Master Scheduling

&
The Master Schedule

Introduction

Aggregate Production
& Capacity Plans

They
combine

Products into
product groups.
Demand into
monthly totals.

Which alltogether
reflect Top Management
Decisions.

Personnel
Requirements
across departments

Eventually, the time comes when individual end item products and services
must be scheduled at specific work centers.
This is accomplished by master scheduling
Which means, producing a SUPPLY PLAN (a time table including quantities) to produce specific
items or provide specific services within a given time period.

Master Scheduling & the Master Production Schedule (MPS)

The master schedule (MS) is a

presentation of the demand, including
the forecast and the backlog (customer
orders received), the master production
schedule (the supply plan), the projected
on hand (POH) inventory, and the
available-to-promise (ATP) quantity.
The master production schedule
(MPS) is the primary output of the
master scheduling process.It is the
plan for providing the supply to meet
the demand.

Example : A simple MS for an MPS item (end

product)

Table 1

Relationship of Master Scheduling to other MPC activities

Creates demand
requirements

Creates demand
requirements

The master schedule (MS) is a

key link in the manufacturing
planning and control chain.

Is the key in
developing the
master
schedule

The MS interfaces with marketing,

distribution planning, production
planning, and capacity planning.
The MS drives the material
requirements planning (MRP) system.
Master scheduling calculates the
quantity required to meet demand
requirements from all sources (see
the example case on next page).

Is the key
link

Input-Output Control &

Operation Scheduling

Calculates net
requirements

Figure 1

Example : A case in which the distribution requirements are the gross

requirements
for the MS

Here, the MS;

enables marketing to make
legitimate delivery commitments
to field warehouses and final
customers.
enables production to evaluate
capacity requirements in a
more detailed manner.
provides to management the
opportunity to ascertain whether
the business plan and its
strategic objectives will be
achieved.

Distribution requirements
(gross requirements for
MS)

Table 2
Net Requirements are
calculated by MRP logic.

Understanding THE ENVIRONMENT in which master scheduling takes

place.
Before describing the activities involved in creating and managing the MS,
we need to examine the different organizational environments in
which master scheduling takes place.
THESE ENVIRONMENTS ARE DETERMINED BY
the companys STRATEGIC RESPONSES to;

the INTERESTS of
CUSTOMERS

and

the ACTIONS of
COMPETITORS

Thus, a COMPETETIVE
STRATEGY evolves...

FOR A SPECIFIC PRODUCT (end item),

THIS COMPETETIVE STRATEGY MAY BE
ONE OF THE FOLLOWING

Make finished items

to stock
(sell from finished goods inventory)

Assemble final products to order

and make/buy subassemblies and
lower level detail parts to stock.

It is not
unusual for an
organization to have different
strategies for different product
lines and, thus, use different
MS approaches.

Custom design and make to

order.

Make-to-stock Strategy

Basic characteristics of this

strategy/environment:
This strategy emphasizes immediate delivery of reasonably priced off-the-shelf
standard items.
In this environment the MPS is the anticipated build schedule of the items required
to maintain the finished goods at the desired level.
Quantities on the schedule are based on manufacturing economics, the forecasted
demand and desired safety stock levels.
In this environment, an end item bill of material (BOM) is used. Items may be
produced either on a mass production (continuous or repetitive) line or in batch
production.

Assemble-to-order Strategy

Basic characteristics of this

strategy/environment:
In this environment, subassemblies and lower level detail parts/components are
either produced or purchased to stock.
The competitive strategy is to be able to supply a large variety of final product
configurations from standard components and subassemblies within a relatively
short lead time.
This environment requires a forecast of options as well as the total demand of the
end item. Thus, there is an MPS for the options, accessories, and common
components as well as final assembly schedule (FAS). Here, examples of options can
be given as; an automobile may be ordered with or without air conditioning or a
fast-food restaurant may deliver your hamburger with or without lettuce.
The advantage of this approach is that many different final products can be
produced from relatively few subassemblies and components. This reduces
inventory substantially (see example on following page).

Example : Advantages of Assemble-to-order Strategy

(Each final
product contains
four major subassemblies and
a detail part)

There are 2 different

Variations for A2
There are 3 different
Variations for A4
There are 4 different
Variations for A1

There are 4 different

Variations for A3

There are 5 different

Variations for C1

Figure 2

The number of alternative final product configurations = 4x2x4x3x5 = 480

The number of different items to stock = 4+2+4+3+5 = 18
Relatively small
number of
component items to
stock.

Competetive
strategy of large
variety of final
product.

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Custom Design & Make-to-Order Strategy

In many situations the final design of an item is part of what is purchased. The final
product is usually a combination of standard items and items custom designed to meet the
special needs of the customer.
Combined material handling and manufacturing processing systems, special trucks for offthe-road work on utility lines and facilities are examples of such final products.
Thus, there is one MPS for the raw material and the standard items that are purchased,
fabricated, or built to stock and another MPS for the custom engineering, fabrication, and
final assembly.

11

Relationships between competetive strategies

Figure 3

12

Understanding the Bill of Material & its uses

An inclusive definition of a final product includes; a list of the items,
ingredients, or materials needed to assemble, mix, or produce that end product.
This list is called a bill of material (BOM) and created as part of the design process .

A single level BOM is

sufficient when final
product is assembled
or manufactured from
a set of purchased parts
and raw materials.

Table 3

13

A multilevel (indented)
BOM is required when
final product has make
subassemblies in its
structure.
Figure 4

End Item: Lamp LA01

Table 4

14

If the finished shaft and wiring assembly shown in Table 4

were make subassemblies, then their components would be listed
in the multilevel (indented) BOM of Lamp LA01.

As one can easily see, the

multilevel product structure
is really made up of building
blocks of single level product
trees.

Table 5

15

COMPLEXITIES IN REAL LIFE :

What happens if we manufacture alternate lamps by using;
three different shades,
two alternate base plates, and
two types of sockets

Then we have (3x2x2=) 12 different models

having some common components.

To make the
planning task more
understandable, we
can prepare the
common parts
bill.
Some parts are
common to all
models
Some parts are not
common to all
models

Table 6

16

Inorder to ease up the planning task, we can reduce the number of items in BOM by
grouping part 1100 (finished shaft) and part 1700 (wiring assembly) which are common
parts to all products, and assign a new part number (such as 3000) to this group.
Since part no 3000 will never be
stocked, it will be a pantom number.

18 items

19 items

17

From Table 6, a simplified product structure diagram can be created for the family of lamps which
consists of modular pseudo subassemblies :

Figure 5
In this kind of diagram, instead of the quantity
for each unit assembled, the percentage split
for each type of component is stated.
If we plan for a total of 10,000 lamps for each
month, this planning bill can be used to
derive the number of each type of component
to build.

Furthermore, if we decide to change from 15

cream shade to, say, a 16 green shade, we
need to alter only this single BOM (modular
bill).

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Understanding the Planning Horizon

A Principle of Planning:
A plan must cover a period at least equal to the time required to accomplish it.
That is, the MS planning horizon must be at least as long as the lead time
required to fabricate the MS items. This includes production and procurement time
as well as engineering time in a custom design environment.

Figure 6

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Minimum Planning Horizon:

Production Hours

According to the principle of planning, Minimum Planning Horizon is, the

time period in which the MPS can not be changed. This period is also called
as frozen zone.

Committed Backlog
(IN PRODUCTION)
(frozen schedule/zone)
Committed
Backlog
(NOT in
PROD)

1
Figure 7

Minimum planning horizon

(frozen zone)

Forecasted
Backlog

Committed
Backlog
(NOT in
PROD)

9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24
Planning horizon which is under the
authority of master schedular

Weeks
20

A Sample Time Fencing for MS Planning Horizon

Table 7
PERIOD A :

Only top management can change the MPS.

PERIOD B :

Any additions to the schedule must be counterbalanced by comparable

deletions or increases in capacity. Changes are usually negotiated between
marketing and manufacturing with the master scheduler determining their
feasibility before the final decision. The product mix may change but not the
production rate.

PERIOD C :

The MPS is consistent with the production plan. Preparation of the MS is

straightforward in this time frame.

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DESIGNING, CREATING & MANAGING THE MASTER SCHEDULE

Master Scheduling activities are carried out in three main steps:
SUBSTEPS :
STEP 1 :

Designing the master

schedule (MS)

STEP 2 :

Creating the master

schedule (MS)

STEP 3 :

1. Select the items; that is, select the levels in the BOM structure to be represented by
the items scheduled (both components and final assemblies may be included).
2. Organize the MS by product groups.
3. Determine the planning horizon, the time fences, and the related operational guides.
4. Select the method for calculating and presenting the available-to-promise (ATP)
information.

1. Obtain the necessary informational inputs, including the forecast, the backlog
(customer commitments), and the inventory on hand.
2. Prepare the initial draft of the master production schedule (MPS).
3. Develop the rough cut capacity requirements plan (RCCR').
4. If required, increase capacity or revise the initial draft of the MPS to obtain a
feasible schedule.

Controlling the master

schedule (MS)

1. Track actual production and compare it to planned production to

determine if the planned MPS quantities and delivery promises are
being met.
2. Calculate the available-to-promise to determine if an incoming
order can be promised in a specific period.
3. Calculate the projected on hand to determine if planned production
is sufficient to fill expected future orders.
4. Use the results of the preceding activities to determine if the MPS
or capacity should be revised.

22

Designing The Master Schedule

Suppose that we are going to create a MS in a make-to-stock

environment with no safety stock.

Figure 8

Our planning horizon will be 4 weeks (weeks 32, 33, 34 & 35).
Calculation method for ATP (available-to-promise) quantities
will be discrete.
23

Creating The Master Schedule

When we examine the available
information for PG1, we see that;
For MPS Item1, the POH quantity of
week 31 does not meet the forecasted
requirement of week 32. So, we need
to schedule this item for week 32.
For MPS Item2, the POH quantity of
week 33 does not meet the forecasted
requirement of week 34. So, we need
to schedule this item for week 34.
For MPS Item3, the POH quantity of
week 34 does not meet the forecasted
requirement of week 35. So, we need
to schedule this item for week 35.

Table 8

Some companies may use a safety stock level. Item is rescheduled when POH drops
down to the safety stock level.

24

Based on a weighted average capacity of 180 units per week, we create our
initial (first) plan :
The POH for the
first week equals
the beginning
inventory plus the
MPS quantity
minus the forecast
requirements.

For each week

we expect to
complete a total
of 180 units of
PG1 products.

Table 9

Now the question is, whether do we have sufficient capacity to carry out this plan?
25

Brief summary of Capacity management

Figure 9 shows an overview of the entire

Manufacturing Planning & Control (MPC)
process under MRP.
In this approach, capacity management
techniques usually are separated into four
categories:
1.
2.
3.
4.

resource requirements planning (RRP),

rough cut capacity planning (RCCP),
capacity requirements planning (CRP), and
input / output control.

A problem commonly encountered in

operating MRP systems is the
existence of an overstated MPS.

Remember:
MRP is
insensitive to
capacity.

Figure 9

26

Table 10

27

An overstated master production schedule is the one which

orders more than the production can complete. It causes;
raw materials and WIP inventories to increase because
more materials are purchased and released to the shop
than are completed and shipped.
a buildup of queues on the shop floor resulting an
increase in actual lead times which yields to ship dates
to be missed.
Overstated
MPS causes a
chain
reaction
which flows
down to the
lowest level
components.

Figure 10

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Revising the MPS

Lets go back to the initial MPS developed for product group PG1 which covers
products MPS Item1, MPS Item2, and MPS Item3 according to the production
plan dictated by management.

Capacity required
by this initial MPS
is shown in
following page.

Table 11

29

(0.342 standard hrs/lamp)

Table 12

The comparison of capacity requirements to available capacity gives the master scheduler
the following options:
1. Increase capacity in Weeks 32 and 33.
2. Reduce production quantities in Weeks 32 and 33 and increase
production quantities in Weeks 34 and 35.
3. Some combination of Options 1 and 2,

30

In this case the choice is Option 2:

The revised MPS quantities were obtained by scheduling the maximum possible quantity of
MPS Item1 in Weeks 32 and 33 and completing those requirements in Week 34. The remaining
requirements for MPS Item2 and MPS Item3 were roughly balanced between Weeks 34 and 35,
producing MPS Item2 first.

(0.342 standard hrs/lamp)

Copy of Table 11

Table 13

31

POH values reveal

that sufficient units
will be available to
cover forecast
demand for PG1

Remember that; the

Production Plan and the
MPS were based on the
Forecasts and
customer
commitments /backlog.
For this reason, it may be
necessary to revise the
MPS again if actual
orders are substantially
different from the
forecast.

104

Table 14

Once the initial revised feasible MPS is developed, creating the master schedule is completed.

32

Controlling the MPS

The MASTER SCHEDULE (MS)

itself serves as a control device
in three distinct ways

Actual production is
compared to the MPS to
determine if the
plan is being met.

The projected on hand (POH)

is calculated to determine if
the supply is sufficient to fill
expected future orders.
The available-to-promise
(ATP)is calculated to determine
if an incoming order can be
promised for delivery in
a specific period.

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The Available to Promise Quantity (ATP)

Definition of ATP as given by APICS Dictionary is as follows;
"The uncommitted portion of a company's inventory or planned production.
This figure is normally calculated from the master production schedule and is
maintained as a tool for customer order promising."

However, when we say that;

there are 25 units available-to-promise in Week 7 and
there are20 units available-to-promise in Week 8,
the meanings are not clear until the method of calculation for ATP
values is known.

34

There are three methods

of computing the ATP

DISCRETE
(ATP:D)

CUMULATIVE

Without look ahead

(ATP:WOL)

With look ahead

(ATP:WL)

35

A. Calculation of Discrete ATP (ATP:D)

Table 15

Computation method is as follows:

1.

For the first period

If there is a scheduled MPS quantity;
ATP:D = Beginning inventory + Scheduled MPS qty for the first period Backlog for the period (committed qty).
If there is NO scheduled MPS quantity;
ATP:D = 0

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WHY ATP:D=0 for the second case?

Because in this case, the beginning inventory is supposed
to compensate the backlogs of the first period and the
consecutive periods (if there are any)which does not have
scheduled MPS quantities.
For this reason, the beginning inventory has no
significance for the first period. Thus, the formula yields to
a negative or zero value for ATP:D.
Since there can not be a negative available to promise
quantity, ATP:D value becomes 0.
Example - ATP:D quantities for week 32
MPS Item1 ATP:D = 10+169-110 = 69
MPS Item2 ATP:D = 0+0-35 = -35 = 0
MPS Item3 ATP:D = 0+0-13 = -13 = 0

Table 15

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2.

For the second period and on

If there is a scheduled MPS quantity;
ATP:D = Scheduled MPS qty for the period Backlog for the period (committed qty).
If there is NO scheduled MPS quantity;
ATP:D = 0
What happens to ATP:D values of MPS
Example
Example- ATP:D
- ATP:Dquantities
quantitiesfor
forMPS
MPSItem
Item
for
for
11
weeks
weeks33,
33,34
34and
and35
35

Item1 if we receive an additional order of

30 units for week 32?

For week 33 ATP:D = 169-80 = 89

For week 34 ATP:D = 22-5 = 17
For week 35 ATP:D = 0-15 = -15 0
Example - ATP:D quantities for MPS Item2 for
weeks 33, 34 and 35
For week 33 ATP:D = 0-20 = -20 0
Remember that, since there is no scheduled MPS for this
period, respective backlog should be associated with an
MPS quantity prior to week 32.
For week 34 ATP:D = 160-45 = 115
For week 35 ATP:D = 56-24 = 32

The ATP:D of week 32 changes from

69 to 39. ATP:D quantities for other
weeks remain same as before.

Table 15

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WHY we DO NOT have Forecast and POH values in Master

Schedule when computing ATP:D?
Note that in computing the ATP: D, it is not necessary to have the forecast and the
projected on hand inventory in the master schedule. This is because at this time the
master scheduler is not creating a master schedule, but, instead, is managing an existing
schedule.

The master scheduler is promising the delivery of units to customers which will be
available either from units already on hand when construction of the master schedule
began, or from units scheduled to be built in accordance with the master production
schedule. Therefore, the forecast and POH are not included in the tables that follow.

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B. Calculation of Cumulative ATP without lookahead (ATP:WOL)

Computation method is as follows:
1.

For the first period

ATP:WOL = Beginning inv + Scheduled
MPS qty Backlog

2.

For the following periods

ATP:WOL = ATP:WOL of preceeding
period + Scheduled MPS qty

Backlog
Example - ATP:WOL quantities for MPS Item1 for
weeks 32, 33, 34 and 35
For week 32 ATP:WOL = 10+169-110 = 69
For week 33 ATP:WOL = 69+169-80 = 158
For week 34 ATP:WOL = 158+22-5 = 175
For week 35 ATP:WOL = 175+0-15 = 160
Table 16

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Difference between ATP:WOL & ATP:D methods

The most obvious difference between
ATP:WOL and the ATP:D methods is that,
the ATP in any period is likely to include
units also included in the ATP of other
periods.
For example, For MPS Item1, the 158 unit
ATP:WOL of Week 33 includes the 69 units
in the ATP of Week 32, which are also
included in the ATP of all other weeks.
Furthermore, in ATP:WOL procedure, the
ATP for a week may include units
committed to fill requirements for a later
week.
For example, 15 of the units in the ATP of
Week 34 are committed to customer orders
promised in Week 35.

Table 16

The data becomes

misleading

41

B. Calculation of Cumulative ATP with lookahead (ATP:WL)

The look-ahead approach resolves the misleading data problem of ATP:WOL
method of calculation.
Computation method is as follows:
The ATP:WL of a period = (the ATP:WL of the
preceding period) + (the MPS of the period) (the
backlog of the period) (the sum of the
differences between the production [MPS qty] and
backlog of all future periods until, but not
including, the period at which point production
exceeds the backlog).
Example - ATP:WL quantities for MPS Item1 for
week 34
For week 34 ATP:WL = 158+22-5-15 = 160

Table 17

42

Detailed Calculation:

MPS Item1 :

ATP:WL for week 33;

ATP:WL for week 32;

ATP:WL which is prior to week 32 is 10 units.
MPS for week 32 is 169 units.
Backlog for week 32 is 110 units.
In the following week (week 33), production
(MPS qty of 133 units) exceeds the backlog
(of 80 units). Therefore we will not consider
week 33.
Accordingly; ATP:WL quantity of week 32 =
10+169-110 = 69 units.

Is calculated exactly in the same way since, in the following week (week 34), production (MPS qty of 22
units) exceeds the backlog (of 5 units). Accordingly; ATP:WL quantity of week 33 = 69+169-80 = 158 units.

ATP:WL for week 34;

In the following week (week 35), production (MPS qty of 0 units) does not exceed the backlog (of 15 units).
So, we have to look ahead and say that, this difference of 15 units between production and backlog of week 35
will be covered by the ATP of week 34.
Accordingly; ATP:WL quantity of week 34 = 158+22-5-(15) = 160 units.

ATP:WL for week 35; remains as 160 units since we had already
excluded 15 units of difference qty.

43

Resolution of the misleading data problem :

The ATP quantity of 175 for week 34

includes comitted quantity of 15 units for
the following week (week 35).

The ATP quantity of 160 for week 34 does

not include the comitted quantity of 15
units for the following week (week 35).

Week in which we
do not have enough
production to meet
the existing backlog.

Week in which we
do not have enough
production to meet
the existing backlog.

Also read the following supplementary handouts for Rough Cut Capacity Planning
from the IE434 web page:
Reading 03-ROUGH CUT CAPACiTY PLANNiNG_supplement for MPS_2010.doc

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