Master Scheduling

&
The Master Schedule
2
Introduction
They
combine
Eventually, the time comes when individual end item products and services
must be scheduled at specific work centers.
This is accomplished by master scheduling
Which means, producing a SUPPLY PLAN (a time table including quantities) to produce specific
items or provide specific services within a given time period.
Aggregate Production
& Capacity Plans
Products into
product groups.
Demand into
monthly totals.
Personnel
Requirements
across departments
Which alltogether
reflect Top Management
Decisions.
3
Master Scheduling & the Master Production Schedule (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.It is the
plan for providing the supply to meet
the demand.
Table 1
Example : A simple MS for an MPS item (end
product)
4
Relationship of Master Scheduling to other MPC activities
Figure 1
Is the key
link
Is the key in
developing the
master
schedule
Creates demand
requirements
Creates demand
requirements
Calculates net
requirements
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.
The MS drives the material
requirements planning (MRP) system.
Master scheduling calculates the
quantity required to meet demand
requirements from all sources (see
the example case on next page).
Input-Output Control &
Operation Scheduling
5
Example : A case in which the distribution requirements are the gross requirements
for the MS
Here, the MS;
enables marketing to make
legitimate delivery commitments
to field warehouses and final
customers.
enables production to evaluate
capacity requirements in a
more detailed manner.
provides to management the
opportunity to ascertain whether
the business plan and its
strategic objectives will be
achieved.
Net Requirements are
calculated by MRP logic.
Table 2
Distribution
requirements (gross
requirements for MS)
Distribution
requirements (gross
requirements for MS)
6
Understanding THE ENVIRONMENT in which master scheduling takes
place.
Before describing the activities involved in creating and managing the MS,
we need to examine the different organizational environments in
which master scheduling takes place.
THESE ENVIRONMENTS ARE DETERMINED BY
the companys STRATEGIC RESPONSES to;
and
Thus, a COMPETETIVE
STRATEGY evolves...
the INTERESTS of
CUSTOMERS
the ACTIONS of
COMPETITORS
7
FOR A SPECIFIC PRODUCT (end item),
THIS COMPETETIVE STRATEGY MAY BE
ONE OF THE FOLLOWING
Make finished items
to stock
(sell from finished goods inventory)
Assemble final products to order
and make/buy subassemblies and
lower level detail parts to stock.
Custom design and make to
order.
It is not
unusual for an
organization to have different
strategies for different product
lines and, thus, use different
MS approaches.
8
Make-to-stock Strategy
This strategy 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, the forecasted
demand and desired safety stock levels.
In this environment, an end item bill of material (BOM) is used. Items may be
produced either on a mass production (continuous or repetitive) line or in batch
production.
Basic characteristics of this
strategy/environment:
9
Assemble-to-order Strategy
In this environment, subassemblies and lower level detail parts/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.
This environment requires a forecast of options as well as the total demand of the
end item. Thus, there is an MPS for the options, accessories, and common
components as well as final assembly schedule (FAS). Here, examples of options can
be given as; an automobile may be ordered with or without air conditioning or a
fast-food restaurant may deliver your hamburger with or without lettuce.
The advantage of this approach is that many different final products can be
produced from relatively few subassemblies and components. This reduces
inventory substantially (see example on following page).
Basic characteristics of this
strategy/environment:
10
Example : Advantages of Assemble-to-order Strategy
The number of alternative final product configurations = 4x2x4x3x5 = 480
The number of different items to stock = 4+2+4+3+5 = 18
Figure 2
There are 4 different
Variations for A
1

There are 2 different
Variations for A
2

There are 4 different
Variations for A
3

There are 3 different
Variations for A
4

There are 5 different
Variations for C
1

(Each final
product contains
four major sub-
assemblies and
a detail part)
Competetive
strategy of large
variety of final
product.
Relatively small
number of
component items to
stock.
11
Custom Design & Make-to-Order Strategy
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, special trucks for
off-the-road work on utility lines and facilities are examples of such final products.

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.
12
Relationships between competetive strategies
Figure 3
13
Understanding the Bill of Material & its uses
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) and created as part of the design process .
A single level BOM is
sufficient when final
product is assembled
or manufactured from
a set of purchased parts
and raw materials.
Table 3
14
A multilevel (indented)
BOM is required when
final product has make
subassemblies in its
structure.
Table 4
Figure 4
End Item: Lamp LA01
15
If the finished shaft and wiring assembly shown in Table 4
were make subassemblies, then their components would be listed
in the multilevel (indented) BOM of Lamp LA01.
Table 5
As one can easily see, the
multilevel product structure
is really made up of building
blocks of single level product
trees.
16
COMPLEXITIES IN REAL LIFE :
What happens if we manufacture alternate lamps by using;
three different shades,
two alternate base plates, and
two types of sockets
Then we have (3x2x2=) 12 different models
having some common components.
To make the
planning task more
understandable, we
can prepare the
common parts
bill.
Table 6
Some parts are
common to all
models
Some parts are not
common to all
models
17
Inorder to ease up the planning task, we can reduce the number of items in BOM by
grouping part 1100 (finished shaft) and part 1700 (wiring assembly) which are common
parts to all products, and assign a new part number (such as 3000) to this group.
18 items
19 items
Since part no 3000 will never be
stocked, it will be a pantom number.
18
From Table 6, a simplified product structure diagram can be created for the family of lamps which
consists of modular pseudo subassemblies :
Figure 5
In this kind of diagram, instead of the quantity
for each unit assembled, the percentage split
for each type of component is stated.
If 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 from 15
cream shade to, say, a 16 green shade, we
need to alter only this single BOM (modular
bill).
19
Understanding the Planning Horizon
A plan must cover a period at least equal to the time required to accomplish it.
A Principle of Planning:
That is, 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.
Figure 6
20
Minimum Planning Horizon:
According to the principle of planning, Minimum Planning Horizon is, the
time period in which the MPS can not be changed. This period is also called
as frozen zone.
P
r
o
d
u
c
t
i
o
n

H
o
u
r
s

1 2 6 3 4 5 7 8 9 10 11 12 13 14 15 16 17 18
Weeks
Committed Backlog
(IN PRODUCTION)
(frozen schedule/zone)
Committed
Backlog
(NOT in
PROD)
Committed
Backlog
(NOT in
PROD)
Forecasted
Backlog
Minimum planning horizon
(frozen zone)
19 20 21 22 23 24
Planning horizon which is under the
authority of master schedular
Figure 7
21
A Sample Time Fencing for MS Planning Horizon
Only top management can change the MPS. PERIOD A :
PERIOD B : Any additions to the schedule must be counterbalanced by comparable
deletions or increases in capacity. 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.
PERIOD C : The MPS is consistent with the production plan. Preparation of the MS is
straightforward in this time frame.
Table 7
22
DESIGNING, CREATING & MANAGING THE MASTER SCHEDULE
Master Scheduling activities are carried out in three main steps:
Designing the master
schedule (MS)
STEP 1 :
STEP 2 :
Creating the master
schedule (MS)
Controlling the master
schedule (MS)
STEP 3 :
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.
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.
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.
SUBSTEPS :
23
Designing The Master Schedule
Suppose that we are going to create a MS in a make-to-stock
environment with no safety stock.
Our planning horizon will be 4 weeks (weeks 32, 33, 34 & 35).
Calculation method for ATP (available-to-promise) quantities
will be discrete.
Figure 8
24
Creating The Master Schedule
Table 8
When we examine the available
information for PG
1
, we see that;
For MPS Item
1
, the POH quantity of
week 31 does not meet the forecasted
requirement of week 32. So, we need
to schedule this item for week 32.
For MPS Item
2
, the POH quantity of
week 33 does not meet the forecasted
requirement of week 34. So, we need
to schedule this item for week 34.
For MPS Item
3
, the POH quantity of
week 34 does not meet the forecasted
requirement of week 35. So, we need
to schedule this item for week 35.
Some companies may use a safety stock level. Item is rescheduled when POH drops
down to the safety stock level.
25
Based on a weighted average capacity of 180 units per week, we create our
initial (first) plan :
Table 9
The POH for the
first week equals
the beginning
inventory plus the
MPS quantity
minus the forecast
requirements.
For each week
we expect to
complete a total
of 180 units of
PG
1
products.
Now the question is, whether do we have sufficient capacity to carry out this plan?
26
Brief summary of Capacity management
Figure 9 shows an overview of the entire
Manufacturing Planning & Control (MPC)
process under MRP.

In this approach, capacity management
techniques usually are separated into four
categories:

1. resource requirements planning (RRP),
2. rough cut capacity planning (RCCP),
3. capacity requirements planning (CRP), and
4. input / output control.
Figure 9
Remember:
MRP is
insensitive to
capacity.
A problem commonly encountered in
operating MRP systems is the
existence of an overstated MPS.
27
Table 10
28
An overstated master production schedule is the one which
orders more than the production can complete. It causes;
raw materials and WIP inventories to increase because
more materials are purchased and released to the shop
than are completed and shipped.

a buildup of queues on the shop floor resulting an
increase in actual lead times which yields to ship dates
to be missed.
Figure 10
Overstated
MPS causes a
chain
reaction
which flows
down to the
lowest level
components.
Overstated
MPS causes a
chain
reaction
which flows
down to the
lowest level
components.
29
Revising the MPS
Lets go back to the initial MPS developed for product group PG
1
which covers
products MPS Item
1
, MPS Item
2
, and MPS Item
3
according to the production
plan dictated by management.

Capacity required
by this initial MPS
is shown in
following page.
Table 11
30
The comparison of capacity requirements to available capacity gives the master scheduler
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 1 and 2,
Table 12
(0.342 standard hrs/lamp)
31
In this case the choice is Option 2:
The revised MPS quantities were obtained by scheduling the maximum possible quantity of
MPS Item
1
in Weeks 32 and 33 and completing those requirements in Week 34. The remaining
requirements for MPS Item
2
and MPS Item
3
were roughly balanced between Weeks 34 and 35,
producing MPS Item
2
first.
Table 13
Copy of Table 11
(0.342 standard hrs/lamp)
32
Table 14
Remember that; the
Production Plan and the
MPS were based on the
Forecasts and
customer commitments
/backlog. For this reason,
it may be necessary to
revise the MPS again if
actual orders are
substantially different
from the forecast.
Once the initial revised feasible MPS is developed, creating the master schedule is completed.
104
POH values reveal
that sufficient units
will be available to
cover forecast
demand for PG
1

33
Controlling the MPS
The MASTER SCHEDULE (MS)
itself serves as a control device
in three distinct ways
Actual production is
compared to the MPS to
determine if the
plan is being met.
The available-to-promise
(ATP)is calculated to determine
if an incoming order can be
promised for delivery in
a specific period.
The projected on hand (POH)
is calculated to determine if
the supply is sufficient to fill
expected future orders.
34
The Available to Promise Quantity (ATP)
Definition of ATP as given by APICS Dictionary is as follows;
"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 we say that;

there are 25 units available-to-promise in Week 7 and
there are20 units available-to-promise in Week 8,

the meanings are not clear until the method of calculation for ATP
values is known.
35
There are three methods
of computing the ATP
DISCRETE
(ATP:D)
CUMULATIVE
With look ahead
(ATP:WL)
Without look ahead
(ATP:WOL)
36
A. Calculation of Discrete ATP (ATP:D)
Computation method is as follows:
1. For the first period
If there is a scheduled MPS quantity;
ATP:D = Beginning inventory + Scheduled MPS qty for the first period Backlog for the period (committed qty).
If there is NO scheduled MPS quantity;
ATP:D = 0
Table 15
37
WHY ATP:D=0 for the second case?
Because in this case, the beginning inventory is supposed
to compensate the backlogs of the first period and the
consecutive periods (if there are any)which does not have
scheduled MPS quantities.
For this reason, the beginning inventory has no
significance for the first period. Thus, the formula yields to
a negative or zero value for ATP:D.
Since there can not be a negative available to promise
quantity, ATP:D value becomes 0.
Example - ATP:D quantities for week 32
MPS Item
1
ATP:D = 10+169-110 = 69
MPS Item
2
ATP:D = 0+0-35 = -35 = 0
MPS Item
3
ATP:D = 0+0-13 = -13 = 0
Table 15
38
2. For the second period and on
If there is a scheduled MPS quantity;
ATP:D = Scheduled MPS qty for the period Backlog for the period (committed qty).
If there is NO scheduled MPS quantity;
ATP:D = 0
Table 15
Example - ATP:D quantities for MPS Item
1
for
weeks 33, 34 and 35
For week 33 ATP:D = 169-80 = 89
For week 34 ATP:D = 22-5 = 17
For week 35 ATP:D = 0-15 = -15 0
Example - ATP:D quantities for MPS Item
2
for
weeks 33, 34 and 35
For week 33 ATP:D = 0-20 = -20 0
Remember that, since there is no scheduled MPS for this
period, respective backlog should be associated with an
MPS quantity prior to week 32.
For week 34 ATP:D = 160-45 = 115
For week 35 ATP:D = 56-24 = 32
What happens to ATP:D values of MPS
Item
1
if we receive an additional order of
30 units for week 32?
The ATP:D of week 32 changes from
69 to 39. ATP:D quantities for other
weeks remain same as before.
Example - ATP:D quantities for MPS Item
1
for
weeks 33, 34 and 35
39
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. This is because at this time the
master scheduler is not creating a master schedule, but, instead, is managing an existing
schedule.
WHY we DO NOT have Forecast and POH values in Master
Schedule when computing ATP:D?
The master scheduler is promising the delivery of units to customers which 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.
40
B. Calculation of Cumulative ATP without lookahead (ATP:WOL)
Computation method is as follows:
1. For the first period
ATP:WOL = Beginning inv + Scheduled
MPS qty Backlog
2. For the following periods
ATP:WOL = ATP:WOL of preceeding
period + Scheduled MPS qty
Backlog
Example - ATP:WOL quantities for MPS Item
1
for
weeks 32, 33, 34 and 35
For week 32 ATP:WOL = 10+169-110 = 69
For week 33 ATP:WOL = 69+169-80 = 158
For week 34 ATP:WOL = 158+22-5 = 175
For week 35 ATP:WOL = 175+0-15 = 160
Table 16
41
Difference between ATP:WOL & ATP:D methods
The most obvious difference between
ATP:WOL and the ATP:D methods is that,
the ATP in any period is likely to include
units also included in the ATP of other
periods.

For example, For MPS Item
1
,

the 158 unit
ATP:WOL 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, in ATP:WOL 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.
The data becomes
misleading
Table 16
42
B. Calculation of Cumulative ATP with lookahead (ATP:WL)
The look-ahead approach resolves the misleading data problem of ATP:WOL
method of calculation.
Table 17
Computation method is as follows:
The ATP:WL of a period = (the ATP:WL of the
preceding period) + (the MPS of the period) (the
backlog of the period) (the sum of the
differences between the production [MPS qty] and
backlog of all future periods until, but not
including, the period at which point production
exceeds the backlog).
Example - ATP:WL quantities for MPS Item
1
for
week 34
For week 34 ATP:WL = 158+22-5-15 = 160
43
Detailed Calculation:
MPS Item
1
:
ATP:WL for week 32;
ATP:WL which is prior to week 32 is 10 units.
MPS for week 32 is 169 units.
Backlog for week 32 is 110 units.
In the following week (week 33), production
(MPS qty of 133 units) exceeds the backlog
(of 80 units). Therefore we will not consider
week 33.
Accordingly; ATP:WL quantity of week 32 =
10+169-110 = 69 units.
Is calculated exactly in the same way since, in the following week (week 34), production (MPS qty of 22
units) exceeds the backlog (of 5 units). Accordingly; ATP:WL quantity of week 33 = 69+169-80 = 158 units.
ATP:WL for week 33;
ATP:WL for week 34;
In the following week (week 35), production (MPS qty of 0 units) does not exceed the backlog (of 15 units).
So, we have to look ahead and say that, this difference of 15 units between production and backlog of week 35
will be covered by the ATP of week 34.
Accordingly; ATP:WL quantity of week 34 = 158+22-5-(15) = 160 units.
ATP:WL for week 35; remains as 160 units since we had already
excluded 15 units of difference qty.
44
Resolution of the misleading data problem :
The ATP quantity of 175 for week 34
includes comitted quantity of 15 units
for the following week (week 35).
The ATP quantity of 160 for week 34 does
not include the comitted quantity of 15
units for the following week (week 35).
Week in which we
do not have enough
production to meet
the existing backlog.
Week in which we
do not have enough
production to meet
the existing backlog.
Also read the following supplementary handouts for Rough Cut Capacity Planning
from the IE434 web page:
Reading 03-ROUGH CUT CAPACiTY PLANNiNG_supplement for MPS_2010.doc