Chapter 6

Schedule Management

Chapter 6: Schedule Management 1

Schedule Management

Chapter 6: Schedule Management 2

Introduction

Chapter 6: Schedule Management 3

 Henry Ford Hospital
 Aggregate planning involves matching
hospital’s available capital, workers, and
supplies to a highly variable customer
demand pattern
 903 beds arranged into 30 nursing units
 Each nursing unit contains 8 to 44 beds
 Each nursing unit treated as independent
production facility
Chapter 6: Schedule Management 4
 Factors Complicating Aggregate
Planning at Henry Ford Hospital
 High degree of demand variability
 average number of occupied beds in 1991
was 770
 in one 8-week period an average of 861 beds
was occupied
 in another 8-week period an average of 660
beds were occupied
 number of beds occupied could change by as
may as 146 beds in less than two weeks

Chapter 6: Schedule Management 5

Complicating Factors continued
 Large penalty for not being able to admit HMO
patients
 lost revenue
 must pay other hospital for patient’s stay
 a simple obstetrics case cost $5,000
 Tight labor market for RNs
 12 to 16 weeks to recruit and train nurses at cost of
$7,600
 Cost of 8-bed modules exceeds $35,000/
month
Chapter 6: Schedule Management 6
Importance of Aggregate Planning

 Without sufficiently long-term view may make

short-term decisions that hurt the
organization in the long-term
 For example, shortly after Henry Ford
Hospital reduced staff, it determined the staff
was needed
 New staff was recruited
 Both staff reduction and recruiting costs
incurred
Chapter 6: Schedule Management 7
Extremely Difficult Decision

 Demand can shift by more than 16% in

a two-week period
 Takes 12 - 16 weeks and costs $7,600
a piece to recruit new nurses
 By time staff hired, demand may have
shifted again

Chapter 6: Schedule Management 8

Extremely Difficult Decision
continued

 If don’t have enough staff, cost $5,000

per patient turned away (simple cases)
 Cost of one idle 8-bed module is
$35,000/month or $420,000/year

Chapter 6: Schedule Management 9

Package Products Inc.

 Folding Carton Packing for baker and

deli industry
 Significant growth during 1990s
 More demanding customers
 Needed to do better job of managing
operations

Chapter 6: Schedule Management 10

Producing Folding Cartons

 Four to eleven steps

 rolls of pulpboard cut into sheets
 sheets run through printing presses to
add four color images
 sheets dried and die cut
 cellophane window added
 cartons glued
 product prepared for shipping
Chapter 6: Schedule Management 11
Scheduling at Package
Products

 Initially used Gantt chart

 manually schedule jobs using a board
and magnetic strips
 capacity shortage problems
 critical information scattered throughout
organization
 Acquired finite capacity scheduling
(FCS) software package
Chapter 6: Schedule Management 12
Using the FCS Package

 Runs on PC
 Updates previous day’s schedule
 Allows performing what-if analysis
 Used to generate schedules for next 3 to 6 months
 Overtime reduced by 300%
 On-time delivery performance improved by 32%
 Backorders reduced by 53%
 Respond to customer inquiries in 22 seconds

Chapter 6: Schedule Management 13

Scheduling

 Ensuring the right tasks are conducted

at the right time on the right items
 Productivity problems often attributable
to poor schedule management
 Scheduling not anywhere as difficult
for continuous flow and processing
organizations as it is for job shops

Chapter 6: Schedule Management 14

The Sequence of Scheduling
Activities

Chapter 6: Schedule Management 15

Scheduling Activities

Chapter 6: Schedule Management 16

 Demand Forecast
 Forecast supports entire scheduling process
 May not need forecast if customers place orders far in
advance
 Forecast used for different purposes
 Long-range forecasts used for capacity planning

 Forecast in range of 9 to 18 months used for

aggregate planning
 Short-range forecasts used for loading and

sequencing

Chapter 6: Schedule Management 17

The Aggregate Plan

 Approximate schedule of overall

operations that will satisfy demand
forecast at minimum cost
 Planning horizon often a year or more and
broken into monthly or quarterly periods
 Purpose is to minimize short-sighted
effects
 Work with aggregate units and resources

Chapter 6: Schedule Management 18

The Aggregate Plan continued

 Equivalent units
 Relevant costs
 hiring and layoff costs
 inventory and backorder costs
 wages and overtime charges
 subcontracting costs

Chapter 6: Schedule Management 19

 The Production Plan
 Result of managerial iteration and changes to
aggregate plan
 Often disaggregated one level into major output
groups
 Aggregate Plan: number of automobiles to
be produced in each of the upcoming 12
months
 Production Plan: number of compacts, mid-
size, full-size, light trucks, and minivans to
produce in each of the upcoming 12 months

Chapter 6: Schedule Management 20

The Master Schedule

 Point where actual orders incorporated

into scheduling system
 Aggregate outputs broken down into
individual end items

Chapter 6: Schedule Management 21

Check for the Following Problems

 Does schedule meet production plan?

 Does schedule meet demand forecasts?
 Are there priority or capacity conflicts?
 Are other constraints violated?
 Does schedule conform to policy?
 Does schedule conform to laws and
rules?
 Does schedule provide flexibility?
Chapter 6: Schedule Management 22
Rough-Cut Capacity Planning

 Feasibility check of master production

schedule
 Historical ratios of loads placed on
workcenters used
 Workloads assumed to fall in period
end items demanded

Chapter 6: Schedule Management 23

Priority Planning

 What materials are needed when

 Feasibility check of master production
schedule to make sure all materials will
be available when needed
 Determine when order is needed and
schedule backwards from that date
 Material Requirements Planning (MRP)
systems often used
Chapter 6: Schedule Management 24
Capacity Planning

 Inventory control system and master

schedule used to determine required
capacity over planning horizon
 Load reports generated for each work
center
 Inventory and lead times considered

Chapter 6: Schedule Management 25

Loading

 Deciding which jobs to assign to which

work centers
 Often some equipment or workers
better for certain jobs

Chapter 6: Schedule Management 26

Sequencing

 After jobs assigned to work centers,

order in which to process the jobs
must be decided
 Sequencing can have impact on
timeliness of job completions
 Priority rules often used

Chapter 6: Schedule Management 27

Detailed (Short-Term) Scheduling

 Detailed schedules itemizing specific

jobs, times, materials developed
 Typically done for only a few days in
advance

Chapter 6: Schedule Management 28

Dispatching

 All previous activities are planning

activities
 Dispatching is the physical release of a
work order from production planning

Chapter 6: Schedule Management 29

Expediting

 Task of getting job done on time once

it is released to the shop floor
 Special tags used to identify hot jobs

Chapter 6: Schedule Management 30

Aggregate Planning

Chapter 6: Schedule Management 31

Capacity Options

 Overtime
 Additional or fewer shifts
 Hiring or laying off workers
 Subcontracting
 Building up inventories
 Leasing facilities
 Backlogging demand
 Changing demand
 Undersupplying the market

Chapter 6: Schedule Management 32

 Pure Aggregate Planning Strategies

 Level Production
 Equal amount produced each period
 Steady employment
 Inventory costs and risks
 Chase Demand
 Production matched to demand for the
period
 Minimal inventory
 High overtime or hire/fire costs
Chapter 6: Schedule Management 33
Personnel Needed by Rap-X-Press

Chapter 6: Schedule Management 34

Level Production at 40 Workers

Chapter 6: Schedule Management 35

Cost of Chase Demand with 40 Workers

Chapter 6: Schedule Management 36

Master Scheduling

Chapter 6: Schedule Management 37

Master Production Schedule

 Production plan disaggregated into

individual end items
 Final word about what will be built and
when
 Altering the master schedule can alter
inventory levels, lead times, capacity
requirements and so on
 Should not be a “wish list”
Chapter 6: Schedule Management 38
Master Production Schedule
 Sales and operations key players in developing
master schedule
 MPS usually stated in terms of weekly periods
(buckets)
 Rolling schedule
 Four periods
 frozen period

 firm period

 full

 open

Chapter 6: Schedule Management 39

Orders Replacing the Forecast in the
Master Schedule

Chapter 6: Schedule Management 40

Master and Final Assembly Schedules

Chapter 6: Schedule Management 41

Four Periods in the Rolling MPS

Chapter 6: Schedule Management 42

Scheduling Services

Chapter 6: Schedule Management 43

Hospitals

 Patient arrivals somewhat

uncontrollable
 Specialized and expensive equipment
 Nurses must always be available
 Nurses represent large expense
 Constraints associated with scheduling
nurses
Chapter 6: Schedule Management 44
Urban Alarm Services

 Quick response required

 Personnel is a major expense
 Use of duty tours can complicate
scheduling

Chapter 6: Schedule Management 45

Educational Services

 Scheduling of classes
 Assignment of classes to students
 Allocation of faculty to classes
 Allocation of facilities to classes

Chapter 6: Schedule Management 46

Yield/Revenue Management and
Overbooking

 Attempt to allocate the fixed capacity

of a service to match the revenue
demand in the market place

Chapter 6: Schedule Management 47

When is Yield Management Appropriate?

 Fixed Capacity
 Perishable Capacity
 Segmentable Market
 Capacity Sold in Advance
 Uncertain Demand
 Low Marginal Sales Cost, High
Marginal Capacity Addition Cost
Chapter 6: Schedule Management 48
Overbooking
 An attempt to reduce costs through
better schedule management.
 Based on inventory solution for the
“newsboy problem.”

Chapter 6: Schedule Management 49

Copyright
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Chapter 6: Schedule Management 50