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Master production schedules
Chapter 23
Master production schedules Chapter takeaways After completion of this chapter the reader would be able to 1. Appreciate the need for developing ideal master production schedules (MPSs) in effective production planning and control and practice the same. 2. Understand the stages of production scheduling in order to perform systematically. 3. Understand input terms to collect them systematically. 4. Distinguish between forward scheduling and backward scheduling to be able to make appropriate decisions while choosing between them. 5. Plan a production schedule in such a manner to ensure that there is no machine interference.
23.1 Introduction We have seen in the earlier chapters that after aggregate planning, the next step in production planning is the preparation of master production schedules (MPSs). A MPS is a translation of the production planning into schedule charts and details. It expresses the overall plans in terms of specific end items or models that can be assigned priorities. MPS is meticulously drawn up, after the planning stage, to determine when specific products groups will be made, when customer orders will be filled, and what manufacturing capacity is still available for new customer demand. It provides the basic foundation for 1. 2. 3. 4. 5.
Planning for the material and capacity requirements, Making good use of manufacturing resources, Making customer delivery promises, Resolving tradeoffs between sales and manufacturing and Attaining strategic objectives in the sales and operations plan.
It forms a key link in the manufacturing planning and control interfacing with marketing, distribution planning, production planning, and capacity planning.
Production Planning and Control. DOI: https://doi.org/10.1016/B978-0-12-818364-9.00023-8 Copyright © 2019 BSP Books Pvt. Ltd. Published by Elsevier Inc. All rights reserved.
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23.2 Master production schedule comes before material requirements planning MPS gives a weekly or monthly breakdown of the production requirement for each product and expresses the overall plans in terms of specific end items or models that can be assigned priorities. It is useful to plan for the material and capacity requirements. It gives production, planning, purchasing, and top management the information needed to plan and control the manufacturing operation. With the help of this schedule, one can know the requirements for the individual end items by date and quantity and would enable the production manager to shift the production from one product to another as per the changed production requirements. Master production scheduling plays an important role in balancing of demand with the supply, satisfying customers according to the limits of the factory and the supplier’s base. This is akin to the quality function deployment, which is a structured approach to defining customer needs or requirements and translating them into specific plans to produce products to meet those needs. This is described more detail in quality management books (Fig. 23.1).
Bill of materials
Process planning layouts
Company policy on make or buy
Delivery dates
Priority planning
Available capacities
Master production schedules
Material requirement planning
FIGURE 23.1 Basic input data for MPS. MPS, Master production schedule.
Staffing
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The MPS is generally followed by an operation schedule, which fixes the total time required to do a piece of work with a given machine or which shows the time required to do each detailed operation of a given job with a given machine.
23.3 General terms of reference related to master production schedule The website of http://people.brunel.ac.uk suggests the following terms of reference that are commonly used in MPS: 1. Forecast demand: The forecast demand for the product per week within a period of 4 weeks. 2. Initial number of employee: The initial number of employees in each week, say 10; during the course of the period, we may hire extra hands, as cited following. 3. Regular time capacity in hour per employee: The number of regular hours each employee works per week, say 40 hours. 4. Regular time cost per hour: The cost per hour of regular time worked, the monthly or weekly wages computed on an hourly basis. 5. Undertime cost per hour: The cost per hour of not using a worker to their full regular capacity. Though this cost is generally zero, this term is coined overtime, which is the more popular and very common term. 6. Overtime capacity in hour per employee: The maximum number of hours each employee can work in overtime per week, here 10 hours. 7. Overtime cost per hour: The cost per hour of overtime, which generally is double the regular time cost. 8. Hiring cost per employee: The cost of hiring one employee. This is akin to the fixed cost as compared to the regular time cost, which is akin to the variable cost. 9. Dismissal cost per employee: This is the cost of dismissing (firing) one employee, in which you may have to pay compensation of a month’s wages or higher. 10. Maximum/minimum number of employee allowed: The physical capacity constraints or the fear of union, etc., may make the management of maximum number of employees. 11. Initial inventory caused by make-to-stock policy and backorder caused by make to-order policy, which result in the initial inventory available or backorders outstanding, 12. Maximum/minimum ending inventory: The initial inventory or backorder forces us to set a maximum/minimum limit for the inventories lying with us by the end of the period. While the minimum number corresponds to safety stock, the maximum number is limited by cost considerations.
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13. Unit inventory holding cost: The cost of holding one unit in stock at the end of each period, also called the inventory carrying cost as detailed in Chapter 29, Scientific inventory control. 14. Maximum subcontracting allowed: The maximum number of product units we are allowed to buy in from the external subcontractor, which is limited by the make or buy decision explained in Chapter 14, Breakeven and make or buy analyses. 15. Unit subcontracting cost: The cost of each unit bought from the external subcontractor. 16. Maximum backorder allowed: The maximum number of backorders allowed at the end of each period, since too many backorders results in customer dissatisfaction and loss of sales.
23.4 Definitions of master production schedule A master production schedule translates a business plan into a comprehensive product manufacturing schedule that covers what is to be assembled or made, when, with what materials acquired when, and the cash required. MPS is a key component of material requirements planning (MRP). It sets the quantity of each end item to be completed in each week of a short-range planning period. This period varies from a week to a month depending upon the industry. Business Dictionary A master production schedule (MPS) is a plan for individual commodities to produce in each time period such as production, staffing, inventory, etc. It is usually linked to manufacturing where the plan indicates when and how much of each product will be demanded. Wikipedia A Master Production Schedule or MPS is the plan that a company has developed for production, inventory, staffing, etc. It sets the quantity of each end item to be completed in each week of a short-range planning horizon. A Master Production Schedule is the master of all schedules. It is a plan for future production of end items. http://www.inventorysolutions.org/def_mps.htm Master scheduling is the detailed planning process that tracks manufacturing output and matches this against customer orders that have been placed. The master schedule is the next step in planning after the sales and operations planning (S&OP). http://logistics.about.com/od/strategicsupplychain/a/Master-Scheduling.htm
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23.5 Rough cut capacity planning As explained in Chapter 20, Capacity planning, rough cut capacity planning (RCCP) is the process of determining if the plan is feasible; it determines whether the organization has sufficient capacity to carry out the plan. Although RCCP is more refined than resource requirements planning, it is called rough cut because it is less refined than capacity requirements planning. This is discussed more in detail in Chapter 21, Aggregate planning, on capacity planning. The master schedule process also uses information on available to promise (ATP) inventory on a period-by-period basis to determine the projected inventory, production requirements, and the resulting uncommitted inventory.
23.6 Functions of master production schedule 1. To translate aggregate plans into specific end items: Aggregate plan determines level of operations that tentatively balances the market demands with the material, labor, and equipment capabilities of the company. Master schedule translates this plan into a specific number of end items to be produced in a specific time period. 2. Evaluate alternative schedules: Master schedule is prepared by trial and error. Computer-simulated models are now available to evaluate the alternate schedules. 3. General material requirement: It forms the basic input for material requirements planning (MRP). 4. Generate capacity requirements: Capacity requirements are directly derived for MPS and also vice versa. 5. Facilitate information processing: By controlling the load on the plant, a master schedule determines when the deliveries should be made. It coordinates with other management information systems such as marketing, finance, and personnel. 6. Give production, planning, purchasing, and management the information to plan and control manufacturing. 7. Enable marketing to make legitimate delivery commitments to warehouses and customers. 8. Effective utilization of capacity: By specifying end item requirements, a master schedule establishes the load and utilization requirement for machines and equipment. 9. Increase the efficiency and accuracy of a company’s manufacturing. 10. RCCP.
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23.7 Benefits of master production schedule The achievement of all the functions as cited above can be considered as the benefits of MPS.
23.7.1 Inputs for master production schedule 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12.
Forecast demand, voice of customer Customer orders Production facilities, visual quality objective Aggregate planning Production costs Inventory costs Bill of materials Process planning layout for each component Inventory levels Supply and market availability Economic lot size, production lead time Vision and mission of the company
23.7.2 Outputs from master production schedule 1. 2. 3. 4.
Amounts to be produced Staffing levels Quantity ATP Projected available balance
23.8 Stages of master production schedules 1. First, the business plans are consolidated based on a. Corporate strategies and policies b. Demand forecasts c. Economic, competitive, and political conditions d. This would help in establishing production and capacity strategies. 2. Based on these, the aggregate production plans are prepared as detailed in Chapter 21, Aggregate planning. 3. Next, the plans are disaggregated for scheduling each and every item and to ensure that no small detail is omitted. 4. MPSs are then prepared as explained in detail in subsequent paragraphs. These stages are illustrated in Fig. 23.2. Note that the subsequent stages of MPS (shop floor loading, scheduling and controlling, as well as material requirement planning) are also represented in this figure.
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FIGURE 23.2 Stages of master production scheduling.
23.9 Material requirements planning models to determine the lot size The following are some of the models used in MRP to determine the economic lot sizes, as also cited in Chapter 14, Break-even and make or buy analyses. G
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Economic order quantity (EOQ): Compute a lot size using the EOQ formula with the demand rate set equal to the average of the net requirements observed over the considered planning horizon. Periodic order quantity: When you schedule a new lot, take the average of the EOQs of the preceding periods to cover the net requirements for the subsequent periods. Silver-meal (SM): Every time you start a new lot, keep adding the net requirements of the subsequent periods, as long as the average (setup plus holding) cost per period decreases.
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Least unit cost: Every time you start a new lot, keep adding the net requirements of the subsequent periods, as long as the average (setup plus holding) cost per unit decreases. Part period balancing: Every time you start a new lot, add a number of subsequent periods such that the total holding cost matches the lot setup cost as much as possible. Wagner: Whitin algorithm for dynamic lot sizing: This model introduced by Harvey M. Wagner and Thomson M. Whitin in 1958 takes into account that demand for the product varies over time. The detailed discussion of this algorithm is beyond the scope of this book. Note that
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Normally, the lot size policy shall maintain a smoother production flow at the same time considering the lowest inventory holding costs. If the setup times and costs are high, serial process batching may be adapted to control the capacity losses. Processes that require a large production volume in order to maintain a high utilization may need parallel process batching similar to the machine balancing discussed in Chapter 24, Sequencing and line balancing.
23.10 Job shop scheduling versus job order scheduling Job shop scheduling (or job-shop problem) is an optimization problem in computer science and operations research in which ideal jobs are assigned to resources. Though the heuristic methods and detailed explanation are more relevant to computer science or operations research but less relevant to the job order scheduling in production shops, these are cited and introduced briefly because of the similarity of the terminology between the job shop scheduling and job order scheduling.
23.10.1 Typical approaches for job shop scheduling G
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Branch & bound (B&B): Constructs all possible schedules incrementally, including those options that appear suboptimal to some other options. Though time consuming, it can generate superior schedules. This is also called beam search. Local search techniques: Given an initially constructed schedule, it tries to identify an improved schedule that is obtained from the original one through a localized change (like changing the order of two jobs on a single machine). Simulated annealing: Seeks to identify and avoid local constraints by simulating a nonzero probability for transitioning to an inferior schedule. The name comes from annealing in metallurgy, a technique involving heating and controlled cooling of a material to increase the strength and to reduce
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defects. Refer to the website https://en.wikipedia.org/wiki/ Simulated_annealing, which gives an animated illustration for this method. Tabu search: Seeks to identify and avoid local constraints that might attract the schedule back to a local optimum for certain schedule changes. These constraints are called Taboo, which in Swahili means problem. Generic algorithms: Maintains an entire set of schedules at each iteration, and it updates this set by replacing schedules of inferior performance with new schedules resulting from the “combination” of the most efficient schedules currently available; the synthesis of such new schedules is known as crossover. Also, mutation provides additional schedules resulting from the local modification of some single schedules.
23.11 Forward scheduling (setting forward) Forward scheduling is commonly used in job shops where customers place their orders on a “needed as soon as possible” basis. Forward scheduling determines the start and finish times of the next priority job by assigning it the earliest available time slot and from that time determines when the job will be finished in that work center. Since the job and its components start as early as possible, they will typically be completed before they are due at the subsequent work centers in the routing. The setting forward method generates in the process an inventory that is needed at subsequent work centers at higher inventory cost. Forward scheduling is simple to use, and it gets job done in shorter lead time, compared to backward scheduling. As an illustration, let us consider a product assembled out of eight components A, B, C, D, E, F, G, and H, each of which is produced as illustrated by the operation process chart per Fig. 23.3. Note the following: 1. Some of the operations are indicated along with the machine number. 2. When any particular machine like number 24 is used for more than one operation, scheduling has to be done to avoid machine interference. 3. The components can be produced and kept ready for their subassembly either by forward scheduling or by backward scheduling as detailed next.
23.12 Backward scheduling (setting backward) Backward scheduling is often used in assembly type industries and commits in advance to specific delivery dates. Backward scheduling determines the start and finish times for waiting jobs by assigning them to the latest available time slot that will enable each job to be completed just when it is due, but not before. By assigning jobs as late as possible, backward scheduling minimizes inventories since a job is not completed until it must go directly to the next work center on its routing. Fig. 23.4 illustrates the same situation with backward scheduled program.
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FIGURE 23.3 Forward scheduling.
FIGURE 23.4 Backward scheduling.
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Apart from aiding production planners and controllers, another advantage of the backward scheduling is given next. Just as a program evaluation review technique chart would indicate the critical path, this chart too can indicate the critical components. Looking at the chart, we can see that the part F-SA4-SA5-Final Assy is critical. Any time reduction achieved by a meticulous method improvement study conducted on this part would yield substantial time saving in the whole assembly. On the other hand, time reduction achieved by such a method improvement study conducted on any other part cannot result in any saving of the total time for this assembly.
23.13 Optimal scheduling without machine interference As could be seen from the previous two illustrations, some machines get overlapped, meaning that they are scheduled to do two or more operations at the same time, either causing interference or needing additional machines of the same type. Such a situation can be averted if the machine loading is carefully done by examining analyzing the schedule diagrams, as in Fig. 23.5.
23.14 Backorder Backordering is the process of selling inventory you don’t have on hand and for which the customer is prepared to wait for some time. The percentage of
FIGURE 23.5 Backward scheduling utilizing float times and avoiding machine interference.
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items backordered and the number of backorder days are important measures of the quality of a company’s customer service and the effectiveness of its inventory management. Investopedia defines backorder as an order for a good or service that cannot be filled at the current time due to a lack of available supply. The higher the number of items backordered, the higher the demand for the item.
23.15 Other issues of master production schedule Apart from the major precepts of MPS as discussed in this chapter, the following are some additional precepts involved in MPS, though some of these are cited earlier.
23.15.1 Lot sizing Lot sizing implies calculating effective order quantities or batch quantities either for the produced or purchased items. This is dealt more in detail in Chapter 13, Types of production situations, and Chapter 14, Break-even and make or buy analyses. It is generally specified by the party offering to buy or sell.
23.15.2 Time buckets The production planning and control activities are described in terms of how many units are to be produced in different “time periods” of the future. These time periods are called time buckets. For example, daily time buckets break information down into daily periods while weekly time buckets break information down into weekly periods. We can also have monthly time buckets, but that would result in ineffective MRP.
23.15.3 Rolling plan In rolling plan we assess the previous plans periodically and use this as the basis to plan for the next period. The 5-year plans adapted by the Indian government are the best examples. Production planners are adept at this precept but for smaller periods such as quarterly or annually.
23.15.4 Time fencing Time fences are boundaries set up between different periods in the policy planning or aggregate planning periods defining short-term periods within which MPS can be frozen to minimize costly disruption to shop floor and supplier schedules. For example, you can easily change the MPS for an item
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beyond its cumulative lead time, with little effect on related material and capacity plans.
23.15.5 Schedule freezing In the earlier chapters, we said there should be some flexibility in the schedule parameters to accommodate the customer demands of production eventualities. Nevertheless, it may cause costly disruption to the shop floor and supplier schedules. As a contra-practice, freezing the MPS would reduce the losses due to schedule instability in multilevel MRP systems.
23.16 Conclusion Starting from market forecasting, production planning reaches the grand finale in the formulation and execution of MPS. For any planning manager or the engineer in charge of the production planning and control function, preparation of this MPS forms the bread and butter of his or her career. An effective MPS would yield all the benefits of the effective production system as explained and discussed in this chapter. An understanding of the issues like time bucket and schedule freezing would make MPS more effective.
Further reading 1. Eilon, S. 1962. Elements of Production Planning and Control, New York: Macmillan. 2. Kiran, D.R., 2014. Total Quality Management—An Integrated Approach. BS Publications, Hyderabad. 3. https://en.wikipedia.org/wiki/Master_production_schedule. 4. www.mbaofficial.com/mba. 5. www.inventorysolutions.org. 6. supplychain-mechanic.com. 7. https://www.linkedin.com/production-planning-vs-master-scheduling. 8. https://docs.oracle.com. 9. http://www.mcts.com/Master-Scheduling.html. Criteria questions (The figures in the bracket provide a clue to the answer.) 1. A MPS forms a key link in manufacturing planning and control. Do you agree with the statement? Justify. 2. What are MRP and MPS? Why is it that MRP cannot precede MPS? (23.2) 3. Explain RCCP with an example. (23.5) 4. Discuss the details that should be computed for MPS. (23.6) 5. Illustrate the six stages of preparing MPS. (23.9) 6. Distinguish between EOQ and SM ordering. (23.10)
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7. What is job shop scheduling? Explain the six typical approaches. (23.11) 8. Explain the terms B&B approach and the tabu approach. (23.11) 9. Distinguish between forward scheduling and backward scheduling. Why is the latter more preferred than the former? (23.12) 10. Illustrate the terms float times and avoiding machine interference. (23.14) 11. What is meant by backorder? What are its disadvantages? 12. Explain the terms time bucket, rolling plan, and time fencing. (23.15)
Master production schedules Chapter takeaways After completion of this chapter the reader would be able to 1. Appreciate the need for developing ideal master production schedules (MPSs) in effective production planning and control and practice the same. 2. Understand the stages of production scheduling in order to perform systematically. 3. Understand input terms to collect them systematically. 4. Distinguish between forward scheduling and backward scheduling to be able to make appropriate decisions while choosing between them. 5. Plan a production schedule in such a manner to ensure that there is no machine interference.
23.1 Introduction We have seen in the earlier chapters that after aggregate planning, the next step in production planning is the preparation of master production schedules (MPSs). A MPS is a translation of the production planning into schedule charts and details. It expresses the overall plans in terms of specific end items or models that can be assigned priorities. MPS is meticulously drawn up, after the planning stage, to determine when specific products groups will be made, when customer orders will be filled, and what manufacturing capacity is still available for new customer demand. It provides the basic foundation for 1. 2. 3. 4. 5.
Planning for the material and capacity requirements, Making good use of manufacturing resources, Making customer delivery promises, Resolving tradeoffs between sales and manufacturing and Attaining strategic objectives in the sales and operations plan.
It forms a key link in the manufacturing planning and control interfacing with marketing, distribution planning, production planning, and capacity planning.
Production Planning and Control. DOI: https://doi.org/10.1016/B978-0-12-818364-9.00023-8 Copyright © 2019 BSP Books Pvt. Ltd. Published by Elsevier Inc. All rights reserved.
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23.2 Master production schedule comes before material requirements planning MPS gives a weekly or monthly breakdown of the production requirement for each product and expresses the overall plans in terms of specific end items or models that can be assigned priorities. It is useful to plan for the material and capacity requirements. It gives production, planning, purchasing, and top management the information needed to plan and control the manufacturing operation. With the help of this schedule, one can know the requirements for the individual end items by date and quantity and would enable the production manager to shift the production from one product to another as per the changed production requirements. Master production scheduling plays an important role in balancing of demand with the supply, satisfying customers according to the limits of the factory and the supplier’s base. This is akin to the quality function deployment, which is a structured approach to defining customer needs or requirements and translating them into specific plans to produce products to meet those needs. This is described more detail in quality management books (Fig. 23.1).
Bill of materials
Process planning layouts
Company policy on make or buy
Delivery dates
Priority planning
Available capacities
Master production schedules
Material requirement planning
FIGURE 23.1 Basic input data for MPS. MPS, Master production schedule.
Staffing
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The MPS is generally followed by an operation schedule, which fixes the total time required to do a piece of work with a given machine or which shows the time required to do each detailed operation of a given job with a given machine.
23.3 General terms of reference related to master production schedule The website of http://people.brunel.ac.uk suggests the following terms of reference that are commonly used in MPS: 1. Forecast demand: The forecast demand for the product per week within a period of 4 weeks. 2. Initial number of employee: The initial number of employees in each week, say 10; during the course of the period, we may hire extra hands, as cited following. 3. Regular time capacity in hour per employee: The number of regular hours each employee works per week, say 40 hours. 4. Regular time cost per hour: The cost per hour of regular time worked, the monthly or weekly wages computed on an hourly basis. 5. Undertime cost per hour: The cost per hour of not using a worker to their full regular capacity. Though this cost is generally zero, this term is coined overtime, which is the more popular and very common term. 6. Overtime capacity in hour per employee: The maximum number of hours each employee can work in overtime per week, here 10 hours. 7. Overtime cost per hour: The cost per hour of overtime, which generally is double the regular time cost. 8. Hiring cost per employee: The cost of hiring one employee. This is akin to the fixed cost as compared to the regular time cost, which is akin to the variable cost. 9. Dismissal cost per employee: This is the cost of dismissing (firing) one employee, in which you may have to pay compensation of a month’s wages or higher. 10. Maximum/minimum number of employee allowed: The physical capacity constraints or the fear of union, etc., may make the management of maximum number of employees. 11. Initial inventory caused by make-to-stock policy and backorder caused by make to-order policy, which result in the initial inventory available or backorders outstanding, 12. Maximum/minimum ending inventory: The initial inventory or backorder forces us to set a maximum/minimum limit for the inventories lying with us by the end of the period. While the minimum number corresponds to safety stock, the maximum number is limited by cost considerations.
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13. Unit inventory holding cost: The cost of holding one unit in stock at the end of each period, also called the inventory carrying cost as detailed in Chapter 29, Scientific inventory control. 14. Maximum subcontracting allowed: The maximum number of product units we are allowed to buy in from the external subcontractor, which is limited by the make or buy decision explained in Chapter 14, Breakeven and make or buy analyses. 15. Unit subcontracting cost: The cost of each unit bought from the external subcontractor. 16. Maximum backorder allowed: The maximum number of backorders allowed at the end of each period, since too many backorders results in customer dissatisfaction and loss of sales.
23.4 Definitions of master production schedule A master production schedule translates a business plan into a comprehensive product manufacturing schedule that covers what is to be assembled or made, when, with what materials acquired when, and the cash required. MPS is a key component of material requirements planning (MRP). It sets the quantity of each end item to be completed in each week of a short-range planning period. This period varies from a week to a month depending upon the industry. Business Dictionary A master production schedule (MPS) is a plan for individual commodities to produce in each time period such as production, staffing, inventory, etc. It is usually linked to manufacturing where the plan indicates when and how much of each product will be demanded. Wikipedia A Master Production Schedule or MPS is the plan that a company has developed for production, inventory, staffing, etc. It sets the quantity of each end item to be completed in each week of a short-range planning horizon. A Master Production Schedule is the master of all schedules. It is a plan for future production of end items. http://www.inventorysolutions.org/def_mps.htm Master scheduling is the detailed planning process that tracks manufacturing output and matches this against customer orders that have been placed. The master schedule is the next step in planning after the sales and operations planning (S&OP). http://logistics.about.com/od/strategicsupplychain/a/Master-Scheduling.htm
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23.5 Rough cut capacity planning As explained in Chapter 20, Capacity planning, rough cut capacity planning (RCCP) is the process of determining if the plan is feasible; it determines whether the organization has sufficient capacity to carry out the plan. Although RCCP is more refined than resource requirements planning, it is called rough cut because it is less refined than capacity requirements planning. This is discussed more in detail in Chapter 21, Aggregate planning, on capacity planning. The master schedule process also uses information on available to promise (ATP) inventory on a period-by-period basis to determine the projected inventory, production requirements, and the resulting uncommitted inventory.
23.6 Functions of master production schedule 1. To translate aggregate plans into specific end items: Aggregate plan determines level of operations that tentatively balances the market demands with the material, labor, and equipment capabilities of the company. Master schedule translates this plan into a specific number of end items to be produced in a specific time period. 2. Evaluate alternative schedules: Master schedule is prepared by trial and error. Computer-simulated models are now available to evaluate the alternate schedules. 3. General material requirement: It forms the basic input for material requirements planning (MRP). 4. Generate capacity requirements: Capacity requirements are directly derived for MPS and also vice versa. 5. Facilitate information processing: By controlling the load on the plant, a master schedule determines when the deliveries should be made. It coordinates with other management information systems such as marketing, finance, and personnel. 6. Give production, planning, purchasing, and management the information to plan and control manufacturing. 7. Enable marketing to make legitimate delivery commitments to warehouses and customers. 8. Effective utilization of capacity: By specifying end item requirements, a master schedule establishes the load and utilization requirement for machines and equipment. 9. Increase the efficiency and accuracy of a company’s manufacturing. 10. RCCP.
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23.7 Benefits of master production schedule The achievement of all the functions as cited above can be considered as the benefits of MPS.
23.7.1 Inputs for master production schedule 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12.
Forecast demand, voice of customer Customer orders Production facilities, visual quality objective Aggregate planning Production costs Inventory costs Bill of materials Process planning layout for each component Inventory levels Supply and market availability Economic lot size, production lead time Vision and mission of the company
23.7.2 Outputs from master production schedule 1. 2. 3. 4.
Amounts to be produced Staffing levels Quantity ATP Projected available balance
23.8 Stages of master production schedules 1. First, the business plans are consolidated based on a. Corporate strategies and policies b. Demand forecasts c. Economic, competitive, and political conditions d. This would help in establishing production and capacity strategies. 2. Based on these, the aggregate production plans are prepared as detailed in Chapter 21, Aggregate planning. 3. Next, the plans are disaggregated for scheduling each and every item and to ensure that no small detail is omitted. 4. MPSs are then prepared as explained in detail in subsequent paragraphs. These stages are illustrated in Fig. 23.2. Note that the subsequent stages of MPS (shop floor loading, scheduling and controlling, as well as material requirement planning) are also represented in this figure.
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FIGURE 23.2 Stages of master production scheduling.
23.9 Material requirements planning models to determine the lot size The following are some of the models used in MRP to determine the economic lot sizes, as also cited in Chapter 14, Break-even and make or buy analyses. G
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Economic order quantity (EOQ): Compute a lot size using the EOQ formula with the demand rate set equal to the average of the net requirements observed over the considered planning horizon. Periodic order quantity: When you schedule a new lot, take the average of the EOQs of the preceding periods to cover the net requirements for the subsequent periods. Silver-meal (SM): Every time you start a new lot, keep adding the net requirements of the subsequent periods, as long as the average (setup plus holding) cost per period decreases.
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Least unit cost: Every time you start a new lot, keep adding the net requirements of the subsequent periods, as long as the average (setup plus holding) cost per unit decreases. Part period balancing: Every time you start a new lot, add a number of subsequent periods such that the total holding cost matches the lot setup cost as much as possible. Wagner: Whitin algorithm for dynamic lot sizing: This model introduced by Harvey M. Wagner and Thomson M. Whitin in 1958 takes into account that demand for the product varies over time. The detailed discussion of this algorithm is beyond the scope of this book. Note that
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Normally, the lot size policy shall maintain a smoother production flow at the same time considering the lowest inventory holding costs. If the setup times and costs are high, serial process batching may be adapted to control the capacity losses. Processes that require a large production volume in order to maintain a high utilization may need parallel process batching similar to the machine balancing discussed in Chapter 24, Sequencing and line balancing.
23.10 Job shop scheduling versus job order scheduling Job shop scheduling (or job-shop problem) is an optimization problem in computer science and operations research in which ideal jobs are assigned to resources. Though the heuristic methods and detailed explanation are more relevant to computer science or operations research but less relevant to the job order scheduling in production shops, these are cited and introduced briefly because of the similarity of the terminology between the job shop scheduling and job order scheduling.
23.10.1 Typical approaches for job shop scheduling G
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Branch & bound (B&B): Constructs all possible schedules incrementally, including those options that appear suboptimal to some other options. Though time consuming, it can generate superior schedules. This is also called beam search. Local search techniques: Given an initially constructed schedule, it tries to identify an improved schedule that is obtained from the original one through a localized change (like changing the order of two jobs on a single machine). Simulated annealing: Seeks to identify and avoid local constraints by simulating a nonzero probability for transitioning to an inferior schedule. The name comes from annealing in metallurgy, a technique involving heating and controlled cooling of a material to increase the strength and to reduce
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defects. Refer to the website https://en.wikipedia.org/wiki/ Simulated_annealing, which gives an animated illustration for this method. Tabu search: Seeks to identify and avoid local constraints that might attract the schedule back to a local optimum for certain schedule changes. These constraints are called Taboo, which in Swahili means problem. Generic algorithms: Maintains an entire set of schedules at each iteration, and it updates this set by replacing schedules of inferior performance with new schedules resulting from the “combination” of the most efficient schedules currently available; the synthesis of such new schedules is known as crossover. Also, mutation provides additional schedules resulting from the local modification of some single schedules.
23.11 Forward scheduling (setting forward) Forward scheduling is commonly used in job shops where customers place their orders on a “needed as soon as possible” basis. Forward scheduling determines the start and finish times of the next priority job by assigning it the earliest available time slot and from that time determines when the job will be finished in that work center. Since the job and its components start as early as possible, they will typically be completed before they are due at the subsequent work centers in the routing. The setting forward method generates in the process an inventory that is needed at subsequent work centers at higher inventory cost. Forward scheduling is simple to use, and it gets job done in shorter lead time, compared to backward scheduling. As an illustration, let us consider a product assembled out of eight components A, B, C, D, E, F, G, and H, each of which is produced as illustrated by the operation process chart per Fig. 23.3. Note the following: 1. Some of the operations are indicated along with the machine number. 2. When any particular machine like number 24 is used for more than one operation, scheduling has to be done to avoid machine interference. 3. The components can be produced and kept ready for their subassembly either by forward scheduling or by backward scheduling as detailed next.
23.12 Backward scheduling (setting backward) Backward scheduling is often used in assembly type industries and commits in advance to specific delivery dates. Backward scheduling determines the start and finish times for waiting jobs by assigning them to the latest available time slot that will enable each job to be completed just when it is due, but not before. By assigning jobs as late as possible, backward scheduling minimizes inventories since a job is not completed until it must go directly to the next work center on its routing. Fig. 23.4 illustrates the same situation with backward scheduled program.
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FIGURE 23.3 Forward scheduling.
FIGURE 23.4 Backward scheduling.
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Apart from aiding production planners and controllers, another advantage of the backward scheduling is given next. Just as a program evaluation review technique chart would indicate the critical path, this chart too can indicate the critical components. Looking at the chart, we can see that the part F-SA4-SA5-Final Assy is critical. Any time reduction achieved by a meticulous method improvement study conducted on this part would yield substantial time saving in the whole assembly. On the other hand, time reduction achieved by such a method improvement study conducted on any other part cannot result in any saving of the total time for this assembly.
23.13 Optimal scheduling without machine interference As could be seen from the previous two illustrations, some machines get overlapped, meaning that they are scheduled to do two or more operations at the same time, either causing interference or needing additional machines of the same type. Such a situation can be averted if the machine loading is carefully done by examining analyzing the schedule diagrams, as in Fig. 23.5.
23.14 Backorder Backordering is the process of selling inventory you don’t have on hand and for which the customer is prepared to wait for some time. The percentage of
FIGURE 23.5 Backward scheduling utilizing float times and avoiding machine interference.
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items backordered and the number of backorder days are important measures of the quality of a company’s customer service and the effectiveness of its inventory management. Investopedia defines backorder as an order for a good or service that cannot be filled at the current time due to a lack of available supply. The higher the number of items backordered, the higher the demand for the item.
23.15 Other issues of master production schedule Apart from the major precepts of MPS as discussed in this chapter, the following are some additional precepts involved in MPS, though some of these are cited earlier.
23.15.1 Lot sizing Lot sizing implies calculating effective order quantities or batch quantities either for the produced or purchased items. This is dealt more in detail in Chapter 13, Types of production situations, and Chapter 14, Break-even and make or buy analyses. It is generally specified by the party offering to buy or sell.
23.15.2 Time buckets The production planning and control activities are described in terms of how many units are to be produced in different “time periods” of the future. These time periods are called time buckets. For example, daily time buckets break information down into daily periods while weekly time buckets break information down into weekly periods. We can also have monthly time buckets, but that would result in ineffective MRP.
23.15.3 Rolling plan In rolling plan we assess the previous plans periodically and use this as the basis to plan for the next period. The 5-year plans adapted by the Indian government are the best examples. Production planners are adept at this precept but for smaller periods such as quarterly or annually.
23.15.4 Time fencing Time fences are boundaries set up between different periods in the policy planning or aggregate planning periods defining short-term periods within which MPS can be frozen to minimize costly disruption to shop floor and supplier schedules. For example, you can easily change the MPS for an item
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beyond its cumulative lead time, with little effect on related material and capacity plans.
23.15.5 Schedule freezing In the earlier chapters, we said there should be some flexibility in the schedule parameters to accommodate the customer demands of production eventualities. Nevertheless, it may cause costly disruption to the shop floor and supplier schedules. As a contra-practice, freezing the MPS would reduce the losses due to schedule instability in multilevel MRP systems.
23.16 Conclusion Starting from market forecasting, production planning reaches the grand finale in the formulation and execution of MPS. For any planning manager or the engineer in charge of the production planning and control function, preparation of this MPS forms the bread and butter of his or her career. An effective MPS would yield all the benefits of the effective production system as explained and discussed in this chapter. An understanding of the issues like time bucket and schedule freezing would make MPS more effective.
Further reading 1. Eilon, S. 1962. Elements of Production Planning and Control, New York: Macmillan. 2. Kiran, D.R., 2014. Total Quality Management—An Integrated Approach. BS Publications, Hyderabad. 3. https://en.wikipedia.org/wiki/Master_production_schedule. 4. www.mbaofficial.com/mba. 5. www.inventorysolutions.org. 6. supplychain-mechanic.com. 7. https://www.linkedin.com/production-planning-vs-master-scheduling. 8. https://docs.oracle.com. 9. http://www.mcts.com/Master-Scheduling.html. Criteria questions (The figures in the bracket provide a clue to the answer.) 1. A MPS forms a key link in manufacturing planning and control. Do you agree with the statement? Justify. 2. What are MRP and MPS? Why is it that MRP cannot precede MPS? (23.2) 3. Explain RCCP with an example. (23.5) 4. Discuss the details that should be computed for MPS. (23.6) 5. Illustrate the six stages of preparing MPS. (23.9) 6. Distinguish between EOQ and SM ordering. (23.10)
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7. What is job shop scheduling? Explain the six typical approaches. (23.11) 8. Explain the terms B&B approach and the tabu approach. (23.11) 9. Distinguish between forward scheduling and backward scheduling. Why is the latter more preferred than the former? (23.12) 10. Illustrate the terms float times and avoiding machine interference. (23.14) 11. What is meant by backorder? What are its disadvantages? 12. Explain the terms time bucket, rolling plan, and time fencing. (23.15)