40 Master Schedule

Advanced Production Management Chapter 4:

Master Schedule

Technical Management

25.04.2014

M.Eng. Maria J. Aragón S.

maria.aragon.sandoval@hs-emden-leer.de

2

Content

1. Introduction to the “Master Schedule”

2. Time Horizon & Time Fences

3. Master Production Schedule (MPS)

4. Available to Promise (ATP)

5. Approaches in different environments

6. Demand Management

3

Introduction

• Sales & Operations Planning is done on a product family

level on a strategic time horizon that allows for general

middle-term planning

Master Schedule

• A higher level of detail is needed

for the every-day operations:

+ For specific products

+ On a shorter time frame

4

Master Schedule Introduction

• The “Master Schedule” shows:

+ What should be produced

+ How much should be produced

+ When should it be ready

• Every company has one!

+ Even if it’s informal

+ Even if is not called “Master Schedule”

+ Even if it’s only inside somebody’s head

5

Master Schedule Introduction

The Master Schedule allows a company to:

• Break-down the aggregated plans made in S&OP, into

specific products

• Sever as a plan that uses actual customer orders in

addition to forecast data

• Develop much more specific capacity and resource plans

• Translate customer orders in to effectively time production

orders for the facility

• Plan inventory levels (specially at the finished good level)

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Master Schedule Horizon

• It MUST be at least as long as the “cumulative

lead time” of the product to be planned

“Cumulative Lead Time”

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Master Schedule Horizon

• Example: Bicycle

https://www.cbsi-corp.com/wp-content/uploads/2012/02/NA50_03_Bill_of_Materials2.pdf

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Bicycle Assembly

Wheel Manufacturing

Frame Manufacturing

Master Schedule Horizon - Bicycle Example

5d

6d

6d

Assemble Frame & Fork

Attach handlebars,

brakes, saddle

Assemble wheels,

pedals, chain Final finishing

Manufacturing tubes

Welding and gluing

Finishing & Painting

Spoke lacing

Tensioning and truing

Tire & valve assembly

Based on this information, can you determine the minimum time horizon needed for scheduling?

9

Frame Manufacturing

Bicycle Assembly

Master Schedule Horizon - Bicycle Example

6d

Assemble Frame & Fork

Attach handlebars,

brakes, saddle

Assemble wheels,

pedals, chain Final finishing

5d

Manufacturing tubes

Welding and gluing

Aligning and finishing the

frame

Wheel Manufacturing

6d

Spoke lacing Tensioning and truing

Tire & valve assembly

12d

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Master Schedule Horizon - Bicycle Example

Level 3

Level 2

(Sub assemblies)

Level 1

(Sub assemblies)

Level 0

(Finished Good)

Bicycle

( 1 pc.)

Wheel

(2 pcs.)

Rim

(2 pcs.)

Tire

(2 pcs.)

Tire Valve

(2 pcs.)

Spokes

(72 pcs.)

Frame

(1 pc.)

Color

(1 l)

Tubes

(4,5 m)

https://www.cbsi-corp.com/wp-content/uploads/2012/02/NA50_03_Bill_of_Materials2.pdf

Bicycle Bill of Material (BOM)

Purchased Parts also have a lead time that must be considered in the

Scheduling Horizon!

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Master Schedule Horizon - Bicycle Example

Level 3

Level 2

(Sub assemblies)

Level 1

(Sub assemblies)

Level 0

(Finished Good)

Bicycle

( 1 pc.)

Wheel

(2 pcs.)

Rim

(2 pcs.)

Tire

(2 pcs.)

Tire Valve

(2 pcs.)

Spokes

(72 pcs.)

Frame

(1 pc.)

Color

(1 l)

Tubes

(4,5 m)

https://www.cbsi-corp.com/wp-content/uploads/2012/02/NA50_03_Bill_of_Materials2.pdf

Bicycle Bill of Material (BOM) 6d

5d 6d

2d 3d 2d 2d 3d

2d

6+6+3+2 = 17d

6d

6d

3d

2d

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Example – Exploded View of a Pump

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Time Fences

• Since forecasts are almost always wrong, how to

use them for specific scheduling?

Time Fences

Demand Time Fence Planning Time Fence

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Time Fences

Time Fences Demand Time Fence

• Shorter

• Frozen

• Only real demand data is considered

• Forecast is ignored

Planning Time Fence

• Approximately the cumulative lead time

• Flexible

• Demand & Forecast data is combined

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Master Production Schedule (MPS)

Period 1 2 3 4 5 6 7 8 9 10

Demand 40 50 45 50 50 50 50 50 50 50

Projected Available 30 60 15 45 75 25 55 5 35 65

MPS (completion time) 80 80 80 80 80 80

A Sample Master Schedule (Fig 4.4)

On hand = 70 no planned inventory level Lot size = 80

The entire planning tool is called Master Schedule, the specific schedule production quantities and times are called Master Production Schedule (MPS)

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MPS – Impact of Production Environment

MTS

• Orders are supplied from Stock

• MPS can also be seen as a “final assembly schedule” or “inventory replenishment schedule”

ATO

• The customer chooses various optional subassemblies or features

• Too many options to be individually scheduled

• The MPS focuses therefore on scheduling the options, not the finished goods

MTO

• Customer has a strong influence on the design, so it’s very difficult to master schedule the finished good

• But the raw materials might be common to most of the products

• The MPS focuses on the raw material requirements

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MPS – Impact of Production Environment

MTS

ATO

MTO

Finished Goods

Raw Materials

MPS

Finished Goods

Raw Materials

MPS

Finished Goods

Raw Materials

MPS

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MPS – Impact of Production Environment

MTS

• Finished goods

ATO

• Options

MTO

• Raw Materials

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Available To Promise (ATP)

• Quantities from the master production schedule

that are available on a given period for additional

customer orders

• Or: the quantity that has not yet been “promised”

to any specific customer order

• Benefits of calculating the ATP :

+ It provides visibility of the actual circumstances

+ Gives the ability to communicate immediately and

honestly with customers when new requests come in

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Available To Promise (ATP) - Example

Product: A

• Lead time: 2 weeks

• Lot size: 60

• On-hand: 56

• Demand Time Fence: 2 weeks

Period 0 1 2 3 4 5 6 7 8 9 10 11 12

Forecast 22 25 20 20 18 18 32 30 28 28 29 23

Customer Orders 24 23 17 22 15 14 17 16 12 16 13 11

Forecast or Real Demand? 24 23 20 22 18 18 32 30 28 28 29 23

Projected Available Balance 56 32 9 49 27 9 51 19 49 21 53 24 1

MPS 60 60 60 60

Promised until next MPS

Available to Promise

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Available To Promise (ATP) - Example

What options do you have if a customer requests 35 units for period 7 ?

Period 0 1 2 3 4 5 6 7 8 9 10 11 12

Forecast 22 25 20 20 18 18 32 30 28 28 29 23

Customer Orders 24 23 17 22 15 14 17 16 12 16 13 11

Forecast or Real Demand? 24 23 20 22 18 18 32 30 28 28 29 23

Projected Available Balance 56 32 9 49 27 9 51 19 49 21 53 24 1

MPS 60 60 60 60

Promised until next MPS 47 54 31 28 40

Available to Promise 9 6 29 32 20

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Planning Options in an ATO Environment

• How to plan for the options?

Bicycle

Frame

(x3)

Regular (55%)

Heavy Duty (32%)

Light (21%)

Speeds

(x5)

3 Speeds (12%)

7 Speeds (5%)

10 Speeds (60%)

12 Speeds (20%)

15 Speeds (10%)

Handle bars

(x3)

Regular (55%)

Comfort Curve (25%)

Racing (33%)

Water bottle

(yes/no)

Yes (70%)

Common parts

A “Super Bill” is created

• Each option is planned based on the

historical % of the finished good

• Percentages can add up to more than

100% (“Hedge” or over planning)

• “Two-Level” master schedule is used

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Two-Level Master Schedule - Example

Week 1 2 3 4 5 6 7 8 9

Bic

ycle

Mas

ter

Sch

ed

ule

Fin

ish

ed

G

oo

d (

Leve

l 0)

Forecast 100 100 100 100 100 100 100 100 100

Customer orders 100 82 70 52 23 12 0 0 0

Projected available 0 50 100 0 50 100 0 50 100

MPS 150 150 150 150 150 150

Available to promise 0 68 28 127 138 150 150

Re

gula

r Fr

ame

Op

tio

n

Mas

ter

Sch

ed

ule

(L

eve

l 1)

- 5

5%

Finished Good (Forecast – Orders) 0 18 30 48 77 88 100 100 100

Option Forecast 0 10 17 26 42 48 55 55 55

Booked orders 51 49 15 20 15 9 0 0 0

Projected available 69 10 78 32 75 18 63 8 53

MPS 100 100 100 100 100

Available to promise 20 65 76 100 100

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Exercise (p. 95 Chapter 4 - Exercise 5)

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Demand Management

There must be further alignment and coordination between

Marketing, Sales and Operations (other than S&OP & MPS).

Two main reasons:

• Service, repairs

• Engineering & Prototype requirements

• Quality Assurance Testing

Some Demand is Internal

• Changing Equipment & tooling capacity

• Changing human capacity (training & hiring)

• Submitting changes to suppliers can be costly and time consuming

• Phase in/out of designs

Operations are not as flexible as

Marketing & Sales

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Demand Management - Elements

• Forecast method selection

• Forecast tracking & evaluation

• Methods to cope with the expected error Prediction

• Order reception

• Order delivery date promising

• Customer order servicing Communication

• Sales & Marketing must work close together with operations

• Understand constraints and opportunities Influence

• Allocation of resources according to order priorities

• Prioritization rules must be clearly defined Prioritization

Coping with Error

Communication

Influence

Lead time reduction

Production Flexibility

Policies for “higher-level” plans

Safety Stock or Over planning

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Further Reading

• Chapter 4

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THANK YOU.

Next Session: Inventory Management