Lect7 Master Production Planning & MPS notes PDF

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HONG KONG POLYTECHNIC UNIVERSITY DEPARTMENT OF INDUSTRIAL AND SYSTEMS ENGINEERING

Planning of Production and Service Systems: Master Production Planning & Scheduling Introduction Aggregate Planning represents production across a family or product line that uses the same resources. This must be broken down (disaggregated) into specific product requirements in order to determine labour, materials, and inventory requirements. The aggregate production plan is made operational through a master schedule that identifies specific products (usually end items) and their production dates. A Master Production Schedule (MPS) “disaggregates” the aggregate production plan into a schedule for producing specific products, model, size, colour or product modules. It shows the kinds and quantities of products to be provided in each time period in and specifies the time periods for their completion taking into consideration the delivery time as well as on-hand inventory. It is this point that actual orders are incorporated into the scheduling system. The master schedule can vary considerably by industry and from organization to organization. The master schedule in a production to order organization may be developed strictly from the order backlog. This can be done if the order backlog extends beyond the time horizon of the master schedule. If not, then the master schedule is developed from a combination of the order backlog and a forecast. The master schedule in a production to stock organization is developed from a demand forecast. The schedule is then checked against lead time (time to produce or ship the items) and operations capacity for feasibility. The time horizon of the master schedule will be shorter than that of the production plan. The master schedule should be somewhat longer than the sum of cumulative lead times of component parts, sub-assemblies, and final assembles.

A.P.P.

M.P.S.

Covers a time horizon from 6 to 24 months. Deal with aggregate planning for total output.

Formulated within the time horizon of the APP, usually updated weekly. Usually relates to specific products or end items.

Performed predominately by upper management

By middle management

Table 1: A Comparison of Master Scheduling with Production Planning

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Responsibility for MPS The responsibility for the MPS includes the entire organization. For instance, Marketing will input the forecast, Engineering will structure the bills, Finance will approve the required assets, Manufacturing will develop and execute the plan, Master Scheduler is responsible for the day-to-day development and maintenance of the MPS.

Uses of MPS The MPS interfaces with marketing, capacity planning, production planning and distribution planning. It is used to determine labour, materials, and inventory requirements. It enables marketing to make valid delivery commitments to warehouses and final customers; it enables production to evaluate capacity requirements; it provides the necessary information for production and marketing to negotiate when customers requests cannot be met by normal capacity; it provides senior management with the opportunity to determine whether the business plan and its strategic objectives will be achieved.

Master Production Scheduling The Master Scheduling Function Capacity constraints What to produce (Identification)

Forecast/actual orders

Production Plan

Master Production Scheduling

When to produce (timing)

Customer orders

How much to produce (quantity) Product lead time constraints

Fig 1: The Master Scheduling Function

Planning Time Fences Time fence: Points in time that separate phases of a planning horizon. Frozen Fence (frozen schedule): The schedule time in which only a few very important changes are allowed in the MPS. (eg: special customer orders that require the approval of the master scheduler) Firm Fence: The schedule time in which only small changes are permitted.

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Flexible Fence: The scheduled time in which changes to the MPS are permitted. (a date before which changes in the MPS might adversely affect procurement schedules and resource capacity, etc)

Fig 2: Planning Time Fences Production Lot Size When future demand for an end item can be anticipated, an economic lot size may indicate a minimum order quantity. If demand exceeds the economic lot size, the larger quantity is produced. If demand is less than the economic lot size, the excess quantity can be placed in inventory for future requirements

Master Production Scheduling: An Example: A company that makes industrial pumps wants to prepare a master production schedule for June and July. Marketing has forecasted demand of 120 pumps for June and 160 for July. These have been distributed over the four weeks in each month: 30 per week in June and 40 per week in July. Suppose beginning inventory is 64 pumps and there are committed customer orders of 33, 20, 10, 4 and 2 pumps respectively for week 1 to 4 in June and week 1 in July. Current week requirement is the larger of forecast and customer orders booked (committed). Production lot size is 70 units. Beginning inventory = 64 pumps Production lot size = 70 units Current week requirement = the larger of forecast and customer orders booked. Projected on-hand inventory = beginning inventory – current week’s requirement. Jun Week No.

0

Forecast

Jul

1 30

2 30

3 30

4 30

5 40

33

22

10

4

2

6 40

7 40

8 40

Booked orders Projected on hand

64

31

1

41

11

41

1

31

61

Net inventory before MPS

64

31

1

-29

11

-29

1

-39

-9

70

70

MPS

70 Table 2: Master Production Scheduling 3

70

Capacity and Priority Planning Priority and capacity are important master scheduling considerations, Priority planning determines the order (timing) in which goods are produced. Capacity planning determines what labour and equipment capacity is required and when it is required. Capacity is the demonstrated ability to produce, and not a theoretical or maximum capacity. Capacity planning relates to labour and equipment requirements. Capacity is controlled by eg., the number of scheduled days per period (5, 6, or 7 days per week), the number of shifts scheduled, the overtime policy, manpower levels, and the available equipment. The master schedule must balance product demand (quantity and priority) with facility capacity. A master schedule must be realistic. Capacity limits must be carefully observed in working out the master production schedule. If demands exceed resources, one must reduce the master schedule or increase resources (capacity).

Capacity Requirement Planning (CRP) CRP is the process of determining workloads on each of the work centres due to the Master Production Schedule of final products. The capacity and delivery lead time must be checked for feasibility before the master schedule can be finalized. The master schedule is a major input into material requirements planning (MRP), which generates specific job orders and work releases at the component, part, and subassembly levels.

Demand forecast

Customer orders

Tentative Master Schedule

Are dates/capacity OK?

no

yes

Master Schedule

Fig 3: Capacity Requirement Planning

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A Loading Chart A typical master schedule is a matrix with product categories as the rows and time periods as the columns. As shown in Table 3, the elements in the matrix are the numbers of items required during each time period. The column totals are converted to hours for capacity loading purposes. The time period can be any interval, but a week is common. Period Products

1

2

3

4

5

6

7

8

A B C D E (etc..)

12 9 4 5

9 2 0 3

7 7 4 1

8 9 1 1

7 5 0 2

6 2 0 6

10 3 2 4

9 8 3 1

Std. Hrs loaded

6020

5082

5580

4883

4600

4265

5200

6200

Std. Hrs available

6030

5090

5600

4900

4620

4280

5200

6205

Std. hrs/unit 100 50 60 120 (etc..)

Table 3: A Master Schedule with Capacity Requirement in Standard Hours.

Fig 4: A Gantt Load Chart

Example: Master Scheduling based on the Aggregate Production Plan previously drawn May Production Forecast Ending inventory

300

Jun 4800 5000 100

Table: The Aggregate Production Plan

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Jul 5200 4000 1300

Jun Product 1 2 3 Total

Wk1 1200

1200

Wk2 800 400 1200

Wk3 1100 100 1200

Jul Wk4

1200 1200

Total 2000 1500 1300 4800

Wk1 1200

1200

Wk2 800 400

Wk3

Wk4

Wk5

1200

1200

1200

100 1100 1200

400 400

Table: The Master Production Schedule Table 4: Master Scheduling based on the Aggregate Production Plan. (*A capacity of 1200 aggregate units has been made available each week in Jun and Jul in the APP.)

Time Cycle Chart A time cycle chart shows how much time it would take to produce a product starting from scratch with no inventories available. It indicates lead time requirements as well as the minimum planning horizon for the master schedule. If customer delivery is to be made in less than the maximum time on the time cycle chart, inventories must be maintained. Each material, component, and assembly requires some lead time. Starting with the final product, the time cycle time chart works backwards through each manufacturing step, assembly operation, and purchase to map the time relationships.

Fig 5: A Time Cycle Chart

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Total 2000 1700 1500 5200

Critical Inventory Items Suppose a six week lead time is available to all customers who purchase the finished product. While the total actual lead time required for the manufacturing process is 22 weeks. Inventories could be maintained at every stage of manufacture and assembly, as well as for each purchased part, but there is an easier way that involves less control and smaller inventories. Stocks are maintained for only a few critical items; others are purchased or manufactured only when there is a definite demand for them. To determine the critical inventory items a horizontal line is drawn across the time cycle chart at six weeks. The critical items are those items that are crossed by the horizontal line.

The Product/end item to be master scheduled: The selection of product categories or end items can vary from organization to organization. For organizations with less then 100 products, all products can be included. As the number of products provided exceeds several hundred, some modifications are necessary. The actual items that are master scheduled will depend on the organization's product and bill of material structure. Three general product structures are shown in Figure 6. The idea is to plan at the point of greatest commonality - the narrowest part of the product structure. A: Limited number of standard items assembled from components. B: Many items made from common subassemblies. C: Many items made from limited number of materials.

Finished Products

Finished Products

Finished Products

A

B

C

Materials

Materials

Materials

Fig. 6

General Product Structures

A: Adopt make-to-stock policy B: Adopt assemble-to-order policy C: Adopt make-to-order policy

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Fig 7 Product Structure

Fig 8: Product Structure

Bottle Neck Operations It is desirable to locate the critical restraining production centres or bottleneck operations. It might be a machine, a machine group, a department or manpower group (skilled operators). These critical centres should be loaded to capacity, but not overloaded. In order to increase the capacity of the entire process, it would be necessary to increase the capacity of the bottleneck operation. The bottleneck work centre may change with the nature of the work to be performed in a given time period.

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Master Schedule Revision A master schedule should be an up-to-date rolling schedule that is revised by adding periods and updating as necessary. As new information or new orders become available, the schedule will change. At the end of a period, any incomplete work must be rescheduled. When properly maintained, a master schedule can reduce inventory, improve customer service, and increase productivity.

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