 S&OP is usually planned in terms of product families

 The master schedule represents a critical part of the planning process,

 Usually serves as major “interface” btwn production system and external

customers.

 A method to promise customers and to translate customer order

requirements

MASTER SCHEDULE

DQP 3023: Production Planning and Control

Prepared by: Muhamad Zaki Bin Yusup
 1. Explain the important of the master schedule in production planning.

2. Identify the master schedule horizon, time fences, sources of demand and
basic methodology in production planning.

3. Explain the impact of product environment for master schedule.

4. Apply the general approach to master schedule development and the

concepts of available to promise logic and two-level master schedule.

5. Identify the master schedule responsibility and demand management

overview which is affected the production planning.

DQP 3023: Production Planning and Control

Prepared by: Muhamad Zaki Bin Yusup
  Master Production Schedule
(MPS)
= Master Schedule
= Master Plan
= Specific schedule of individual
product (to be made and when?)

 Ingredients of a Material
Requirement Planning (MRP)
system with:
- Bill of Material (BOM)
- Inventory
- Purchase records
- Lead time for each item.

DQP 3023: Production Planning and Control

Prepared by: Muhamad Zaki Bin Yusup
  The MPS is a medium-range plan because it must consider the lead times.

 Lead time : several months to more than a year. Lead time required to :
i. Order raw materials and components,
ii. Fabricate parts in the factory
iii. Assemble and test the final products.

Lead time
Purchasing systems :
-time between placing order and receiving it.

Production systems:
- wait, move, queue, setup and run times for each component produced.

 MPS was dynamic plan (fixed in the near term within about a six-week horizon.

 Adjustments are possible beyond six weeks (shifts in demand or new product)

 Bill of material (BOM) product structure always used in MPS

DQP 3023: Production Planning and Control

Prepared by: Muhamad Zaki Bin Yusup
 Bill Of Material (BOM)
 Also known as product structure (all components required for a product)

 Show relationships btwn all components and quantities needed for each
component.

 Also typically contain lead times for purchase or production of each component
or assembly.

 This lead time data used for calculation of cumulative lead time, by finding the
longest lead time for each level.

-Above any level are

called parents

- Below any level are

called components or
children.

DQP 3023: Production Planning and Control

Prepared by: Muhamad Zaki Bin Yusup
  Determine the number of units of each item required to satisfy demand for new
order of 20 product (A).

DQP 3023: Production Planning and Control

Prepared by: Muhamad Zaki Bin Yusup
  Calculate the cumulative lead time of this product (A).
 2 weeks to assemble product A from subassemblies B and C
 3 weeks to assemble subassembly B from components D and E
 4 weeks to assemble subassembly C from component F and
subassembly G
 5 weeks to produce subassembly G from component H
 3 weeks to obtain component D from a supplier
 2 weeks to obtain component E from a supplier
 4 weeks to obtain component F from a supplier
 7 weeks to obtain component H from a supplier

Level Longest Lead Time

0 (End Product) 2 weeks
1 4 weeks
2 5 weeks
3 7 weeks

Cumulative lead time product (A)

= 18 weeks (2+4+5+7).

DQP 3023: Production Planning and Control

Prepared by: Muhamad Zaki Bin Yusup
  Changes in design, schedules and production processes 　→　 alter BOM and
MRP.

 Modify Master Production Schedule (MPS) 　→　 changes occur in material

requirements.

 Many firms do not respond to minor scheduling or quantity changes even if they
are aware of them to avoid system nervousness that create havoc in
purchasing and production departments if implemented.

 Tool to reduce this system nervousness are called time fences and pegging.

Time fence

 The way of allowing a segment of the master schedule

to be designated as “not to be rescheduled”.
 To establish rules for managing the master schedule

DQP 3023: Production Planning and Control

Prepared by: Muhamad Zaki Bin Yusup
 Two most common time fences are:
Demand time fence Planning time fence
Forecast data often ignored usually set equal or slightly larger than
(frozen) cumulative lead time
Only customer order quantities Has adequate time to react to new
used to make master schedule orders
computations. Master production schedule “free” to
be changed.

DQP 3023: Production Planning and Control

Prepared by: Muhamad Zaki Bin Yusup
 Where do the figures in MPS come from?

The MPS ⇔ The S&OP

Master schedule is developed somewhat independently of the S&OP

Once developed it should be able to be aggregated back to S&OP values.

Methods used for demand forecasting different for master schedule when
compared to S&OP.

S&OP forecasts are long-range, aggregate forecasts, often generated from

causal methods.

MPS forecasts are more often generated from quantitative or time series
methods, plus demand number is the actual customer order.

DQP 3023: Production Planning and Control

Prepared by: Muhamad Zaki Bin Yusup
  Using demand (both forecast and customer orders) as input

 Master schedule has to accommodate additional constraints as

seen in the S&OP, at a different level of detail:
i. Meet customer needs for delivery as in S&OP.
ii. Balancing preliminary master schedule numbers against available
capacity.
iii. Establishing inventory levels according to S&OP.

DQP 3023: Production Planning and Control

Prepared by: Muhamad Zaki Bin Yusup
  On-hand quantity = 70 units

 In period 1:
- Demand = 40 units
- Projected available = 30 units

 In period 2:
- Demand = 50 units
- MPS = 80 units
- Projected available = 30 + 80 – 50
= 60 units

DQP 3023: Production Planning and Control

Prepared by: Muhamad Zaki Bin Yusup
  Mostly influence customer on final design of product or service

Make-To-Stock (MTS).
• Not influence on final design.
• Master schedule act as final assembly schedule (FAS) for finished goods
inventory.
• Relatively few final products
• Orders are filled directly from stock.

Assemble-To-Order (ATO).
• Customer influence the product.
• Relatively small number of subasembly options.
• Final products often not planned on the master schedule.
• Master schedule may be needed for each unique combination
• Example: automobiles and pc (have optional modules)

Make-To-Order (MTO).
• Customer has influence on design of final product or service.
• May use standard components as raw materials in different way
• Typical of many service organisations.
• Demand is variable (quantity and design )

DQP 3023: Production Planning and Control

Prepared by: Muhamad Zaki Bin Yusup
 When master schedule is developed, forecast is required
 Formal schedule for final product is developed.

Example: Make To Stock for bakery.

 Easier to develop forecasts instead for the amount of raw materials (flour, sugar, etc.) that
might be needed for a given time period.

Example: ATO for bicycle.

 The options may include:
3 frames (regular, heavy-duty, and light)
5 different speed options (3-, 7-, 12-, and 15-speed)
4 different types of seats
3 different handle bar types
6 different types of tires
3 different types of brakes
4 “pure” options (for example, whether it has a water bottle or not)

 May develop 12,960 (3 × 5 × 4 × 3 × 6 × 3 × 4 = 12,960) optional

 Some combinations may never be built or sold.
 In ATO develop master schedules is optional.
 Master schedules may implies 29 master schedules (3 + 5 + 4 + 3 + 6 + 3 + 4 + 1 (common
assemblies)) instead of 12,960

Note: Master schedule designed to operate at level of fewest items that need to be scheduled.
  Allow organisation quickly and realistically promise delivery of product to customers

 Valuable to ATO environment

 Not a projected inventory balance

 ATP will only add customer order promises until next period where MPS quantity exists.

DQP 3023: Production Planning and Control

Prepared by: Muhamad Zaki Bin Yusup
Example:

Calculate the ATP based on forecast as below:

On Hand = 56 Lot Size = 60 Demand Time Fence = 2 weeks

Period 1 2 3 4 5 6 7 8 9 10 11 12
Forecast 22 25 20 20 18 18 32 30 28 28 29 25
Customer order 24 23 17 22 15 14 17 16 12 16 13 11
Proj. Avail. Bal.
Avail. To Promise
MPS

DQP 3023: Production Planning and Control

Prepared by: Muhamad Zaki Bin Yusup
Example:

Calculate the ATP based on forecast as below:

On Hand = 56
Period 1 2 3 4 5 6 7 8 9 10 11 12
Forecast 22 25 20 20 18 18 32 30 28 28 29 25
Customer order 24 23 17 22 15 14 17 16 12 16 13 11
Proj. Avail. Bal. 32 9 49 29 11 53 21 51 23 55 26 1
Avail. To Promise
MPS 60 60 60 60

DQP 3023: Production Planning and Control

Prepared by: Muhamad Zaki Bin Yusup
 Solution

On Hand = 56
Period 1 2 3 4 5 6 7 8 9 10 11 12
Forecast 22 25 20 20 18 18 32 30 28 28 29 25
Customer order 24 23 17 22 15 14 17 16 12 16 13 11
Proj. Avail. Bal. 32 9 49 29 11 53 21 51 23 55 26 1
Avail. To Promise 9 6 29 32 20
MPS 60 60 60 60
 Period 1
o ATP  Period 3
= 56 – (23 + 24)
o MPS = 60
= 9 (can promise to
o Project available Balance
customers)
= (60 + 9) – 20
= 49

o ATP = 60 – ( 17 + 22 + 15)
DQP 3023: Production Planning and Control =6
Prepared by: Muhamad Zaki Bin Yusup
 Week 1 2 3 4 5 6 7 8 9
Forecast 0 11 18 29 46 53 60 60 60
Customer order 70 2 52 45 13 6 0 0 0
Projected available
Available to promise
MPS
Assembly: Water Bottle On Hand: 100 Lot Size: 100
Demand time fence = 3 weeks
Week 1 2 3 4 5 6 7 8 9
Option Forecast 25 62 99 35 66 1 31 61 91
Customer orders 65 50 42 30 15 3 0 0 0
Projected available
Available to promise 35 0 0
MPS 100 100
DQP 3023: Production Planning and Control
Prepared by: Muhamad Zaki Bin Yusup
 KEY ISSUES:

1. Master schedule is the major link to customer orders.

2. Should reflect the issues and constraints S&OP (chase, level or

combination)

3. MPS is a reflection of the completion of the order.

4. Lot sizes are usually established . Some time use lot for lot (order when
need)

5. Safety stocks be planned as absolute number or percentage of forecast

 KEY ISSUES:

6. Sometimes MPS values can be considered as a series of organisation

planned orders in planning time fence.

7. Any changes should be carefully evaluated,(e.g., equipment breakdown,

supplier problems)

8. Master schedule generally represents an extremely vital part of the planning

system for any company.

9. Control of the master schedule never be abdicated to computer control

  Two important reasons that demand management is a significant for
planning and control:

1. Internal demand
i. Service requirements, especially for field repairs
ii. Requirements for new product engineering to build prototypes
iii. Requirements for quality assurance for testing
iv. Internal repairs or replacements for work-in-process
v. Distribution requirements

2. Marketing and Sales (customer demand):

i. Changing capacity. (Equipment- new equipment/ new tooling)
ii. Changing human capacity (hiring and / or training).
iii. Lining up suppliers (changes in product or quantity of product)
iv. Inventory considerations
v. Phase in / phase out of designs.

DQP 3023: Production Planning and Control

Prepared by: Muhamad Zaki Bin Yusup
  Four major aspects of demand management:

1. Prediction
2. Communication
3. Influence
4. Prioritization and allocation

1. Prediction
- forecasting of anticipated customer demand
- issue:
i. Selecting the best forecasting method
ii. forecast must be tracked and evaluated
iii. Checked the impact thru:
a. Communication : communicate with customers, marketing and sales to
understand the demand patterns.
b. Influence : influence with marketing tools.
c. Lead time reduction
d. Production flexibility
e. Policies guiding the development of both the S&OP and the master schedule
f. Safety stock or MPS over-planning
iv. Tracking demand
v. Service levels
 2. Communication
- Effective two way communication, especially with customers.
- Issue:
i. Order entry
ii. Order delivery date promising
iii. Customer order servicing :

3. Influence
- Primary responsibilities of Sales and Marketing function
- Sales and Marketing work closely with Operations Planning to understand
constraints and opportunities.

4. Prioritization and allocation

- Continually prioritize the order

DQP 3023: Production Planning and Control

Prepared by: Muhamad Zaki Bin Yusup
 IMPACT OF OPERATION ENVIRONMENTS
 Effect of environments on demand management activities
 Customer preferences to move backward into production activity (from MTS
to MTO),

1. Make to Stock:
- No order promising, prioritization, or order servicing
- Communication at minimum level

2. Assemble to Order
- More customer influence
- Customer can order various combinations of standard subassemblies or
options
- Focus on order promising made through available to promise (ATP) logic of
the master schedule.
- Customer communication should be both ways

3. Make to Order
- Has an extensive amount of customer influence, customer
- Communication and order promising are very important,

DQP 3023: Production Planning and Control

Prepared by: Muhamad Zaki Bin Yusup
 IMPACT OF OPERATION ENVIRONMENTS

DQP 3023: Production Planning and Control

Prepared by: Muhamad Zaki Bin Yusup
  There are lot of terminologies and
methodologies for developing,
maintaining and effectively activity for
efective customer service with minimal
organisational cost (master schedule).

 Every organisation has at least one

Master Schedule
(large or small / manufacturing or
service).

 In some organisation, master schedule is

very imformal and may not even be
called a schedule, yet it still exists.

DQP 3023: Production Planning and Control

Prepared by: Muhamad Zaki Bin Yusup
  The fundementals of master scheduling
in more formal master scheduling
environment generally represented by
larger manufacturing organisations.

 If the concepts well understood, it is

easy to translate the concepts to the
less formal approaches generally used
by smaller organisations, especially
service organisations.

DQP 3023: Production Planning and Control

Prepared by: Muhamad Zaki Bin Yusup