Manufacturing

Planning and Control

MPC 6th Edition

Chapter 5

McGraw-Hill/Irwin Copyright © 2011 by The McGraw-Hill Companies, Inc. All rights reserved.
Master Production
Scheduling
An effective Master Production
Schedule (MPS) provides the basis
for making good use of
manufacturing resources, making
customer delivery promises,
resolving trade-offs between sales
and manufacturing, and attaining
the firm’s strategic objectives, as
reflected in the Sales and
Operations Plan.

5-2
Agenda

5-3
 Master Production Scheduling
and the Manufacturing
Planning and Control System
 The MPS is a statement of the specific
products that make up manufacturing output
 The MPS is a translation of the sales and

operations plan into producible products with

their timing and quantities determined
 The MPS shows when products will be

available in the future

5-4
 Attributes of the Master
Production Schedule
 The MPS is a statement of production, not of demand
 The MPS is not a forecast
 The MPS considers factors such as capacity constraints,
costs of production, resource limitations, and the sales
and operations plan
 The MPS is stated in terms of product specifications–
usually part numbers which have specific bills of
materials (BOM)
 In assemble-to-order environments, the MPS may be
stated in terms of an “average” final product

5-5
 MPS and the Business
Environment
 In a make-to-stock company, the MPS is a
statement of how much of each end item to be
produced and when it will be available
 In a make-to-order (or engineer-to-order) firm,

the MPS is usually defined as the specific end

item(s) that make up an actual customer order
 In an assemble-to-order firm, the large number of

possible product combinations is represented

with a planning bill of materials

5-6
 MPS in the MPC System

System
Enterprise Resource Planning (ERP)
Resource Sales and operations Demand
planning planning management

Rough-cut capacity Master production

planning scheduling
Front End

Engine
Detailed material
planning

5-7
 Master Production
Scheduling Linkages
 The MPS is the driver of all detailed
manufacturing activities need to meet output
objectives
 The MPS is the basis for key inter-functional

trade-offs
 Production and sales
 Financial budgets should be integrated with
MPS activities

5-8
Master Production Scheduling
Process and Techniques

5-9
Pyramid Forecasting

5-10
 SOP Tabular Display
A planning The display
factor is used includes both
to convert history and the plan
sales $ to
units
Using a chase
strategy can lead to
large variations in
planned production

Financial results of
the plan are
calculated and
displayed

Planning
assumptions are
clearly displayed
5-11
 Time-Phased Record
 A means of gathering and displaying critical
scheduling information (Forecast, available
stock, production schedule)
Period

On hand 1 2 3 4 5

Forecast 5 5 8 10 15

Projected available balance 20 25 30 32 32 27

Master production schedule 10 10 10 10 10

5-12
 MPS Process–with Lot Sizing
Period 1 – 5 plan Period
Order size driven by
lot sizing constraint, On hand 1 2 3 4 5
order timing/quantity
driven by safety stock Forecast 5 5 8 70 11
constraint 5
Projected available balance 20 15 10 32 22 27

Master production schedule 30 60 12

0
On hand stock =
As time progresses, Lot sizeOn= hand
30 Safety stock
– actual = 5 + production
demand
new information = (20 + 0 – 10)
becomes available
Period 2 – 6 plan Period

On hand 2 3 4 5 6
Updated forecast for
periods 2 – 6 changes Forecast 20 20 20 15 20
projected available
balancing, prompting Projected available balance 10 20 30 10 25 5
rescheduling
Master production schedule 30 30 30

Lot size = 30 Safety stock = 5

5-13
 MPS Process–with Lot Sizing
Period 1 – 5 plan Period
Order size driven by
lot sizing constraint, On hand 1 2 3 4 5
order timing/quantity
driven by safety stock Forecast 5 5 8 70 11
constraint 5
Projected available balance 20 15 10 32 22 27

Master production schedule 30 60 12

0
On hand stock =
As time progresses, Lot sizeOn= hand
30 Safety stock
– actual = 5 + production
demand
new information = (20 + 0 – 10)
becomes available
Period 2 – 6 plan Period

On hand 2 3 4 5 6
Updated forecast for
periods 2 – 6 changes Forecast 20 20 20 15 20
projected available
balancing, prompting Projected available balance 10 20 30 10 25 5
rescheduling
Master production schedule 30 30 30

Lot size = 30 Safety stock = 5

5-14
Revising the MPS

Period 2 – 6 plan Period

On hand 2 3 4 5 6

Forecast 20 20 20 15 20

Projected available balance 10 20 30 10 25 5

Master production schedule 30 30 30

Lot size = 30 Safety stock = 5

Additional production
orders in periods 2 and
5 to meet safety stock
requirements

5-15
 Available-to-Promise

 When immediate delivery is not expected (or

is not possible due to stockouts), a promised
delivery date must be established
 The order promising task is to determine

when the shipment can be made

 Available-to-promise (ATP) procedures

coordinate order promising with production

schedules

5-16
 Available-to-Promise Logic–
Discrete
 Discrete ATP treats each period independently
Period 3: Total
Period 1: Total
customer demand
customer demand Period
before next
before next
production On
= 8hand
units 1 2 3 production
4 5 = 2 units

Forecast 5 5 8 10 15

Period
Orders 1: Projected 5 3 2 0 0
available = Previous
Projected +
available available
MPS –balance 20 15 10 32 22 7
MAX(Forecast, Orders)
Available-to-promise 12 28

Master production schedule 30 Period 3: ATP =

Period 1: ATP =
MPS – customer
Lot size = 30 Safety stock = 5 available balance –
customer orders = orders = 30 -2
20 -8 5-17
 Available-to-Promise Logic–
Cumulative
 Cumulative ATP carries ATP units forward
Period 3: Total
Period 1: Total
customer demand
customer demand Period
before next
before next
production On
= 8hand
units 1 2 3 production
4 5 = 2 units

Forecast 5 5 8 10 15

Period
Orders 1: Projected 5 3 2 0 0
available = Previous
Projected +
available available
MPS –balance 20 15 10 32 22 7
MAX(Forecast, Orders)
Available-to-promise 12 40

Master production schedule 30 Period 3: ATP =

Period 1: ATP1 = 3

Lot size = 30 Safety stock = 5 available balance – ATP1 + MPS –

customer orders = customer orders =
20 - 8 12+ 30 - 2 5-18
MPS-Exercise

5-19
 MPS-Step 1

Beginning Inventory
45

Production Quantity:
80
Week 1 Week 2 Week 3 Week 4 Week 5 Week 6 Week 7 Week 8
Forecast = F 20 20 20 20 40 40 40 40
Customer Orders= CO 23 15 8 4 0 0 0 0
Projected On-Hand 22 2 -18 -38 -78 -118 -158 -198
MPS Quantity

5-20
 MPS Development

Beginning Inventory
30

Production Quantity:
60
Week 1 Week 2 Week 3 Week 4 Week 5 Week 6 Week 7 Week 8
Forecast = F 20 20 20 20 40 40 40 40
Customer Orders= CO 23 15 8 4 0 0 0 0
Projected On-Hand
MPS Quantity

5-21
 MPS Development

Step 3: Calculate Available to Promise Quantities

Beginning Inventory
45

Production Quantity:
80
Week 1 Week 2 Week 3 Week 4 Week 5 Week 6 Week 7 Week 8
Forecast = F 20 20 20 20 40 40 40 40
Customer Orders= CO 23 15 8 4 0 0 0 0
Projected On-Hand 22 2 62 42 2 42 2 42
MPS Quantity 80 80 80
Available to Promise 7 68 80 80

80 -(8 + 4) = 68

45 + 0 - (23 + 15) = 7

5-22
Making Decisions on Order
Requests
Order Units Week Requested
1 5 2
2 38 5
3 24 3
4 15 4

Should we accept or reject these orders based on

the Master Production Schedule?

5-23
 Order 1
5 units in week 2

Beginning Inventory
45

Production Quantity:
80
Week 1 Week 2 Week 3 Week 4 Week 5 Week 6 Week 7 Week 8
Forecast = F 20 20 20 20 40 40 40 40
Customer Orders= CO 23 15 8 4 0 0 0 0
Projected On-Hand 22 2 62 42 2 42 2 42
MPS Quantity 80 80 80
Available to Promise 7 68 80 80

ATP = 7 in week 1 - this means that there are 7 units that

can be promised anytime in week 1 and beyond.
Thus, accept order 1 - revise MPS

5-24
 Revised MPS after Order 1
Beginning Inventory
45

Production Quantity:
80
Week 1 Week 2 Week 3 Week 4 Week 5 Week 6 Week 7 Week 8
Forecast = F 20 20 20 20 40 40 40 40
Customer Orders= CO 23 15 8 4 0 0 0 0
Projected On-Hand 22 2 62 42 2 42 2 42
MPS Quantity 80 80 80
Available to Promise 2 68 80 80

Now for Order 2: 38 units in week 5

Since the ATP = 68 in week 3, there will be 68 units

available in weeks 3,4 and 5. Thus we can fill this
order. Note, there are also 2 units still available
from week 1 ATP. Therefore, accept Order 2.

5-25
 Revised MPS after Order 2
Beginning Inventory
45

Production Quantity:
80
Week 1 Week 2 Week 3 Week 4 Week 5 Week 6 Week 7 Week 8
Forecast = F 20 20 20 20 40 40 40 40
Customer Orders= CO 23 15 8 4 0 0 0 0
Projected On-Hand 22 2 62 42 2 42 2 42
MPS Quantity 80 80 80
Available to Promise 2 30 80 80

Order 3: 24 units in week 3

Since we have 30 units (+2 from week 1) in ATP, we can

accept order 3. Now Revise MPS.

5-26
 Revised MPS after Order 3
Beginning Inventory
45

Production Quantity:
80
Week 1 Week 2 Week 3 Week 4 Week 5 Week 6 Week 7 Week 8
Forecast = F 20 20 20 20 40 40 40 40
Customer Orders= CO 23 15 8 4 0 0 0 0
Projected On-Hand 22 2 62 42 2 42 2 42
MPS Quantity 80 80 80
Available to Promise 2 6 80 80

Order 4: 15 units in week 4

Since we have ATP in week 1 of 2 plus ATP of 6 in week
3, there are only 8 units available until the next
planned production in week 6. Thus, we must reject
the order.

5-27
 Textbook p.174 no.5

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