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MASTER SCHEDULING: An Overview
The sections entitled: Uncertainty & Promises and Closed-Loop Planning described production planning and resource requirements planning, which are aggregate plans of production and capacity generally taking one to ten years to complete execution. These plans combine (aggregate) similar products into product groups, combine demand into monthly totals, and often group personnel requirements across departments. The time comes when individual products and services must be scheduled at specific work centers. This is accomplished by master scheduling---producing a plan to manufacture specific items or provide specific services within a given time period.
Rough cut capacity planning (RCCP) is the process of determining if the plan is feasible; it determines whether the organization has sufficient capacity to carry out the plan. Although RCCP is more refined than resource requirements planning (RRP), it is called “rough cut" because it is less refined than capacity requirements planning (CRP).
Figure 1 illustrates how master scheduling and rough cut capacity planning relate to the corporate and operations planning.
This section presents a general picture of master scheduling, the master production schedule (MPS) and its relationship to rough cut capacity planning, the projected on hand (POH) inventory and order promising using the available-to-promise (ATP) quantity. Since these terms and processes are used primarily in manufacturing, we describe them in that context. However, their counterparts exist in many service organizations, A description of the development of the master schedule including the ATP, the POH inventory, and the MPS and its relationship to RCCP follows.
MASTER SCHEDULING & THE MPS
The master schedule (MS) is a presentation of the demand, including the forecast and the backlog (customer orders received), the master production schedule (the supply plan), the projected on hand (POH) inventory, and the available-to-promise (ATP) quantity. The master production schedule (MPS) is the primary output of the master scheduling process. The MPS specifies the end items the organization anticipates manufacturing each period. End items are either final products or the items from which final assemblies (products) are made; as described later in this section. Thus, the MPS is the plan for providing the supply to meet the demand. An example of a master schedule only including the MPS and the backlog is shown in Table 1. This example is developed further in the section.
INTERFACES
The master schedule (MS) is a key link in the manufacturing planning and control chain. The MS interfaces with marketing, distribution planning, production planning, and capacity planning. It also drives the material requirements planning (MRP) system as shown in Figure 1.
Master scheduling calculates the quantity required to meet demand requirements from all sources. Table 2 shows a case in which the distribution requirements are the gross requirements for the MS. Material requirements planning is used to calculate the quantity required. For example, the 15 units in inventory at the end of Week 3 are subtracted from the gross requirements, 85 units, of Week 4 to determine the net requirements of 70 units for Week 4.
The MS enables marketing to make legitimate delivery commitments to field warehouses and final customers. It enables production to evaluate capacity requirements in a more detailed manner. It also provides the necessary information for production and marketing to agree on a course of action when customer requests cannot be met by normal capacity. Finally, it provides to management the opportunity to ascertain whether the business plan and its strategic objectives will be achieved.
Before describing the activities involved in creating and managing the MS, we examine the different organizational environments in which master scheduling takes place. These environments are determined in large measure by an organization's strategic response to the interests of customers and to the actions of competitors. An understanding of these environments, of the bill of material, and of the planning horizon is essential to the first stage of master planning activities---designing the master schedule.
THE ENVIRONMENT
The competitive strategy of an organization may be any of the following:
1. Make finished items to stock (sell from finished goods inventory)
2. Assemble final products to order and make components, 20 subassemblies, and options to stock
3. Custom design and make-to-order
The competitive nature of the market and the strategy of the organization determine which of the MS alternates it should use. It is not unusual for an organization to have different strategies for different product lines and, thus, use different MS approaches.
Make-to-Stock
The competitive strategy of make-to-stock emphasizes immediate delivery of reasonably priced off-the-shelf standard items. In this environment the MPS is the anticipated build schedule of the items required to maintain the finished goods at the desired level. Quantities on the schedule are based on manufacturing economics and the forecast demand as well as desired safety stock levels. An end item bill of material (BOM) (described later in this section) is used in this environment. Items may be produced either on a mass production (continuous or repetitive) line or in batch production. Case I in Figure 2 represents this situation. Note that the MPS is the same as the final assembly schedule (FAS) in this case.
Assemble-, Finish-, or Package-to-Order
In this environment, options, subassemblies and components are either produced or purchased to stock. The competitive strategy is to be able to supply a large variety of final product configurations from standard components and subassemblies within a relatively short lead time. For example, an automobile may be ordered with or without air conditioning, an option, and a fast-food restaurant will deliver your hamburger with or without lettuce. This environment requires a forecast of options as well as of total demand. Thus, there I an MPS for the options, accessories, and common components as well as final assembly schedule (FAS). This is Case II in Figure 2.
The advantage of this approach is that many different final products can be produced from relatively few subassemblies and components. This reduces inventory substantially. Figure 3 represents such a situation. Each final product contains four major subassemblies and a component However, each subassembly and the component has different variations (alternates). There are four different variations of SA1, two of SA2, four of SA3, three of SA4, and five of C, which results in 4 x 2 x 4 x 3 x 5 or 480 final product configurations. Assembling to order enables the firm to stock 4 + 2 + 4 + 3 + S or 18 different items rather than 480.
Custom Design & Make-to-Order
In many situations the final design of an item is part of what is purchased. The final product is usually a combination of standard items and items custom designed to meet the special needs of the customer, Combined material handling and manufacturing processing systems are an example, special trucks for off-the-road work on utility lines and facilities are another. Thus, there is one MPS for the raw material and the standard items that are purchased, fabricated, or built to stock and another MPS for the custom engineering, fabrication, and final assembly. Case III in Figure 2 represents this situation.
As we proceed with the discussion of the policies and procedures of master scheduling and its relationship to rough cut capacity planning (RCCP), we will examine further the relationship of these environments to the MPS task.
THE BILL OF MATERIAL
An inclusive definition of a final product includes a list of the items, ingredients, or materials needed to assemble, mix, or produce that end product. This list is called a bill of material (BOM). The BOM can take several forms and be used in many ways. It is created as part of the design process and is used by manufacturing engineers to determine which items should be purchased and which items should be manufactured. Production control and inventory planning uses the BOM in conjunction with the master production schedule to determine the items for which purchase requisitions and production orders must be released. Accounting uses it to cost the product.
The BOM is a basic required input for many production planning and control activities, and its accuracy is crucial. In computerized systems the BOM data is contained in BOM files, a data base organized by the BOM processor that also produces the BOM in the various formats required by the organization.
Single-Level Bill of Material
The way in which the BOM files are organized and presented is called the structure of the bill of material. The simplest format is a single level BOM, as depicted in Table 3. It consists of a list of all components needed to make the end item, including for each component (1) a unique part number, (2) a short verbal description, (3) the quantity needed for each single end item, and (4) the part's unit of measure.
Multi-Level Tree Structure and Levels
While the single level BOM is sufficient when a product is assembled at one time from a set of purchased parts and raw materials, it does not adequately describe a product that has subassemblies. If we decided to make the base and socket assemblies in Table 3, then each of those would have sub-items that were purchased or manufactured. To illustrate the product structure, we can draw a "tree" having several levels, as shown in Figure 4. Note that by convention the final product is at Level 0' and the level numbers increase as one looks down the tree.
Corresponding to this tree structure is the multilevel BOM shown in Table 4. Each part or assembly is given a unique number. To aid in understanding the structure, the numbers for the components of each subassembly are indented under the respective subassembly numbers. When a component is used in more than one subassembly a common parts bill may be produced for use by inventory planning. In this type bill there is only one occurrence of the item along with its total quantity per final assembly.
If the wiring assembly were itself a subassembly, then its component.' would be listed. On the indented BOM, the component part numbers would be further indented, as shown in Table 5. As you see, the multilevel product structure is really made up of building blocks of single level product trees. that is, a BOM can be drawn up for each subassembly and only these single level bills need be retained. This is important when producing many different end items that have common subassemblies, We do not need to change every, end item BOM when an engineering change takes place in a single common subassembly.
To illustrate this and several other real-life complexities, let's assume that we manufacture lamps with three different shades, two alternate base plates, and two types of sockets. Our original lamp was designated LA0l. Working with the different components, we now can have 12 different final products. To clarify this, we can produce a common parts bill in a matrix format, as shown in Table 6. An examination of the matrix shows that some parts are common to alt models, To ease the planning task, we could group together the wiring assembly and the finished shaft with a new part number, say 4000, on the bill of material. Although these components are produced independently of one another, they can be grouped as common parts on the BOM for administrative purposes. This part number is never stocked and so it is called a phantom part. Its only purpose is to reduce the number of items on the BOM. We can go further with the concept of restructuring our BOMs and, for some products, create new numbers to represent new subassemblies (for example, subassemblies of plate, hub, and screws) in order to shorten lead times.
Another type of BOM is often useful in planning and handling engineering charges. It is referred to as a planning bill, a pseudo bill, a phantom bill, a super bill, or family bill. From the matrix form of the summary bill (Table 6), a simplified product structure diagram (Figure 5) can be created for the family of lamps that consisted of pseudo subassemblies-base assemblies, shades, and socket assemblies. For each of these, in place of the quantity for each unit assembled, the percentage split for each type of component is stated. Now, as we plan for a total of 10,000 lamps for each month, this planning bill can be used to derive the number of each type of component to build. Furthermore, if we decide to change to, say, a 16-inch green shade, only this single BOM, this modular bill, needs to be altered.
Option Over-planning
If the exact percentage split is uncertain, the percentage of each option can be increased to cover the uncertainty This results in the total being more than 100 percent, as illustrated in Figure 6. The amount added can be calculated in the same manner as safety stock. Using this procedure to cover possible high side demand for each option is called option over-planning.
THE PLANNING HORIZON
A principle of planning is that a plan must cover a period at least equal to the time required to accomplish it. This means that the MS planning horizon must be at least as long as the lead time required to fabricate the MS items. This includes production and procurement time as well as engineering time in a custom design environment. Delivery-to-customer response times (lead times) in the different production environments are illustrated in Figure 7
Many organizations divide the planning horizon into periods with different controls on schedule changes. The closer a period is to the present, the tighter are the controls on schedule changes. For example, rime fences (boundaries between different periods) may be established at the fourth week and the eighth week (two months), as shown in Table 7 + The location of the time fences and the nature of the approval required depend on the situation. Varying lead times, market conditions, and processing flexibility make for different time fences, sometimes at different plants within the same firm, Time fences should be tailored to specific product groups as lead time may vary widely between groups. In all cases, the MS is the vehicle for coordinating the achievement of marketing and manufacturing goals.
In Period C (a time horizon beyond two months in Table 7) the MPS is consistent with the production plan. A good production plan will make preparation of the MS straightforward in this time frame.
In Period B (a time horizon of four to eight weeks in Table 7) things become a bit sticky when operating at full capacity. A zero sum game exists; that is, any additions to the schedule must be counterbalanced by comparable deletions or increases in capacity. Changes in demand patterns, unusual orders, or equipment failures may warrant changes in the MPS. These changes are usually negotiated between marketing and manufacturing with the master scheduler determining their feasibility before the final decision. The product mix may change but not the production rate.
In Period A (a time horizon of zero to four weeks in Table 7) only an act of God or top management can change the MPS.
As the time for order execution and manufacturing approaches, labor and material are committed. A change in the schedule can be disruptive and costly, and the costs must be compared with the benefits of the change. Following time-fence-control guidelines, which reflect realistic lead time constraints and competitive factors, will result in an MPS that promotes manufacturing stability and productivity while providing reasonable flexibility in meeting marketing demands. However, the competitive environment may force decisions to restructure the BOM, to develop a modular BOM, to produce to stock at a higher level in the BOM, or to move time fences.
DESIGNING, CREATING, & MANAGING THE MASTER SCHEDULE
Master scheduling activities take place in three stages:
(A) designing the MS,
(B) creating the MS, and
(C) controlling the MS.
A. Designing the MS includes the following steps:
1. Select the items; that is, select the levels in the BOM structure to be represented by the items scheduled (both components and final assemblies may be included).
2. Organize the MS by product groups.
3. Determine the planning horizon, the time fences, and the related operational guides.
4. Select the method for calculating and presenting the available-to-promise (ATP) information.
B. Creating the MS includes the following steps:
1. Obtain the necessary informational inputs, including the forecast, the backlog (customer commitments), and the inventory on hand.
2. Prepare the initial draft of the master production schedule (MPS).
3. Develop the rough cut capacity requirements plan (RCCR').
4. If required, increase capacity or revise the initial draft of the MPS to obtain a feasible schedule.
C. Controlling the MS includes the following activities:
1. Track actual production and compare it to planned production to determine if the planned MPS quantities and delivery promises are being met.
2. Calculate the available-to-promise to determine if an incoming order can be promised in a specific period.
3. Calculate the projected on hand to determine if planned production is sufficient to fill expected future orders.
4. Use the results of the preceding activities to determine if the MPS or capacity should be revised.
Up to this point, this section has emphasized MS design factors and practices. Now we are ready to discuss preparing the initial draft of the master schedule-creating the MS. However, as you will note, creating and controlling activities are interwoven, Remember, the MPS lists by period the planned quantity of each MPS item to be built. The MS includes the demand, the available-to-promise, the projected on hand, and the MPS quantity by period.
Creating the Master Schedule
Let's consider creating the MS in a make-to-stock environment with no safety stock. Table 8 provides the type of information available for a product group. It reveals that Product 3 has sufficient inventory to cover the requirements of Weeks 32, 33, and 34 but not Week 35. Product 2 has sufficient inventory to cover the requirements for Weeks 32 and 33 but not Week 34, Product I must be produced in Week 32. At this point there is no production scheduled yet, so the POW merely equals the POH of the preceding period minus the forecast requirements. An MPS quantity should be planned in the first week that an item has a negative P014. Thus, Product I must be scheduled in Week 32, Product 2 in Week 34, and Product 3 in Week 35. In some situations an organization may decide that an MPS quantity should be scheduled whenever the POH reaches some safety level, 25 units for example. In the latter case, production is planned in the first period that the P014 is less than the safety stock level.
Based on a weighted average capacity of 180 units per week, the first plan calls for manufacturing Product I in Weeks 32 and 33, manufacturing Product 2 in Week 34 and the first part of Week 35, and manufacturing Product 3 in the last part of Week 35, as shown in Table 9. Calculation of the POH quantities demonstrates that the plan will cover forecast requirements.
The POH for the first week equals the beginning inventory plus the MPS quantity minus the forecast, and, for all remaining weeks, it equals the POH of the preceding period plus the MPS quantity minus the forecast requirements of the current period. Thus, the POH of Product I in Week 32 equals 10 + 180 - 150 = 40 units; and in Week 33 it equals 40 + 180 - 100 120. The other POH quantities are calculated in the same manner, The next question is, "Is there sufficient capacity to produce the MPS quantities?"
Rough Cut Capacity Planning (RCCP): RCCP calculates the critical work center capacity requirements for all items on the MPS. It provides an early warning of insufficient capacity and the need for capacity actions. Capacity in some work centers---the paint shop, for example may be well beyond that ever required, while capacity in other work centers---welding and heat treating, for example---may be relatively low and a frequent bottleneck. Planning should focus attention on the potential bottleneck work centers, Capacity actions is the term used to describe rectifying a situation in which the available capacity is less than the required capacity
Figure 8 shows the relationship of the various stages of capacity planning resource capacity planning (RCP), rough cut capacity planning (RCCP), and capacity requirements planning (CRP)-to the specific production processes of a product group. (RCP was described in the Closed-Loop Planning section, RCCP and CRP are described in the RCCP Section.) Table 10 highlights the salient characteristics of these different stages of capacity planning.
The primary differences between RCP and RCCP planning are that the latter plans in smaller time increments, usually weekly rather than monthly, and considers the production lead time of the various components and subassemblies required to produce the products on the MPS.
Revising the MPS: This section reveals. once again that control takes place in the planning process. An initial MPS is developed for Products 1, 2, and 3 of Product Group A from the production plan for Product Group A as shown in Table 11. The capacity required by this initial MPS is shown in Table 12. Calculation of these requirements is described in the RCCP Section.
The comparison of capacity requirements to available capacity reveals ii the present MPS is feasible. Table 12 shows a shortfall 3.56 hours of assembly' capacity in both Weeks 32 and 33 and surplus capacity in Weeks 34 and 35. This presents the master scheduler with the following options:
1. Increase capacity in Weeks 32 and 33.
2. Reduce production quantities in Weeks 32 and 33 and increase production quantities in Weeks 34 and 35.
3. Some combination of Options I and 2,
In this case the choice is Option 2, as shown in Table 13, which also reveals that sufficient capacity is available with the revised MPS. The revise( MPS quantities were obtained by scheduling the maximum possible quantity 0 Product 1 in Weeks 32 and 33 and completing those requirements in Week 34 The remaining requirements for Products 2 and 3 were roughly balanced between Weeks 34 and 35, producing Product 2 first. The resulting POH value are shown in Table 14, which reveals that sufficient units will be available to cover forecast demand for Product 1. Similar calculations will reveal that the forecast demands for Products 2 and 3 are also covered. Later, as orders arrive, it may be necessary to revise the MPS again if actual orders are substantially different from the forecast on which the production plan and the MPS are based.
Many organizations have computerized the calculation of rough cut capacity requirements while others have standard forms and procedures that' facilitate manual computations. In any event the rough cut capacity require to implement the MPS must be compared to available capacity to determine if any capacity actions are required. Table 13 reveals that the MPS is within the capacity constraints of the assembly department. It is also necessary to verify that the plan does not require more than the available capacity in the departments used in the manufacture of subassemblies and components.
At first glance this may seem to be a rather complicated procedure. However, once it is understood and the appropriate software obtained or developed, it readily provides information extremely valuable for planning. Once this initial revised feasible MPS is developed, creating the master schedule is completed.
Controlling the Master Schedule
The MS serves as a control in three distinct ways. Actual production is compared to the MPS to determine if the plan is being met. The available-to-promise is calculated to determine if an incoming order can be promised for delivery in a specific period. The projected on hand is calculated to determine if the supply is sufficient to fill expected future orders.
The Available-to-Promise (ATP): Promising delivery to customers should be based on what is or will be available (not committed). Available-to-promise(ATP) is defined by the APICS Dictionary (1987) as "The uncommitted portion of a company's inventory or planned production. This figure is normally calculated from the master production schedule and is maintained as a tool for customer order promising." However, when one is informed that there are "25 units available-to-promise in Week 7 and 20 units available-to-promise in Week 8," the meanings are not clear until the method of calculation is known, The three basic methods of computing the ATP are the discrete, the cumulative without look-ahead, and the cumulative with look-ahead, Descriptions of these methods follow.
Calculating the Discrete ATP: The discrete available-to-promise (ATP: 9) is computed as follows:
1. For the first period, the available-to-promise is the sum of the beginning inventory plus the MPS for the first period (in this case zero) minus customer commitments for the first period and all periods following the first period up to, but not including, the next period for which an MPS quantity has been planned.
2. For all periods after the first, there are two possibilities:
a. If a master production quantity has been scheduled for the period the available-to-promise is the quantity scheduled minus all customer commitments for the period and for all following periods up to but not including, the next period for which a master production quantity has been scheduled.
b. If no master production quantity has been scheduled for the period the available-to-promise is zero, even if deliveries in the period have been promised. The promised shipments often are shown as backlog (customer commitments) in the period with the most recent production (MPS).
As an example, suppose after the MPS has been constructed, total actual orders received (total customer commitments) for Product I are as follows: 110 units for delivery by the end of Week 32, 80 units for delivery by the end 0; Week 33, 5 units for delivery by the end of Week 34, and 15 units for deliver) by the end of Week 35. The discrete ATP of Product 1 in Week 32 equals 10 + 169 - 110 69 units. The discrete ATP in Week 34 equals 22 (there is no MPS in Week 35) = 2 units, The discrete ATPs for all product', are shown in Table 15.
If in addition to the 110 units of Product 1 that had already been promised for delivery in Week 32, an order for 15 more units was received for delivery in Week 32, the ATP would be 54 in Week 32 and all the other ATPs would remain the same.
Note that in computing the ATP: D it is not necessary to have the forecast and the projected on hand inventory in the master schedule, That is because at this time the master scheduler is not creating a master schedule, but is, instead, managing an existing schedule. The master scheduler is promising delivery to customers of units that will be available either from units already on hand when construction of the master schedule began or from units scheduled to be built in accordance with the master production schedule, Therefore, the forecast and POH are not included in the tables that follow.
Calculating the Cumulative ATP: The cumulative method can be used without or with the "look-ahead" calculation. We describe both methods. Table 16 is an example of the cumulative calculation of the ATP without look-ahead (ATP:WOL) for Products 1, 2, and 3.
The cumulative ATP without look-ahead equals the ATP in the preceding period plus the MPS, minus the backlog (customer commitments) in the period being considered. Thus, in Week 32 the ATP:WOL for Product 1 is
10 + 169 -110 = 69.
In Week 33 it equals
69 + 169-80=158.
The salient difference between this method and the discrete method is that the ATP in any period is likely to include units also included in the ATP of other periods. For example, the 158 unit ATP of Week 33 includes the 69 units in the ATP of Week 32, which are also included in the ATP of all other weeks. Furthermore, when there is no look-ahead procedure, the ATP for a week may include units committed to fill requirements for a later week. For example, 15 of the units in the ATP of Week 34 are committed to customer orders promised in Week 35, Although some planners may function well with such a system be-cause they understand the data and are able to extract accurate information from it, the data is misleading. The look-ahead approach resolves this problem. Table 17 is an example of the cumulative with look-ahead calculation of the ATP (ATP: WL).
The difference between this method and the cumulative ATP without look-ahead is that units produced in one period and committed for use in a future period are omitted from the ATP in all periods preceding that in which they are promised. The ATP of Table 17 gives a very clear picture: there are 62 units of Product 3 that can be promised for any of the Weeks 32 through 34, and a total of 102 units, including the 62 available earlier. that can be promised for delivery in Week 35, The ATP:WL of a period equals the ATP:WL of the preceding period plus the MPS of the period minus the backlog of the period minus the sum of the differences between the backlogs and master production schedules of all future periods until, but not including, the period from which point production exceeds the backlogs. This is shown by the following model. Although this description and the following model seem cumbersome, the actual calculations usually are not. This is because proper management of the MS, including the MPS and promises to customers, usually will prevent the backlog from exceeding the MPS for an extended time.
Consuming the Forecast: This section previously described how to calculate the POH without changing the forecast or the MPS. Under the consuming-the-forecast concept, the master schedule presents the forecast as only the quantity yet to be ordered by customers, as opposed to the initial forecast. Thus, each time an order is received, the forecast quantity on the MS may be changed. Two different situations exist when using this approach.
In the first case, the existing total sales forecast still is seen as an accurate forecast of the total eventual units to be sold for delivery in the period. The revised forecast equals the original forecast minus the orders received (the backlog) for the period; the forecast is "consumed" by the orders received.
This situation is illustrated in Weeks 32,33, and 34 of Table 18. The orders received have been subtracted from the forecast. For example, the forecast for Week 32 now equals 150 (the initial forecast) - 110 = 40. The forecast now represents the remaining orders expected, and the POH equals the POH of the preceding week plus the MPS minus the sum of the forecast and the backlog (B). For example, the POH of Week 34 equals 98 + 22 - (45 + 5) = 70. (The resulting value of the POH is the same as when not consuming the forecast but is calculated differently.)
The second situation differs in that the existing total forecast no longer is viewed as accurate, For example, suppose an unexpected order is received from a new customer and there is no reason to believe that the regular customers will not order as forecast. This situation is illustrated in Week 35 of Table 18. Ten of the units ordered for delivery in Week 35 come from a new customer; the planner decides that there will still be additional orders for 45 units. Thus, only $ units of the 15 ordered are subtracted from the forecast. This also requires that another 10 units be subtracted from the POH in Week 35 as the original forecast for Week 35 has effectively been increased by 10 units. For example, the POH of Week 35 now equals 70 + 0 - (45 + 15) = 10, Thus, the POH for Week 35 is different from that shown in Table 14. Consuming the forecast is an effective method of recognizing either potential stock-outs or excessive inventory and the need to revise the MPS. The likelihood of excessive inventory would be spotted when present sales suggest that eventual total orders will be less than the existing forecast.
THE FINAL ASSEMBLY SCHEDULE
The final assembly schedule (FAS) is a statement of those final products that are to be assembled from MPS items in specific time periods. In some organizations--those producing power tools, for example-MPS items and final products are identical, and one document serves as both the MPS and the FAS. In many other situations, especially when there are many more final products than there are items at the first BOM level, the two are separate and distinct.
In some cases final products differ only by the labeling or packaging of the same MPS item. In others painting or finishes may constitute the difference. In still others a vast difference may exist in the transformation of items into a variety of final products. In each of these cases an FAS that is distinct from but consistent with the MPS must be prepared. In the manufacture of automatic washers, for example, the motor, transmissions, control units, consoles, tubs, sets of assembly hardware, and various optional accessories would be MPS items, and the different models available to the customer would be final assemblies. Thus, the manufacture of motors can be authorized long before each motor is committed to the assembly of a particular model. Since the FAS is constrained by the availability of those items scheduled on the MPS plus those in inventory, the MPS and the FAS must be coordinated, This is true for both purchased and manufactured components.
Table 19 is an example showing the relationship between the FAS for an assembly, A, made-to-order, and an MPS for two optional subassemblies, SAl and SA2, which are made-to-stock with option over-planning. The assembly may be ordered with either an SA1 or an SA2 subassembly. Sales records reveal that each has an equal probability of being selected; each has received a maximum of 60 percent of the orders in any week. Thus, with an FAS for a maximum of ten A's in Week 2, no beginning inventory for any item, and a leadtime of one week for subassemblies, the MPS calls for six each of SAl and SA2 in Week I. Three possible demand combinations exist: five each of SAl and SA2, four of SAl and six of SA2, and six of SAl and four of SA2. Two subassemblies will not be used immediately; they will be carried in stock to the next week.
Week 1 passes: Actual orders are for ten A's, four with SAl and six with SA2. Two SAl's are in inventory at the end of the week. This results in an MPS calling for producing four SAl's and six SA2's in Week 2 to assemble a maximum of ten A's in Week 3. The FAS and the MPS are coordinated.
In an assemble-to-order environment, the FAS frequently is stated in terms of individual customer orders and must be consistent with the shipping schedule. In a make-to-stock environment, the FAS is a commitment to produce specific quantities of catalog final products. The shipping schedule depends on available inventory and available capacity. Capacity is required for assembly and for any items that may be controlled by the FAS and not the MPS. Examples are painting, packaging, crating, and preparing shipping documents.
In any event, authorization of the final assembly schedule should be held to the last possible moment. This provides the greatest flexibility in meeting actual demand and improves customer service. Since assembly lead time and MPS item availability constrain the FAS, any planning and design to reduce this lead time and increase flexibility, aid in achieving customer service objectives.
Preparation, measuring of actual output, and control of the FAS should rest with the master scheduler. This enables one individual to control all demands on resources and coordinate MPS items and the FAS, order entry items, and order-promising activities.
The Master Scheduler
Most organizations should have a master scheduler, This individual is the link between marketing, distribution, engineering, manufacturing, and planning. The tasks of the master scheduler include the following:
Provide delivery promise dates for incoming orders; match actual requirements with the master schedule as they materialize,
Evaluate the impact of top-down inputs, such as a request for the introduction of a new product in much less than the normal delivery time.
Evaluate the impact of bottom-up inputs, such as anticipated delay reports from the shop or purchasing indicating that particular components will not be available as scheduled or that planned production rates are not being attained,
Revise the master schedule when necessary because of lack of material or lack of capacity.
Call basic conflicts of demand and capacity to the attention of other members of management, especially marketing and manufacturing, who need to participate in resolving the problems.
Whether or not a firm has someone formally designated as the master scheduler, the tasks are essential. Combining them under the jurisdiction of one individual improves the likelihood that they will be coordinated and managed properly. Most importantly, it provides a focal point for the required coordination of marketing, manufacturing, distribution, and planning as well as a place to look for answers when things are not going as planned.
MPS Information Systems and Analysis
The complexity of most manufacturing environments requires a computerized production planning and control system with human interfaces at appropriate decision points. As noted previously, the master scheduler requires such as interface. The requirement for computer assisted planning is due to a combination of the number of items on the MPS, the large number of subassemblies'. and components, and the magnitude of recording and processing inventory transactions, material requirements, and capacity requirements. Today, there are literally hundreds of commercial software Systems available. Some are for use with mainframe computers, others for use with minicomputers, and a growing number for use with personal computers.
The installation and availability of such a computer system often allows the organization to perform what-if analyses to answer questions such as:
(1) What will be the effect of a shift in product mix on capacity requirements?
(2) What will be the effect of a 10 percent increase in demand on capacity requirements?
Answers to these questions, available from a computerized simulation run, will enable management to prepare plans for such contingencies.
SUMMARY AND COMMENTS
Although the preparation and maintenance of all the elements of the master; schedule may be complex in some situations, the principles and concepts an not. All have been developed in practice and are well documented in the literature and have been discussed in this section.
The MPS is a vital link in the operations planning and control systems in Manufacturing, production, marketing, and engineering (product and process design). The items on the MPS, in particular their level in the BOM, should be consistent with the organization's competitive strategy. The efficacy of the master scheduling process and the MPS requires an accurate and reliable capacity planning system.
The master scheduler plays a key role in the master scheduling function. This individual plays a key role in marketing and manufacturing working to the same plan.
Available-to-promise information is very useful for responding to customer requests for delivery. POH data is very helpful in indicating when the MPS is inadequate or will result in excessive inventory.
If actual production is consistently below the planned MPS, it suggests that actual capacity is less than the "capacity available" used in creating the MPS. And if actual orders completed in each period consistently differ substantially from those in the MPS, it suggests that the priority plan established by the MPS is not being followed throughout the system or that the MPS is not being controlled (revised) as unplanned changes in material, equipment, or personnel occur.
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