orders will reduce this instability.

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Customer Order Promising Example

The MPS planner at Murphy Motors uses MPS time-phased records for planning end item production. The planner is currently working on a schedule for the P24. The production lot size is 70 and the safety stock is 5.

1 2 3 4 5 6 7 830 30 30 40 40 40 45 4513 8 4

Available

MPS (completion)

Period

Available to promise

On hand = 20, MPS Lot Size = 70

Item: P24ForecastOrders

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Customer Order Promising Example

a. Complete the MPS time-phased record for P24.

b. Can Murphy accept the following orders? Update the MPS time-phased record for accepted orders.

Order Amount Desired Period1 40 42 30 63 30 24 25 3

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Customer Order Processing Procedure

Item: P24 1 2 3 4 5 6 7 8Forecast 30 30 30 40 40 40 45 45Orders 13 8 4Available 60 30 70 30 60 20 45 70Available to promise 69 66 70 70 70MPS (Completion) 70 70 70 70 70On hand = 20, MPS lot size = 70

Perioda.

b. Order Amount Desired Period1 40 42 30 63 30 24 25 3

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Customer Order Processing Procedure

b.

• The convention of the greater of forecast or orders is used in determining the projected available balance.

Item: P24 1 2 3 4 5 6 7 8Forecast 30 30 30 40 40 40 45 45Orders 13 38 29 40 30Available 60 22 62 22 52 12 37 62Available to promise 39 1 40 70 70MPS (Completion) 70 70 70 70 70On hand = 20, MPS lot size = 70

Period

Order Amount Desired Period Accept (Y or N) 1 40 4 Y2 30 6 Y3 30 2 Y4 25 3 Y

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Rolling Through Time – Transactions Example

The following MPS time phased record has been prepared at the start of period 1.

Item: Smell fresh 1 2 3 4 5 6 7 8Forecast 20 20 20 30 30 30 30 30Orders 5 3 2 Available 50 30 10 30 50 20 40 10Available to promise 60 50 50 50MPS (Completion) 50 50 50 50

Period

On hand = 20, MPS lot size = 50

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Rolling Through Time – Transactions Example

The following events occurred during period 1:

• Actual demand during period 1 was 25 units.• Marketing forecasted that 40 units would be

needed for period 9.• An order for 10 in period 2 was accepted.• An order for 20 in period 4 was accepted.• An order for 6 in period 3 was accepted.• The MPS in period 1 was produced as

planned.

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Rolling through Time -Transactions/ Processing

b. Update the record below after rolling through time.

Beginning On Hand Period 1 = 20

Period 1 Actual Demand = -25

MPS Receipt Into Stock =+50

Beginning on Hand Period 2 = 45

Smell freshPeriod 2 3 4 5 6 7 8 9Forecast 20 20 30 30 30 30 30 40Orders 13 8 20 Available 25 5 25 45 15 35 5 15Available to promise 24 30 50 50 50MPS (Completion) 50 50 50 50On Hand = 45, MPS lot size = 50

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Session 8Master Production Scheduling (MPS) –

Managing the MPS

• Example Company MPS Records• Handling MPS Lead Time• Incorporating Capacity Constraints• MPS Stability• Managing the MPS• Master Production Scheduler’s Job • Concluding Principles

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Jet Spray Corporation Master Planning Schedule

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Handling MPS Lead Time

The Spencer Optics Company produces an inexpensive line of sunglasses. The manufacturing process consists of assembling two plastic lenses (produced by the firm's plastic molding department) into a finished frame (purchased from an outside supplier).

The firm's sales manager has prepared a 10-period sales forecast for one of the more popular sunglasses (the Classic model). The forecast is 100 orders per period. Spencer has customer orders of 110 units, 80 units. 50 units, and 20 units in periods l , 2, 3, and 4, respectively. The sunglasses are assembled in batches of 300. Presently, three such batches are scheduled: one in period 2, one in period 5, and one in period 8.

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Spencer Optics (Continued)

a. Complete the time-phased record.

Period 1 2 3 4 5 6 7 8 9 10Forecast 100 100 100 100 100 100 100 100 100 100Orders 110 80 50 20Available 30 230 130 30 230 130 30 230 130 30Available to Promise 30 150 300 300MPS (Completion) 300 300 300On-hand = 140, MPS lot size = 300

a. Classic Model

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Spencer Optics (Continued)

b. Prepare the MRP record for the assembly of the sunglasses. The final assembly quantity is 300, lead time is 2 periods, and there’s a scheduled receipt in period 2. Note that no inventory is shown for the assembled sunglasses in this record, since it’s accounted for in the MPS record.

1 2 3 4 5 6 7 8 9 10300 300 300300

Projected available balance 0 0 0 0 0 0 0 0 0 0 0300 300

b. Final Assembly - Classic Model

Q = 300; LT = 2; SS = 0

Period

Scheduled receipts

Planned order release

Gross requirements

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Incorporating Capacity Constraints

End Product Beginning Inventory Period Forecast Lot size Hours per lot size

A 60 10 30 30B 20 5 20 20C 30 15 50 50

a. Prepare the master production schedule for these items during the next four periods using the Ethan Allen master production scheduling method.

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Incorporating Capacity Constraintsa. Capacity=

Hours Period 1 Period 2 Period 3 Period 44035302520151050

C

B

AC

C

C

B

Produce Period 1 Period 2 Period 3 Period 4A 60/10 = 6 50 / 10 = 5 30 / 10 = 3B 20/5 = 4 15 / 5 = 3* 25 / 5 = 5*C 30 / 15 = 2* 55 / 15 = 3.7 85 / 15 = 5.67

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Incorporating Capacity Constraints (Continued)

b. Should the plant increase or decrease the capacity of the final assembly line?

The plant should decrease capacity by 10 hours/period because the total units forecast each period totals 30 units (10 + 5 + 15) and the time to produce each unit is 1 hour. Therefore, 30 hours of capacity are required each period versus 40 units of available capacity.

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Incorporating Capacity Constraints (Continued)

c. Suppose that the master production schedule is frozen for the next three periods. What specific impact would the policy have on the firm's performance?

Freezing the MPS for the next three periods would not allow the plant to adjust to any radical changes in demand but it would stabilize plant operations.

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MPS Stability

• Freezing the MPS

• Time Fencing– Demand Fence– Planning Fence

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Ethan Allen FirmPlanned Order Approach

Period

Production

Hours

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Managing the MPS

• Overstated MPS• MPS Performance Measures• Monitoring the MPS

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MPS Performance Measures

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Mitel’s Master Production Scheduler Job Description

A. Identifying InformationJob Title: Master SchedulerDepartment/Unit: Planning & AdministrationJob Location: Kanata, Ontario

B. Job Purpose and MandateThe incumbent of this position is responsible for the day to day management of the Master Production Schedule, as it relates to actioning unplanned forecast demand, forecast shortfalls, production and inventory changes, allowing accurate and up-to-date information which in turn drives material and capacity requirements and customer order dating. An advanced level of material planning and manufacturing process knowledge is required.

C. Organization StructureThe Master Production Scheduler reports to the Manager, Planning who reports to the Director, Planning and Administration.

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Mitel’s Master Production Scheduler Job Description

D. Job Description1. Specific Activities and Accountabilities:

- Responsible for the creation and continuous update of the master schedule that satisfies customer demand, maintains stability in terms of material and capacity requirements and minimizes RAW. WIP, and Finished Goods inventory levels by:• Managing day to day increases/decreases to the schedule

through interface with Materials, Manufacturing and Order Administration.

• Working with Materials to ensure smooth E.C.O. transition into factory

• Continuously monitor the impact of ''Performance to Forecast'' on inventory levels for the current month, and implement any necessary changes to the schedule; i.e. cut rollover, Increase availability through Fast-Man MRP tool.

- Act as a focal point between N.A. Order Administration, Manufacturing and Distribution to ensure configured system orders are:• Scheduled to meet customer cut-over requirements• Scheduled to meet manufacturing cell capacity.• Quoted and reviewed with manufacturing, initiating build and

test.• Free of any discrepancies, with Order Administration notified

to correct any problems.

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Mitel’s Master Production Scheduler Job Description

- Continuously monitor problem inventory, taking advantage of any conversion opportunities, making recommendations for scrapping, or potential ''Fire Sale's".

- Assess the impact to capacity, inventory levels, purchase order activity and problem inventory levels that result from any proposed major change to the master schedule, utilizing the Fast-Man MRP tool.

2. Supervisory Responsibilities: Direct ( ) Indirect ( )

3. Key relationships (internal and external)• Internal and external auditors• Marketing• Order Administration• Distribution• A1l levels of management within Mitel• Traffic• Manufacturing• Materials Planning• Product Management

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Mitel’s Master Production Scheduler Job Description

E. Job requirements• superior product knowledge• 3-4 years progressive experience in materials or production control• knowledge of internal Mitel processes and procedures• APIC's Certification a definite asset• knowledge gained through APIC's Certification• organizational and planning skills• secondary education• high degree of initiative and personal motivation• personal computer skills• broad based knowledge of supply/demand process

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MPS – Concluding Principles

• The MPS unit should reflect the company's approach to the business environment in which it operates.

• The MPS is one part of an MPC system-the other parts need to be in place as well for a fully effective MPS activity.

• Time-phased MPS records should incorporate useful features of standard MRP record processing.

• Customer order promising activities must be closely coupled to the MPS.

• Available-to-promise information should be provided to both the master scheduler and the sales department.

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MPS – Concluding Principles• A final assembly schedule (FAS) should be used to

convert an anticipated build schedule (MPS) into an actual build schedule.

• The master production scheduler must keep the sum of the parts (MPS) equal to the whole (production plan).

• The MPS activity must be clearly defined organizationally.

• Stability must be designed into the MPS and managed.

• The MPS should be evaluated with a formal performance measurement system.

• The MPS can be usefully considered as a set of firm planned orders.