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Supplement DMaster Scheduling and Rough-cut Capacity Planning

Operations Managementby

R. Dan Reid & Nada R. Sanders4th Edition © Wiley 2010

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Learning Objectives

Explain the role of the master production schedule and describe the objectives of master production scheduling.

Develop a master production schedule and project the capacity needed using rough-cut capacity planning.

Calculate available-to-promise quantities. Describe time fence policies.

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Master Production Scheduling

MPS: The anticipated build schedule The Master scheduler is the person

responsible for managing, developing, reviewing and maintaining the master schedule

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MPS As a Basis of Communication

Master production schedule linkages

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Objectives of Master Scheduling

The master scheduler considers these points when developing the (master) schedule: Achieve the desired customer service level

either by maintaining finished goods inventory or by scheduling completion of the item or service to meet the customer’s delivery needs.

Make the best use of the company’s resources: material, labor, and equipment.

Ensure that the inventory investment is at the appropriate level.

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Developing an MPS

The master scheduler: develops a proposed MPS, checks the schedule for feasibility in terms

of available capacity, modifies as needed, and authorizes the MPS.

The master scheduler uses the finished MPS records to develop a proposed master production schedule, which is then checked for feasibility with a rough-cut capacity planning technique.

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The MPS Record

Projected Available = beginning inventory + MPS shipments - forecasted demand

The MPS row shows when replenishment shipments need to arrive to avoid a stock out (negative projected available)

Week BI 1 2 3 4 5 6 7 8 9 10 11 12

Forecast 50 50 50 50 75 75 75 75 50 50 50 50

Projected available 110 60 10 -40

MPS

Week BI 1 2 3 4 5 6 7 8 9 10 11 12

Forecast 50 50 50 50 75 75 75 75 50 50 50 50

Projected available 110 60 10 85 35 -40

MPS 125

Q= 125 units

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Revised and Completed MPS Record

Week BI 1 2 3 4 5 6 7 8 9 10 11 12

Forecast 50 50 50 50 75 75 75 75 50 50 50 50

Projected available 110 60 10 85 35 85 10 -65

MPS 125 125

Week BI 1 2 3 4 5 6 7 8 9 10 11 12

Forecast 50 50 50 50 75 75 75 75 50 50 50 50

Projected available 110 60 10 85 35 85 10 60 110 60 10 85 35

MPS 125 125 125 125 125

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Rough-Cut Capacity Planning Rough-cut capacity planning (RCCP): The process of

converting the master production schedule into requirements for key resources such as direct labor and machine time

Demonstrated capacity: Proven capacity calculated from actual performance data

Capacity planning using overall planning factors (CPOPF): A rough-cut capacity planning technique. MPS items are multiplied by historically determined planning factors for key resources. See Procedures for CPOPF below:

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Rough Cut Capacity Problem: a shoe company produces two models of dance shoes. Over the past 3 years 72,000 pairs of Model M have been produced using 21,600 direct labor hours and 5760 machine hours, and 108,000 pairs of Model W using 43,200 hours of labor and 12,960 hours of machine time.

Step 1: Determine the Planning factors:

Labor Factors

Machine Factors

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456789

10111213

A B C D E FPlanning Factors (hours per pair)

Model M 0.30 0.08Model W 0.40 0.12

Quarterly Master Production Schedule (MPS) (pairs)Q1 Q2 Q3 Q4 Totals

Model M 6000 5500 9500 6500 27500Model W 10000 12000 7500 10100 39600

Direct Labor

Machine Time

Step 2:Calculate the Workload Generated by This Schedule

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Step 3: Calculate the Capacity Needs for Each Resource for Each Time Period

1516171819202122232425

A B C D E FDirect Labor Hours Required

Q1 Q2 Q3 Q4 TotalsModel M 1800 1650 2850 1950 8250Model W 4000 4800 3000 4040 15840

Totals 5800 6450 5850 5990 24090

Machine Time (Hours) RequiredQ1 Q2 Q3 Q4 Totals

Model M 480 440 760 520 2200Model W 1200 1440 900 1212 4752

Totals 1680 1880 1660 1732 6952

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Step 4: Calculate Individual Workcenter Capacity Needs Based on Historical Percentage Allocation

2728293031323334353637383940414243

A B C D E FWork Center Historical Breakdown

Center 101 60% 60%Center 102 40% 40%

Direct Labor Hours Required by Work CenterQ1 Q2 Q3 Q4 Totals

Center 101 3480 3870 3510 3594 14454Center 102 2320 2580 2340 2396 9636

Totals 5800 6450 5850 5990 24090

Machine Time Hours Required by Work CenterQ1 Q2 Q3 Q4 Totals

Center 101 1008 1128 996 1039.2 4171.2Center 102 672 752 664 692.8 2780.8

Totals 1680 1880 1660 1732 6952

Direct Labor

Machine Time

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Evaluating and Accepting the MPS

The master scheduler checks that promised customer delivery dates are met.

He also ensures that the MPS provides enough flexibility to cover new customer orders.

Once the master scheduled has evaluated and accepted the MPS, the authorized MPS is entered into the MRP system.

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Using the MPS

One use of authorized MPS is order promising (the process of making order-delivery commitments).

Order promising relies on available-to-promise (ATP), which is the uncommitted portion of a company's inventory and planned production that is maintained in the MPS to support order processing.

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Using the ATP records

The ATP records show how much inventory is available to satisfy customer demand.

Two rules to help manage the ATP: A negative number is the projected

available row is sometimes a problem. A negative number in the available-to-

promise row is always a problem.

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Using the MPS to “Order Promise”

The authorized MPS is used to promise orders to customers The MPS table is expanded to add customer orders and

available-to-promise rows (inventory to satisfy new orders) ATPAction Bucket = (beginning inventory + MPS shipment) less (customer orders before next replenishment). Available in period

1 ATP=MPS shipment – Customer orders between current MPS

shipment and next scheduled replenishment in periods 3,5,7,8, & 11

Week BI 1 2 3 4 5 6 7 8 9 10 11 12

Forecast 50 50 50 50 75 75 75 75 50 50 50 50

Customer orders 35 25 25 20 0 15 0 0 10 0 0 10

Projected available 110 60 10 85 35 85 10 60 110 60 10 85 35

Available-to-promise 50 80 110 125 115 115

MPS 125 125 125 125 125

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Example of Revising the ATP MPS Record: A customer calls marketing willing to purchase 200 units if they can be delivered in period 5. The two tables below show how the system logic would first slot the 200 into period 5 and then how the order would be allocated across periods 1, 3, and 5 and adjusting the ATP row.

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Stabilizing the MPS

The master scheduler tries to minimize the changes made to an authorized MPS – each change can impact the feasibility of the MPS.

This figure shows the demand time fence and the planning time fence which split the MPS into three parts.

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MPS & Rough-cut Capacity Planning within OM: How it all fits together

In most companies, the operations manager develops the aggregate plan, which determines the resources available to operations to execute the master production schedule. The plan will clearly indicate the size of the workforce and the aggregate production rate. The master production scheduler then develops the master production schedule. The only feasible plan that can be developed is one by the scheduler working with marketing, operations, demand management, and the customers. The master scheduler’s job is to develop an MPS that achieves the company’s desired customer service level, uses capacity effectively, and minimizes the inventory investment. To make sure that the master production schedule is feasible, rough-cut capacity planning is done.

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Supplement Highlights The MPS shows how the resources authorized by the

aggregate plan will be used to satisfy the objectives of the organization. The MPS specifies the products and quantities to be built in each time period. The MPS is a common organizational document used to facilitate communication between different functional areas. The master scheduler develops a proposed MPS based on input received from the aggregate plan and demand management. This MPS is checked for feasibility using a rough-cut capacity planning technique.

The objectives of master scheduling are to satisfy customer service objectives, use resources effectively, and minimize costs. An MPS is developed by looking at individual MPS records and calculating when replenishment quantities are needed. The individual MPS records are summed together to show the total proposed workload.