Unit 3

Scheduling Operations

Chapter 12: Aggregate Planning

Lesson 39- MASTER SCHEDULING AND ROUGH-CUT CAPACITY PLANNING Learning Objectives After reading this lesson you would be able to understand Master production plan Master schedule Rough cut capacity planning

Well, my friends, let’s get started.

As we all very well know, the production plan represents a firm's aggregate measure of

manufacturing output. Once this plan is made, it is the responsibility of marketing to sell

it and production to implement it. To do so requires a desegregation of the production

plan into individual products. Recall that the master production schedule (MPS) is a

statement of how many finished items are to be produced. Typically the master schedule

is developed for weekly time periods over 6-12 months horizon. An example of partial

MPS is shown in figure 7.

1 2 3 4 5 6 7 8 A 200 200 350 B 150 10

0 190 120

X 75 75 75 60

Totals (Aggregate production plan) 500 800 350 600 280 750 420 300 FIGURE .7 A portion of a master production schedule Master scheduling is generally a complex problem, especially for products with large number of operations For example, in Dow Corning there are 12 MPS, who are responsible for scheduling 400 packed products over a 26-week time horizon. In process

industries with only a few different operations, master production scheduling is somewhat easier. In order to illustrate the basic concepts of master production scheduling and rough-cut capacity planning, let us turn to an example Developing a Master Schedule Let us suppose that Gulden’s management has decided to use the production plan in Table 8. Since the company produces two products, Golden Brew and Golden Delight,' the master scheduler must translate the aggregate production plan into a weekly schedule for each product. Gulden’s beer is produced in cases of twenty-four 16-ounce cans (3 gallons). Each barrel consists of 32 gallons; the product mix, which is determined by historical sales data, is relatively constant, a 70-30 percent split between Golden Brew and Golden Delight. With this information, we can project the monthly production for each product for the first 6 months is shown in Table 9.

Table 8 Alternate Production Inventory Plan

MONTH PRODUCTION INVENTORY LOST SALES

CUMULATIVE PRODUCTION

Jan 1500 1000 0 2500 Feb 1500 1500 0 4000 Mar 1500 1100 0 5500 April 2800 1300 0 8300 May 2800 1300 0 11100 June 2800 1000 0 13900 July 2800 600 0 16700

August 2800 4000 0 19500 Sept 2200 600 0 21700 Oct 2200 1800 0 23900 Nov 2200 2200 0 26100 Dec 1500 1500 0 2700

Table 9

AGGREGATE PRODUCTION PRODUCT MIX

GOLDEN BREW GOLDEN DELIGHT MONTH

BARRELS CASES (CASES) (CASES) " January 1500 16,000 11,200 4800

February 1500 16,000 11,200 4800

March 1500 16,000 11,200 4800 April 2800 29,867 20,907 8960 May 2800 29,867 20,907 8960 June 2800 29,867 20,907 8960 July 2800 29,867 20,907 8960

Average Weekly Production Requirements for GoldenBreweries WEEK

To simplify our

calculations, we assume there are 4 weeks in each month. Then the average weekly production required is given in Table 10. At Gulden’s plant, only one product at a time can be produced, since they share common facilities such as mixing equipment, bottling, capping, and case packing. Using a master schedule as determined by Table 10 would probably not be economical, since there would be frequent changeovers of products and thus high setup costs. One method of reducing the number of product changeovers is to produce in large batch sizes. Table 11shows a possible master schedule in which products are alternated on a weekly basis.

A Master Schedule for Golden Breweries

Table 12

We have not determined whether there is sufficient capacity available on a short-term basis to be able to achieve this schedule. We previously stated that under normal conditions, the plant has a capacity of 2200 barrels per month, or 5867 cases per week. With overtime, the capacity can be increased) to 2800 barrels per month, or 7467 cases per week. These restrictions are due to the physical limitations of the production equipment. From Table 11, we see that up to week 12, we are able to produce within capacity. Beyond this, the planned schedule for Golden Brew cannot be achieved within

the limitation of 7467 cases per week. We would therefore say that this master

A Feasible Master Production Schedule for GoldenBreweries

PRODUCT 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23

Golden ' \

Brew 2800 2800 2800 2800

2800 2800 2800 2800

2800 2800 2800 2800

5227 5227

5227

5227

5227

5227

5227

5227

5227

5227

5227

Golden

Delight 1200 1200

1200

1200

1200 1200 1200

1200

1200

1200

1290

1200

2240 2240

2240

2240

2240

2240

2240

2240

2240

2240

2240

Table 10

Table 12 A feasible Master Schedule for Golden Breweries

PRODUCT 1 2 3 4 5 6 7 8 9 1

0 11 12 13 14 15 16 17 18 19 20 21 22 23

Golden

Brew 5600 0 5600 0 5600 0 5600 0 5600 0 5600

0 7467

0 5974

7461

7467 0 5974 74

677467 0 597

4

Golden

Delight 0 2400 0 2400 0 2400 0 2400 0 2400 0

3892 0 7467 1493 0 0 746

7 1493 0 0 7467

1493

WEEK PRODUCT 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23

Golden

Brew 5600

0 5600'

0 5600 0 5600 0 5600 0

5600 0 10,454 0 10,454 0

10,454 0 10,454 0 10,454 0 10,45

Golden

Delight

0 2400

0 2400 0 2400 0 2400 0 2400 0 240

0 0 4480

0 4480 0 4480 0 4480 0 4480 0 4

Schedule is infeasible. This is the essence of rough-cut capacity planning-namely, determining if a master schedule is feasible with respect to capacity limitations. If not, then the master scheduler must revise the MPS to stay within capacity constraints. In some cases, it may even be necessary to revise the aggregate production plan. Table 12 shows a feasible master schedule, developed by trial and error, which. meets the capacity limitations in each month. Note that as in Table 11, two product changeovers each month must be made. For example, in weeks 14 and 15, Golden Delight will be produced and. early in week 15, a changeover will be made to Golden Brew. This will be produced until week 18, when a changeover to Golden Delight will be made, and so on. It is a good idea to check planned inventory levels in relation to an MPS. We may use Equation 1 on a weekly basis to do this. Equation 1 = Beginning inventory +Production – Projected sales – ending inventory. Using the projected demand from Table 13 and translating this into cases per week, we arrive at Table 14., which shows the projected short-term fluctuations in Inventory for both products and can be used in assessing the feasibility of the master schedule from the viewpoint of safety stock.

Table 13 Demand forecast for Golden Breweries. e

Month Demand ( Barrels) Cumulative Demand Jan 1500 1500 Feb !000 2500 Mar 1900 4400 April 2600 7000 May 2800 9800 June 3100 12900 July 3200 16100 August 3000 19100 Sept 2000 21100 Oct 1000 22100 Nov 1800 23900 Dec 2200 26100 26100

TABLE 14. Inventory Analysis for Golden Breweries' Master Production Schedule

GOLDEN BREW GOLDEN DELIGHT

WEEK DEMAND PRODUCTION

INVENTORY.

DEMAND

PRODUCTION INVENTORY.

1 2800 5600 10,267 1200 0 2000 2 2800 0 7,467 1200 2400 3200 3 2800 5600 10,267 1200 0 2000 4 2800 0 7,467 1200 2400 3200 5 1867 5600 11,200 800 0 2400 6 1867 0 9,333 800 2400 4000 7 1867 5600 13,066 800 0 3200 8 1867 0 11,199 800 2400 4800 9 3547 5600 13,252 1520 0 3280

10 3547 0 9,705 1520 2400 4.160 11 3547 5600 11,758 1520 0 2640 12 3547 0 8,211 1520 3892 5012 13 4853 7467 10,825 2080 0 2932 14 4853 0 5,972 2080 7467 8319 15 4853 5974 7,093 2080 1493 7732 16 4853 7467 9,707 2080 0 5652 17 5227 7467 11,947 2240 0 3412 18 5227 0 6,720 2240 7467 8639 19 5227 5974 7,467 2240 1493 7892 20 5227 7467 9,707 2240 0 5652 21 5787" 7467 11,387 f480 0 3172 22 5787 0 5,600 2480 7467 8159 23 5787 5974 5,787 2480 1493 7172 24 5787 7467 7,467 2480 0 4692 25 5973 7467 8,961 2560 0 2132 26 5973 0 2,988 2560 7467 7039

,. .Initial inventory = 1000 barrels (7467 cases of Golden Brew and 3200 cases of Golden Delight)

Using the Master Schedule

It is clear from this simple example that master scheduling can be a compli-cated process. Let us summarize some of the observations we made through the Golden Breweries example. First, the master production schedule should relate to the aggregate production plan; that is, the planned monthly schedule

should equal the aggregate plan when totaled over all products. Second, rough-cut capacity planning assists the master scheduler in developing a feasible schedule by determining potential production bottlenecks. Often, the master schedule must be revised several times until it is feasible. Third, other ways of evaluating a master production schedule include the and cost of setups or product changeovers and short-term inventory fluctuations.

The master schedule is important, since it forms the basis for future production-planning activities. Therefore, it must be adaptive to changes in the environment. Seldom will forecasted demands be realized or production plans be adhered to perfectly. As each week passes, operations managers must compare scheduled production with actual results. This may result in changes to the MPS-master scheduling is a full time job! Too many changes, however, indicate that master scheduling is not being performed correctly and can result in poor productivity and low levels of customer service.

With that, we have come to the end of today’s discussions. I hope it has been an enriching and satisfying experience. See you around in the next lecture. Take care. Bye.