Module 2 Section C

Three important manufacturing requirements that influence master scheduling approaches in different manufacturing environments are

Appropriate production process Methods used to manage sales volume fluctuations Choice of unit of production

advanced planning and scheduling

Techniques that deal with analysis and planning of logistics and manufacturing during short, intermediate, and long-term time periods. APS describes any computer program that uses advanced mathematical algorithms or logic to perform optimization or simulation on finite capacity scheduling, sourcing, capital planning, resource planning, forecasting, demand management, and others. These techniques simultaneously consider a range of constraints and business rules to provide real-time planning and scheduling, decision support, available-to-promise, and capable-to-promise capabilities. APS often generates and evaluates multiple scenarios. Management then selects one scenario to use as the "official plan."

The five main components of APS systems are

(1) demand planning, (2) production planning, (3) production scheduling, (4) distribution planning, and (5) transportation planning.

Demand time fence

(point of no return) Any change or new order in the firm zone inside the DTF disrupts production. MTO: The DTF is farther out, since lead time includes some purchasing as well as subassembly and assembly lead time. ATO: The DTF is not as far out, as subassemblies (modes or options) are in stock. MTS: The DTF is very close. A customer order triggers shipment from stock.

Planning time fence

(slightly beyond cumulative lead time) Inside the PTF (slushy or "trading" zone), orders can be changed, and new orders are accepted and consume the forecast. Unexpected orders may have problems with component and capacity availability. Orders that exceed the forecast could require rescheduling open orders and delaying release of planned orders. Planning software allows the master scheduler to stop orders just outside the PTF from rolling into the trading zone to allow assessment of capacity and materials impact.

Within the demand time fence used by master scheduling, how much of the forecast demand from sales and operations planning is included? 0 Greater of customer orders or forecast Lesser of customer orders or forecast 1

0 Within the demand time fence, only customer orders are included.

planning bill of material

An artificial grouping of items or events in bill-of-material format used to facilitate master scheduling and material planning. It may include the historical average of demand expressed as a percentage of total demand for all options within a feature or for a specific end item within a product family.

The organization will validate that the MPS is able to

Be completed on time Be done within the budget Function successfully within the expected parameters.

Which of the following elements related to closing the demand/supply loop is most likely to be included within rough-cut capacity planning? Final assembly Theoretical capacity Constraining operations Bottleneck work centers

Bottleneck work centers Rough cut capacity planning is at the key or bottleneck work center level; the other responses are not used in RCCP.

Inputs from MPC/ERP:

Business plan information, such as S&OP information Forecast, purchasing plan, order fulfillment status, distribution requirements, production, and logistics capacity data Information on customer and product profitability and priorities

discrete available-to-promise

A calculation based on the available-to-promise figure in the master schedule. For the first period, the ATP is the sum of the beginning inventory plus the MPS quantity minus backlog for all periods until the item is master scheduled again. For all other periods, if a quantity has been scheduled for that time period, then the ATP is this quantity minus all customer commitments for this and other periods until another quantity is scheduled in the MPS. For those periods where the quantity scheduled is zero, the ATP is zero (even if deliveries have been promised). The promised customer commitments are accumulated and shown in the period where the item was most recently scheduled.

Master production schedule

A line on the master schedule grid that reflects the anticipated build schedule for those items assigned to the master scheduler. The master scheduler maintains this schedule, and in turn, it becomes a set of planning numbers that drives material requirements planning. It represents what the organization plans to produce, expressed in specific configurations, quantities, and dates. The MPS is not a sales item forecast that represents a statement of demand. It must take into account the forecast, the production plan, and other important considerations such as backlog, availability of material, availability of capacity, and management policies and goals.

product configuration catalog

A listing of all upper-level configurations contained in an end-item product family. Its application is most useful when there are multiple end-item configurations in the same product family. Used to provide a transition linkage between the end-item level and a two-level master production schedule. Also provides a correlation between the various units of upper level product definition.

bill of resources

A listing of the required capacity and key resources needed to manufacture one unit of a selected item or family. Rough-cut capacity planning uses these bills to calculate the approximate capacity requirements of the master production schedule. Resource planning may use a form of this bill.

Product load profile

A listing of the required capacity and key resources needed to manufacture one unit of a selected item or family. The resource requirements are further defined by a lead-time offset to predict the impact of the product on the load of the key resources by specific time period. The product load profile can be used for rough-cut capacity planning to calculate the approximate capacity requirements of the master production schedule.

cumulative available-to-promise

A calculation based on the available-to-promise (ATP) figure in the master schedule. Two methods of computing the cumulative available-to-promise are used, with and without look-ahead calculation. The cumulative with look-ahead ATP equals the ATP from the previous period plus the MPS of the period minus the backlog of the period minus the sum of the differences between the backlogs and MPSs of all future periods until, but not to include, the period where point production exceeds the backlogs. The cumulative without look-ahead procedure equals the ATP from the previous period plus the MPS, minus the backlog in the period being considered. Cumulative ATP(Period 1) = On-Hand Quantity + Sum of(Customer Orders(Before Next MPS)) Cumulative ATP(Next MPS Period) = Previous Cumulative ATP + MPS - Sum of(Customer Orders(Before Next MPS))

firm planned order

A planned order that can be frozen in quantity and time. The computer is not allowed to change it automatically; this is the responsibility of the planner in charge of the item that is being planned. This technique can aid planners working with MRP systems to respond to material and capacity problems by firming up selected planned orders. In addition, firm planned orders are the normal method of stating the master production schedule.

product mix hedge

A product mix hedge is an approach where several interrelated optional items are overplanned. Sometimes, using a planning bill, the sum of the percent mix can exceed 100 percent by a defined amount, thus triggering additional hedge planning.

capacity planning using overall factors (CPOF)

A rough-cut capacity planning technique. The master schedule items and quantities are multiplied by the total time required to build each item to provide the total number of hours to produce the schedule. Historical work center percentages are then applied to the total number of hours to provide an estimate of the hours per work center to support the master schedule. This technique eliminates the need for engineered time standards.

Which of the following changes is most likely to directly impact the master schedule? Extending the planning time fence by 4 periods Increasing safety stock from 1 to 2 period's demand Reducing the lot size quantity by one-half Shortening the demand time fence by one-half

Increasing safety stock from 1 to 2 period's demand Increasing safety stock will have the affect of pulling orders forward in the schedule, which may result in overload conditions or material shortages; extending the planning time fence will have no affect on demand; reducing the lot size will increase the number of orders but not otherwise change the demand quantity or supply; shortening the demand time fence will reduce the number of orders released to production but will not otherwise change demand or supply.

the key features of the engineering change process

Initiation Affected by the change Engineering change notice Engineering change board

Inputs

Inputs from MPC/ERP APS inputs to manufacturing execution

Requests to Expedite or Schedule a New Rush Order

Is capacity available? Are materials available? How much will it cost? Impact on worker morale and teamwork Organization implications and advantages

Are materials available?

Key Issues to Consider: Can suppliers provide the materials on time? Do we have any of the materials needed on hand? Key Parties to Involve: Purchasing Master scheduler

How much will it cost?

Key Issues to Consider: Costs of expediting materials (by air freight)? Cost of overtime? Will additional costs result in very low profit? Will diversion of resources from other orders lead to a revenue loss? Key Parties to Involve: Material management Finance

Organization implications and advantages

Key Issues to Consider: Is the customer strategically important? Is the customer potentially a strategically important new customer? Is the revenue a net windfall? Key Parties to Involve: Production Master scheduler

Is capacity available?

Key Issues to Consider: Is the order within the planning time fence? Will the order overload the schedule? Can another of the customer's orders be rescheduled to offset the new one? Can another customer's order be rescheduled? Key Parties to Involve: Production Master scheduler Sales

Impact on worker morale and teamwork

Key Issues to Consider: Will morale suffer from the interruption of a smooth-running system? Will efficiency also suffer from the disruption? Key Parties to Involve: Sales Finance Master scheduler

The following are three areas of focus for validating the MPS.

Key performance measures Indicators of issues or problems Methods and policies utilized in master scheduling

A functional layout company produces several product families that use the same work centers, with some units being a standard design and others having custom design. Which of the following management decisions is most applicable as it relates to master scheduling? Relevance of a demand time fence Use of a final assembly schedule Use of a quantity/period or flow rate Level and type of inventory to stock

Level and type of inventory to stock Decisions would be required on which products to keep in stock as finished goods versus assemblies; a demand time fence would be relevant to manage demand; nothing in the question indicates the applicability of a finished assembly schedule, volume or mix issues.

An overstated forecast results in an overestimate of which of the following elements? Load and inventory Inventory and capacity Backlog and load Capacity and backlog

Load and inventory An overstated forecast will show an overestimated load on production, as well as drive component, subassembly and finished goods inventory to be ordered or produced.

The following is a select list of key performance measures that ultimately define customer service and satisfaction. The measures are in four groups and focus on internal performance, external impact on customers, and financial performance.

MPS aggregate performance MPS stability MPS lead time MPS execution

The best reason for using planning bills of material in master scheduling is The company is make-to-stock and planning bills match planned production levels Material procurement or productions occurs prior to knowing actual end items Planning bills do not require actual engineering or manufacturing bills of material A single bill can be used no matter how many products are in a product family

Material procurement or productions occurs prior to knowing actual end items Planning bills get necessary components on order until actual configuration is known and allow for flexibility; Actual bills of material are still required for the product; planning bills have nothing to do with planned production levels.

The delivery of materials from suppliers is a vital link in the success of the master scheduling process. The MPS assumes the following:

Materials of the right quantity and quality will be on hand when work orders are released by production control. The supplier's capacity and ability to deliver are as stated in current lot size and lead time information. Suppliers are able to react to production control requests or notices to correct parts shortages or to reschedule deliveries because of slippages in the schedule.

A company produces make-to-order product families that use common work centers configured in a functional layout. Ship dates are specified by the customer. It is a stable product line in the maturity stage, but demand is erratic. The master scheduler has ongoing problems maintaining a balanced schedule due to randomly appearing overload conditions among the various work centers. A likely cause of the overload condition is Changes in customer orders Missed schedules in production Inaccurate capacity records Late supplier shipments

Missed schedules in production Missed schedules are likely to be a problem due to having a mix of products using the same work centers and meeting customer ship dates; the other responses cannot be inferred from the questions.

When the rough-cut capacity plan identifies situations that are not as easily remedied, several actions can be considered and taken singly or in combination with others. These include actions focused specifically on the MPS:

Modification of the MPS dates and quantities Communication with customers on delivery flexibility Changes in available capacity

A company produces lawnmowers that come in three horsepowers. Product is produced in lot quantities for retail sales, and assembled to order for direct sales. Which of the following types of bills of material is most likely used for the master scheduling? Modular Common parts Single level Multi-level

Modular Modular bills would allow a percentage to be applied to each of the horsepower options; the others are used for engineering and production, but not for planning.

The steps to calculate discrete ATP are as follows:

Calculate the ATP for period 1 Calculate the ATP for all other periods

Other MPS Challenges

Capacity is not in balance with the MPS. ATO products require a planning bill of material. MTO products require a final assembly schedule.

Management has determined that the master production schedule will not be met. The last action to be taken would be to Change the master production schedule Move non-utilized resources Use alternate routings Schedule overtime

Change the master production schedule Since the master production schedule drives the ordering of all manufactured and purchased components, changing it will lead to changes throughout the planning system. Other alternatives should be considered if possible.

Actions necessary to manage supply- and supplier-related issues that affect the success of master scheduling include

Changes in supplier delivery capabilities Availability of parts during shop floor execution Slippages in production schedules Supplier performance

Techniques for fine-tuning master scheduling include

Changing inventory levels in MTS environments Balancing backlogs and capacity costs in MTO and ATO environments Establishing criteria for accepting an unexpected new customer order or expediting an existing customer order Using time fences in different environments Identifying mandatory, phased-in, and optional engineering changes, their causes, and appropriate actions Responding proactively to changes in suppliers' capabilities, availability of materials or parts, timely delivery, and overall performance.

Slippages in production schedules

Communicate schedule requirements and changes effectively by sharing the master schedule with suppliers; for example, faxing or emailing purchase-order change action enables supplier to react to but not see the manufacturer's internal scheduling constraints.

Availability of parts during shop floor execution

Communicate status of materials information to suppliers (for example, by MRP exception reports and action messages) to prevent shortages.

Demand

Competition in the marketplace Variations in product transportation Supply chain partners Sales and marketing initiatives

Actions can also be taken apart from the MPS:

Consider revisions to the production plan. Increase sales through promotions.

The purpose of rough-cut capacity planning is to

Convert the schedule for MPS end items into a schedule (usually weekly) of requirements for key resources Compare load requirements for key resources to available capacity Resolve differences to create a workable MPS.

Inventory Levels of MTS Products: Change stocking strategy.

Converts low-volume, low-margin products to ATO or MTO. Standardizes offerings; eliminates low-volume, low-margin products; reduces number of master scheduled items. Reduces inventory costs.

The key objectives of master scheduling include

Creating a build schedule for specific products: end items, quantities, and due dates Setting up due dates for the availability of the end items Providing the required information regarding resources and materials, which acts as the supporting pillars of aggregate planning Enabling sales and customer service to promise deliveries to customers Providing the basis for tradeoffs if orders cannot be met Coordinating sales and operations for superior customer service

Order promising

Data found in the master scheduling record provide the customer order entry function in demand management with the information needed for customer order promising.

An assemble-to-order environment using a mixed model production schedule has a bottleneck work center. The best rough cut capacity planning approach for determining the feasibility of the master production scheduler is to Define capacity as 85% of rated to provide 15% to accept additional customer orders Define capacity as some percent less than 100% of rated capacity by management policy Define capacity as rated capacity x utilization x efficiency to factor the engineering standard Define capacity at 100% of rated capacity and utilization when mix of demand justifies it

Define capacity at 100% of rated capacity and utilization when mix of demand justifies it Bottlenecks should be scheduled at the rated capacity if there is sufficient business volume to justify it; defining capacity at less than 100% runs the risk of not having necessary subassemblies and component inventory available in the time periods required.

The purpose of a modular bill of material includes Translating the sales and operation plan to the master production schedule Easier material requirements planning processing Facilitating forecasting Minimizing inventory for unique components

Facilitating forecasting A modular bill of material is a type of planning bill that is arranged in product modules or options. It is often used in companies where the product has many optional features

The purpose of a modular bill of material includes Translating the sales and operation plan to the master production schedule Minimizing inventory for unique components Facilitating forecasting Easier material requirements planning processing

Facilitating forecasting A modular bill of material is a type of planning bill that is arranged in product modules or options. It is often used in companies where the product has many optional features

Facility, Production Volume, Product Variety, Production Lead Time, Operations per Product, Production Resources A, High, High, Long, Many, Many B, High, Low, Short, Few, Many C, Low, High, Long, Many, Few D, Low, Low, Short, Few, Few In which facility would product unit costs most likely be reduced through a setup reduction program? Facility A Facility B Facility C Facility D

Facility C The factors to consider are: Low production volume that there are a lot of small order released; High product variety means that there are a number of different products that can be produced; and many Operations per product means that there is a lot of setup being performed.

Frozen zone

In this zone, which is inside the DTF, changes to the MPS cannot or should not be made. Rescheduling into or out of the zone is possible but discouraged. Emergency changeovers from producing one product to producing another are expensive at this late stage. Only customer orders are used in calculating the projected available balance. Forecasts are ignored. Changes Approved by: Vice president of manufacturing or equivalent (rescheduling into or within zone) Vice president of sales (rescheduling out)

Backlog of MTO and ATO Products: Improve quality.

Increases process reliability Shortens throughput time, reduces backlog, improves customer service, and reduces inventory costs.

Inventory Levels of MTS Products: Improve quality.

Increases process reliability. Shortens throughput time and reduces safety stock requirements. Improves customer service and profit margins and reduces inventory costs.

Key concepts that are important to know about modular bills include the following:

Modules and the common parts bill are standard units that may be prepared in advance of receiving a customer order; modules can be manufactured or purchased subassemblies or individual components. The total number of modules is based on an end-item forecast. Modules and the common parts bill are defined at Level 1 of the BOM. The options for each module can be selected by the customer. Each option is defined as a single-level or multilevel BOM (not shown). The BOM for each option links the option's components to the option's parent. Unlike a multilevel bill, a modular BOM does not show the ultimate use of the module in an end item. Modular bills simplify the forecasting and master scheduling of ATO products.

Changes in supplier delivery capabilities

Monitor variability in supplier capacity and adjust lead times and lot sizes as necessary. Carry safety stock as necessary.

Master scheduler

Often the job title of the person charged with the responsibility of managing, establishing, reviewing, and maintaining a master schedule for select items. Ideally, the person should have substantial product, plant, process, and market knowledge because the consequences of this individual's actions often have a great impact on customer service, material, and capacity planning.

A data element that can cause the most occurrences of inaccuracy in a master schedule for a particular product is Product mix percentage On-hand inventory Manufacturing lead time Bottleneck capacity

On-hand inventory Inventory data affects projected available balance, available-to-promise and the periods in which an MPS is scheduled.

cycle stock

One of the two main conceptual components of any item inventory, the cycle stock is the most active component. The cycle stock depletes gradually as customer orders are received and is replenished cyclically when supplier orders are received. The other conceptual component of the item inventory is the safety stock, which is a cushion of protection against uncertainty in the demand or in the replenishment lead time.

APS inputs to manufacturing execution:

Optimized schedules validated for capacity for multiple factories Schedules consistent with logistics capacity Start and finish times for all orders in sequence Priorities for profitable-to-promise and optimized sourcing

A production plan has established 1000 units in a period for a stocked product family. Specific percentages for end items are not known with certainty. Which of the following alternatives should the master schedule ignore when translating the product family into specific master production schedule quantities? Use a super bill of material to over-plan the percentages in a two-level master production schedule Use a modular bill of material and overplan the options to provide for some uncertainty Make an estimate of the number of actual end items to produce based on history Overplan the end items based on historical deviations to provide for some uncertainty

Overplan the end items based on historical deviations to provide for some uncertainty The end item quantities should not be overplanned as they must equal the quantity in the production plan; the others are all valid approaches.

When creating a common parts BOM, the master scheduler begins by identifying

Part numbers used in all models in the same quantity Part numbers used in all models but in different quantities Part numbers used in some but not all models.

Affected by the change

Part, drawing, BOM, item master

Persistent past-due orders

Past-due orders are a symptom of overloaded MPSs and inadequate capacity planning.

MPS stability

Percentage of MPS orders that change Percentage of orders past due

MPS execution

Percentage of perfect orders Line-item fill-rate percentage

MPS lead time

Percentage of planned orders that violate time fence rules Reduction in customer lead times over a period of time

relationship of master scheduling to Demand management

Planning hierarchy Forecasting Customer orders Order promising

Mass customization is the ability to Produce generic products that the customer can use in multiple ways Produce products with multiple features Produce a large variety of individual products at a low cost Produce large quantities of customer-configured products

Produce a large variety of individual products at a low cost Mass customization is the creation of a high-volume product with large variety so that a customer may specify an exact model out of a large volume of possible end items.

Type of Change: Mandatory

Product Issue/Reason for Change: Failure to function Safety issue Legal compliance Action Required: Immediate Engineering change notice Design review board process

Type of Change: Phased-in/optional

Product Issue/Reason for Change: Product improvement or correction Customer request Cost reduction Process improvement Action Required: Phase-out or modification of existing products Review of options for effectivity date when old part is no longer in inventory or when a given serial number is processed Engineering change notice Design review board process

Which of the following statements about production planning is true? Production planning is a process a company uses to plan its resources to change either backlog and/or finished goods inventory. Production planning should be processed on a weekly basis and in detail by unique end items The production plan should be frozen for at least the cumulative lead time of the product Production plan families are broken down into MRP items and the time frame changed to days or weeks

Production planning is a process a company uses to plan its resources to change either backlog and/or finished goods inventory. The production plan does not get frozen, and should be done on a monthly or quarterly basis by product group or family; it is broken down into MPS items.

ATP is used to support product delivery in the following ways:

Provide information on valid customer delivery dates. Hold (or reserve) products for customer order before delivery. Provide warnings on components to prevent over-promising on delivery dates. Provide sales with up-to-date information to manage delivery expectations.

After reviewing production for a particular product family over the past six months, the master scheduler is recommending that the demand time fence be moved out one period. Which of the following sales and operations planning team members could be excused from the discussion and decision making? Sales Senior management Production Purchasing

Purchasing Changing the demand time fence does not impact purchasing lead times or POs; sales and production may need to request changes to management during the additional period; senior management will have an extra period to approve changes; production has an extra period where their schedule and priorities are less likely to change.

The standard hours of load placed on a resource within a time period is the Resource profile Resource driver Bill of resources Resource calendar

Resource profile The resource profile is the standard hours of load placed on a resource by time period.

Problems DTF Should Prevent in MTO

Return or scrapping of purchased items Rework or scrapping of subassemblies Delay in delivery of finished goods, schedules of other orders, or orders using the same capacity

Problems DTF Should Prevent in ATO

Rework or scrapping of final assemblies Higher costs and shipping delays

Compared to infinite capacity planning, the advanced planning and scheduling technique Uses a longer planning horizon Validates the master production schedule Schedules based on achievable operations within a set time period Limits the plan to critical resources only

Schedules based on achievable operations within a set time period An advanced planning and scheduling tool uses priority rules to determine what orders will be produced in what time periods, and takes into account capacity constraints.

A company purchases almost 30% of its raw material directly from farmers, cutting out wholesalers and distributors. This allows the companies to Increase their hold on the farmers by eliminating an echelon. See that the true suppliers of raw material realize a higher price for their efforts Promote the farmers to a tier one supplier facilitating tighter controls Reduce the costs associated with an entire echelon thus driving their profit margins up

See that the true suppliers of raw material realize a higher price for their efforts A popular coffee roster company purchases about 29% of its coffee directly from farmers, cutting out the intermediaries. This allowed the roaster company to see that farmers realize a higher price for their efforts.

Backlog of MTO and ATO Products: Use synchronous flow and cellular manufacturing.

Shifts from job shop to cellular process choice. Shortens throughput time and decreases work in process. Increases resource productivity. Reduces backlog and improves customer service.

At which of the following levels in the product structure is the final assembly schedule in an assemble-to-order environment? Narrowest point of the product structure Level 1 of the configured bill of material First occurrence of a custom-designed part Shippable end item level of the bill of material

Shippable end item level of the bill of material The final assembly schedule would be at the end item sold to the customer, which is level -0- of the bill of material; narrowest point is where master scheduling occurs; level 1 and custom-designed parts do not represent the FAS level.

The tactics listed below are examples of strategies the organization may want to embrace to make it easier to accommodate an increasing amount of changes and become more agile:

Shorten cycle time. Improve quality. Shorten the journey. Finish or make-to-order vs. make-to-stock. Rethink stocking strategies. Standardize product offerings. Streamline transportation. Loosen time fences.

Backlog of MTO and ATO Products: Use optimum production planning method to achieve cost, revenue, and backlog goals.

Simulates optimal blend of chase, level, and hybrid strategy. Optimal balance of production costs and backlog and customer service goals.

Level adjustments

Since 100 percent manufacturing facility utilization and labor efficiency is not realistic for most organizations, this technique adjusts the level of the master schedule to the capacity actually demonstrated and encourages incremental increases in output. Each month shows a slight increase to gradually raise the bar.

In an assemble-to-order environment, the stocking level where independent demand is planned for the master production schedule is Subassemblies Finished goods Raw materials Purchased parts

Subassemblies The master production schedule would be planned at the sub-assembly level; raw materials and purchased parts would be planned as dependent within MRP; finished goods would be planned at the final assembly schedule level.

Which of the following data requires no disaggregating to develop the master schedule from the sales and operations plan and check for feasibility? Volume Demand Supply Mix

Supply Supply, or capacity, is shared across product families. The other responses all relate specifically to a product family, so would have to be disaggregated to end units for the master scheduled.

Which of the following statements about the final assembly schedule (FAS) is true? The final assembly schedule is the same as the production plan The final assembly schedule only includes final operations The final assembly schedule is the same as the master production schedule The final assembly schedule is separate from the MPS and serves a completely different purpose

The final assembly schedule is separate from the MPS and serves a completely different purpose The FAS plans and controls final assembly, which is different from the MPS; it is typically driven by customer demand not the forecast, and is for end items; it may include other operations than simply the final ones, depending on where the assemblies from the MPS are located in the structure.

There are three techniques for dealing with an overloaded master schedule:

The five whys Managing output Level adjustments

the basic elements of the master schedule grid

The forecast for the periods in the planning horizon Customer orders (booked) The projected available inventory balance (including starting inventory) Inventory that is available-to-promise (ATP) to customers The MPS

MPS grid: Projected available balance

The forecasted inventory on hand. This is the initial inventory (quantity on hand) minus the actual customer orders for the closest week. For the following weeks, it is the projected inventory on hand minus the forecast.

The best time to measure master scheduling performance is The last period where actual production can be compared to company-planned targets Between the current period and the demand time fence to encompass released and firm-planned orders Over the entire planning horizon to provide forward planning visibility to the organization Between the current period and planning time fence to encompass the cumulative lead time

The last period where actual production can be compared to company-planned targets Performance can only be measured after production has occurred; the other responses do not have performance measures.

Product mix

The make-up of the different end items being produced can impact the changes to production time, resources, or equipment

Two basic rules of master scheduling hold true despite the industry:

The master production schedule must be realistic. The master scheduler must fully understand the impact of the MPS on all aspects inside and outside the organization.

Which of the following validations is most likely to be performed for measuring master scheduling performance as it relates to sales and operations planning in a make-to-stock company? Available to promise shows inventory for promising customer orders The inventory plan supports the finished goods portion of the business plan The bottleneck work center has a safety capacity to absorb unplanned demand The master schedule equals the production plan quantity

The master schedule equals the production plan quantity The MPS must closely match the production plan; the other responses are not relevant.

Which of the following statements about capacity is true? The number of machines in a machine shop is the primary determinant of capacity The master scheduler can schedule load above that indicated by rough-cut capacity planning Resource planning capacity is more accurate than rough-cut capacity planning due to aggregation Common units such as quantities or hours are used at all levels for consistency

The master scheduler can schedule load above that indicated by rough-cut capacity planning Rough cut capacity planning is a check of only critical resources; capacity at higher levels may not be in quantities or hours; aggregation is not a consideration for accuracy; operators can also be used as capacity determinants in a machine shop.

MPS grid: MPS quantity

The output of actual production, not when production begins. If the organization has positive inventory above the safety stock level, the MPS production quantity is zero. The MPS quantity is based on the order policy.

resource profile

The standard hours of load placed on a resource by time period. Production lead-time data is taken into account to provide time-phased projections of the capacity requirements for individual production facilities.

In an assemble-to-order environment, the number of assemblies is most influenced by The final assembly combinations The manufacturing lead time The master production schedule The structure of the bill of material

The structure of the bill of material The bill of material would determine at what point subassemblies are produced; the other responses do not impact the subassemblies.

Indicators of issues or problems

Unreliable delivery promises Persistent past-due orders Excess inventory High rate of schedule changes Top management intervention

The best technique for ensuring master schedule stability for production is Use of a demand time fence Use of a production time fence Use of a planning time fence Use of a supply time fence

Use of a demand time fence A demand time fence identifies the point within which production changes need to be authorized by senior management; the planning time fence includes periods where production has not yet started, so changes are still OK; production and supply time fences do not exist.

The best technique for ensuring master schedule stability for production is Use of a planning time fence Use of a supply time fence Use of a demand time fence Use of a production time fence

Use of a demand time fence A demand time fence identifies the point within which production changes need to be authorized by senior management; the planning time fence includes periods where production has not yet started, so changes are still OK; production and supply time fences do not exist.

Backlog of MTO and ATO Products

Use optimum production planning method to achieve cost, revenue, and backlog goals. Use synchronous flow and cellular manufacturing. Standardize product offering where possible. Improve quality.

Overload Solutions

Use overtime, extra shifts. Transfer personnel. Hire more help. Split lots and spread out production. Use alternate work centers. Install more equipment. Offer incentives to customers.

Inventory Levels of MTS Products

Use safety stock/safety time. Shorten throughput time. Change stocking strategy. Improve quality.

Underload Solutions

Use time for training and maintenance. Transfer workers. Use temporary layoffs. Shorten workdays, workweeks. Reduce subcontracting.

MPS aggregate performance

Variance of the sum of MPSs from the production plan by product family; detail by product family to facilitate identification of problem areas Variance of the RCCP from the resource plan at the S&OP level Variance of the master schedule from the financial plan or budget

MPS grid: Item

What is being produced.

Initiation

When form, fit, function of a part changes

bill of labor

a structured listing of all labor requirements for the fabrication, assembly, and testing of a parent item.

common parts bill of material

a type of planning bill that groups common components for a product or family of products into one bill of material, structured to a pseudoparent item number.

Which of the following best measures the production operation's contribution to delivery reliability? cycle time per part direct labor hours per product number of customer complaints percent master schedule achieved

percent master schedule achieved There is a direct correlation between the percent of the master schedule that is completed as scheduled and on time delivery. Cycle time per part refers only to the time that it takes for a product to be built. Whether it is built on time is not a consideration. The number of customer complaints is actually a quality or customer service issue. Direct labor hours per product is the standard hours it takes to produce a product. It has no affect on product delivery time.

Which of the following best measures the production operation's contribution to delivery reliability? percent master schedule achieved direct labor hours per product cycle time per part number of customer complaints

percent master schedule achieved There is a direct correlation between the percent of the master schedule that is completed as scheduled and on time delivery. Cycle time per part refers only to the time that it takes for a product to be built. Whether it is built on time is not a consideration. The number of customer complaints is actually a quality or customer service issue. Direct labor hours per product is the standard hours it takes to produce a product. It has no affect on product delivery time.

The role of master scheduling is to create a statement of planned output from production and to: drive the distribution planning process determine the feasibility of the operations plans provide information for coordinating production and sales synchronize the plans with trading partners

provide information for coordinating production and sales Master scheduling provides information on when products will be available in the future, enabling sales to promise delivery to customers.

(Period, Forecast, Customer Orders, Projected Available Balance, Master Production Schedule) OH: (0, 0, 0, 15, 0) Demand Time Fence: (1, 20, 19, 0, 0), (2, 20, 20, 0, 0), (3, 20, 21, 0, 0) Planning Time Fence: (4, 20, 21, 0, 0), (5, 20, 25, 0, 0), (6, 20, 24, 0, 0), (7, 20, 20, 0, 0), (8, 20, 18, 0, 0) Safety stock = 10 Lot size = 30 Using the information provided, which periods would have a master schedule quantity? 1,3,4,7 1,2,3,4,6,7 1,2,4,5,6,8 1,2,3

1,2,4,5,6,8 (Period, Forecast, Customer Orders, Projected Available Balance, Master Production Schedule) OH: (0, 0, 0, 15, 0) Demand Time Fence: (1, 20, 19, 26, 30), (2, 20, 20, 36, 30), (3, 20, 21, 15, 0) Planning Time Fence: (4, 20, 21, 24, 30), (5, 20, 25, 29, 30), (6, 20, 24, 35, 30), (7, 20, 20, 15, 0), (8, 20, 18, 27, 30)

modular bill of material

A type of planning bill that is arranged in product modules or options. It is often used in companies where the product has many optional features (e.g., assemble-to-order companies such as automobile manufacturers).

super bill of material

A type of planning bill, located at the top level in the structure, that ties together various modular bills (and possibly a common parts bill) to define an entire product or product family. The quantity per relationship of the super bill to its modules represents the forecasted percentage of demand of each module. The master-scheduled quantities of the super bill explode to create requirements for the modules that also are master scheduled.

volume hedge

A volume hedge or market hedge is carried at the master schedule or production plan level. The master scheduler plans excess quantities over and above the demand quantities in given periods beyond some time fence such that, if the hedge is not needed, it can be rolled forward before major resources must be committed to produce the hedge and put it in inventory.

Outputs

APS outputs to MPC/ERP Manufacturing execution

A company has historically provided a high level of customer service. A past-due condition in the master production schedule might be a result of An exception occurring in the availability of capacity and materials The production plan being overloaded and the condition not caught by resource planning The master production schedule being overloaded and the condition not caught by rough-cut capacity planning Production not following the master production schedule priorities and not completing all of the orders as scheduled

An exception occurring in the availability of capacity and materials Since the past-due condition is not normal, an exception must have occurred; the other responses all refer to the planning and execution processes not being performed correctly, which would not be indicative due the normally high customer service level.

projected available balance

An inventory balance projected into the future. It is the running sum of on-hand inventory minus requirements plus scheduled receipts and planned orders. PAB = Prior Period PAB or On-Hand Balance + MPS - (Producation Forecast + Customer Orders)

Engineering change board

Approves and tracks through engineering change tracking system

Which of the following is a process environment that most likely uses both a master schedule and a final assembly schedule (FAS)? Assemble to order personal computers Remanufacture of automotive engines Synchronized production of small motors Repetitive manufacturing of toasters

Assemble to order personal computers Many personal computer manufacturers partially build their computers, but wait for the final order from the customer before adding items such as a hard drive, RAM memory, graphics cards and similar items ; automotive engines would begin and end with the same unit; repetitive and synchronized may use FAS if the environment is assemble to order, but that is not the environment stated.

Which of the following environments using both a master production schedule and a final assembly schedule is most likely to achieve the highest on-time customer performance level? Assemble-to-order Make-to-stock Make-to-order Engineer-to-order

Assemble-to-order Assembly to order promises within a window of time, and typically has a shorter lead time than engineer to order or make to order, which have less flexibility, and more variance; a final assembly schedule is typically not used in a make to stock environment.

Which of the following advanced planning and scheduling techniques is of most value to the master scheduler in developing a valid master schedule? Availability of decision-support tools Having real-time feedback Incorporation of business rules Quantification of constraints

Availability of decision-support tools Having decision-support capability enables alternate scenarios to be evaluated in order to develop and then maintain a valid master schedule.

The main components of Advanced Planning and Scheduling are Demand planning, production planning, production scheduling, material requirements planning, and final assembly scheduling Demand planning, sales and operations planning, master production scheduling, material requirements planning, and distribution planning Demand planning, production planning, production scheduling, distribution planning, and transportation planning. Forecasting, sales and operations planning, production scheduling, distribution planning, and transportation planning.

Demand planning, production planning, production scheduling, distribution planning, and transportation planning. The five main components of APS systems are (1) demand planning, (2) production planning, (3) production scheduling, (4) distribution planning, and (5) transportation planning.

Ripple effect from untimely deliveries of raw materials

Depending on the manufacturing environment, there can be a ripple effect throughout the organization if one piece changes at the beginning of the process.

Backlog of MTO and ATO Products: Standardize product offering where possible.

Especially in ATO, reduces module options and increase number of common parts. Reduces number of master-scheduled products. Reduces production and inventory costs.

Excess inventory

Excess inventory can result from inaccurate forecasts. It could indicate that the master scheduler does not have a good handle on the changing business.

Supplier performance

Execute effective supplier selection and collaboration processes.

A company makes four product lines with a variety of features and options offered for each product line. Which of the following tools is most appropriately used to document the product configurations to be built over the next two weeks in this situation? Master production schedule Final assembly schedule Detailed material plan Planning bill of material

Final assembly schedule The final assembly schedule (FAS) is prepared after receipt of a customer order, as constrained by the availability of material and capacity (based on the features and options ordered), and schedules the operations necessary to complete the product assembly. It states the exact set of end products to be built over some time periods. Detailed material plan and planning bill of material are incorrect because they do not document the product configurations to be built. MPS is incorrect because an assemble-to-order company does not typically develop a master production schedule.

A company makes four product lines with a variety of features and options offered for each product line. Which of the following tools is most appropriately used to document the product configurations to be built over the next two weeks in this situation? Planning bill of material Final assembly schedule Master production schedule Detailed material plan

Final assembly schedule The final assembly schedule (FAS) is prepared after receipt of a customer order, as constrained by the availability of material and capacity (based on the features and options ordered), and schedules the operations necessary to complete the product assembly. It states the exact set of end products to be built over some time periods. Detailed material plan and planning bill of material are incorrect because they do not document the product configurations to be built. MPS is incorrect because an assemble-to-order company does not typically develop a master production schedule.

Calculate the ATP for all other periods

For all other periods, if a quantity has been scheduled for that time period, the ATP is this quantity minus all customer commitments for this and other periods until another quantity is scheduled in the MPS. For those periods where the quantity scheduled is zero, the ATP is zero (even if deliveries have been promised). ATP(Next MPS Period) = MPS Receipt Quantity- Sum of(Customer Order(Before Next MPS))

Calculate the ATP for period 1

For the first period, the ATP is the sum of the beginning inventory plus the MPS quantity minus backlog for all periods until the item is master scheduled again. ATP(Period 1) = On-Hand Quantity + MPS Receipt Quantity- Sum of(Customer Order(Before Next MPS))

three other important topics that impact schedule integrity—firm planned orders, safety stock, and hedges. These

Give the master scheduler authority to make tradeoffs that might be necessary to match demand and capacity in the slushy period between the DTF and the PTF Enable the master scheduler to see parts availability or capacity problems Create a more stable MPS to prevent nervousness in material requirements planning.

A make-to-order company is in the process of implementing lean manufacturing techniques, making equipment layout changes and standardizing the designs of their highest value products in order to transition to assemble-to-order. Which of the following actions should also be taken to reduce the backlog from six to three weeks? Don't take orders for the assemble-to-order products for three weeks. Work overtime until the backlog has been reduced to three weeks Gradually reduce marketing's quoted lead time to three weeks No action is required since the backlog will reduce automatically

Gradually reduce marketing's quoted lead time to three weeks As product design and production improvements shorten cycle time, the backlog will be reduced as well, but if the quoted lead time is not reduced, customers will continue to order six weeks in advance. Working overtime does not fulfill the lean manufacturing principles, and no company is going to stop taking orders.

A make-to-order company is in the process of implementing lean manufacturing techniques, making equipment layout changes and standardizing the designs of their highest value products in order to transition to assemble-to-order. Which of the following actions should also be taken to reduce the backlog from six to three weeks? Work overtime until the backlog has been reduced to three weeks No action is required since the backlog will reduce automatically Don't take orders for the assemble-to-order products for three weeks. Gradually reduce marketing's quoted lead time to three weeks

Gradually reduce marketing's quoted lead time to three weeks As product design and production improvements shorten cycle time, the backlog will be reduced as well, but if the quoted lead time is not reduced, customers will continue to order six weeks in advance. Working overtime does not fulfill the lean manufacturing principles, and no company is going to stop taking orders.

Which of the following customer service measures are appropriate for mature make to stock products? I. Percentage of orders shipped on schedule II. Line-item fill rate III. Finished-goods inventory turnover IV. Total manufacturing cycle time I and II only I and III only II and IV only I, II, III, and IV

I and II only Options (I.) and (II.) measure the performance of finished goods sales by order and by line. Option (III.) is incorrect because turnover is a measurement for inventory and not customer service. Option (IV.) is incorrect because manufacturing cycle time measurements are important for determining manufacturing and not customer service performance.

Rough-Cut Capacity Planning Process

Identify critical resources and their capacity. Develop resource profiles for each work center for items being master-scheduled. Calculate the total load on the work centers. Compare load to available capacity. Balance required capacity and planned available capacity.

Which of the following criteria would management be most likely to ignore when establishing performance measures for master scheduling? Necessity of a feasible production plan since it is only an approximation of production Impact of forecast accuracy on the ability to match the master schedule with the production plan Necessity that product resource profiles used in rough cut capacity planning be accurate Orders shipped on time and complete to customers per the master production schedule

Impact of forecast accuracy on the ability to match the master schedule with the production plan Regardless of the source of demand, the master schedule must aggregate to the production plan; this is part of the MPS process, and does not need to be measured; a feasible production plans , accurate resource profiles and on-time shipments are all key performance measures.

Inventory Levels of MTS Products: Use safety stock/safety time.

Improves customer service but increases inventory costs. Does not affect flexibility and speed.

hedge

In master scheduling, a scheduled quantity to protect against uncertainty in demand or supply. The hedge is similar to safety stock, except that a hedge has the dimension of timing as well as amount.

A problem with evaluating master scheduling and purchasing performance as they relate to each other is Master scheduling uses rough-cut capacity planning to test for schedule feasibility, but this does not test for supplier capacity Purchasing may have to do a great deal of expediting, incur premium costs for freight and change priorities of other orders to make the MPS appear feasible Master scheduling only has one order per period to use for performance evaluation but purchasing may have hundreds of orders for the same period Purchasing places orders based on reliance on a forecast in those periods near the time fence, but master scheduling is not responsible for the forecast

Purchasing may have to do a great deal of expediting, incur premium costs for freight and change priorities of other orders to make the MPS appear feasible Feasibility should be measured with normal effort; the two functions are typically not compared to each other.

Balance required capacity and planned available capacity.

Question Asked: How can orders be rescheduled or other steps taken to eliminate over- or underloads? Key Points: Take steps to eliminate under- and overloads, such as rescheduling orders inside the planning time fence, increasing or decreasing labor inputs, increasing sales through promotions, or modifying the MPS.

Compare load to available capacity.

Question Asked: In what weeks are there overloads or underloads? Key Points: The total capacity required at the work center per week now is compared against the planned availability of machine or labor hours at the work center to determine underload or overloads.

Identify critical resources and their capacity.

Question Asked: What critical work centers are involved in making or assembly of the MPS end item? Key Points: Only critical resources are included. More detailed information on all the other centers is considered at the MRP level, when capacity requirements planning takes place.

Calculate the total load on the work centers

Question Asked: What is the aggregate critical load placed on capacity by all MPS items by week at the work center? Key Points: Aggregate the adjusted loads on work center capacity for end items that share the same work center to determine the total required capacity each week at the work center.

Develop resource profiles for each work center for items being master-scheduled.

Question Asked: What is the critical load placed by each MPS item by week at the work centers? Key Points: The key inputs to the product resource profiles, also called load or capacity requirements, are the MPS item quantities and the bill of resources (such as labor) for each item. The latter contains information on the standard hours (machine or labor) needed to produce one unit of an item. The resource profile is developed by multiplying the end item quantity by the standard hours required per unit to obtain the weekly and total load on the work center in question in standard hours.

Engineering change notice

Reasons for change: cost, correction, quality, reliability, serviceability Cost impact Effectivity dates: immediate, rework all units, use all existing product before change Old and new part numbers Where-used data

An organization converting from a process-focused facility to work cells will most likely experience which of the following? Reduced excess capacity A less focused, unstable workforce Increased in-process inventory Reduced manufacturing lead times

Reduced excess capacity Building products in smaller lot sizes will reduce process lead times. Work cells usually will reduce not increase WIP inventory. The workforce will be focused on performing multiple tasks in a dedicated production cell environment. As processes are better focused, utilization and efficiency measurements become less important, and smaller lot sizes are being built, excess capacities might appear.

An organization converting from a process-focused facility to work cells will most likely experience which of the following? A less focused, unstable workforce Increased in-process inventory Reduced excess capacity Reduced manufacturing lead times

Reduced manufacturing lead times Building products in smaller lot sizes will reduce process lead times. Work cells usually will reduce not increase WIP inventory. The workforce will be focused on performing multiple tasks in a dedicated production cell environment. As processes are better focused, utilization and efficiency measurements become less important, and smaller lot sizes are being built, excess capacities might appear.

Inventory Levels of MTS Products: Shorten throughput time.

Reduces cycle time (the length of time from when material enters a production facility until it exits). Shortens replenishment order lead time. Reduces inventory costs and increases flexibility.

A master schedule with too short a horizon will result in The need to allocate materials to orders further into the future Less master production schedule flexibility Release past-due messages on planned material orders Release past-due message on planned assembly orders

Release past-due messages on planned material orders If the master production schedule is too short, purchase orders will generally have to be placed in less-than-normal lead time.

Problems DTF Should Prevent in MTS

Rerouting of shipments Customer returns

Which of the following planning functions is one of the direct inputs to the other planning process shown? The Production plan is a direct input to the master schedule Material requirements planning is a direct input into the strategic plan The Production plan is a direct input into the material requirement plan The Business plan is a direct input into the master schedule

The Production plan is a direct input to the master schedule The planning hiearchy starts with the Business plan which inputs into the S&OP plan which inputs into the production plan which inputs into the master production schedule which inputs into the material requirement plan.

Manufacturing flexibility

The ability of the organization to adjust to new equipment or processes; this includes the potential time it takes to get everyone trained.

The final assembly schedule takes place when There are few options The component level is fixed The customer's order is received The forecast is fixed

The customer's order is received The final assembly schedule is a schedule of end items to finish the product for specific customersÕ orders in a make-to-order or assemble-to-order environment.

order promising

The process of making a delivery commitment (i.e., answering the question, "When can you ship?"). For make-to-order products, this usually involves a check of uncommitted material and availability of capacity, often as represented by the master schedule available-to-promise.

For MTS, ATP can be used to establish if

The product is available at time of order The items can be shipped by the customer's requested date Items are available for a single shipment.

MPS grid: Customer orders

The real customer orders from sales.

Supply-demand balance

The reliability of a single or limited number of suppliers can put the organization at risk if they start to fall behind.

Key policies and methods are important in setting performance expectations. The following are some of the more significant ones:

The role of the master scheduler is clearly defined, and his or her decision-making authority is clearly understood. The role of master scheduling in disaggregating the production plan is clearly understood and carried out. Senior management has created a collaborative approach to solving scheduling conflicts among production, sales and marketing, finance, and the master scheduler. Time fences are used to manage changes to the master schedule, especially to control the number of schedule changes. This translates to stable component schedules and adherence to order promise dates. Lot size, safety stock, lead time, forecast consumption, forecast revisions, control of the MPS using firm planned orders, and other planning methods are clearly defined and updated. Rough-cut capacity and advanced planning and schedule methods (discussed in the next topic) are in place.

Which of the following statements describes the reason why resource planning is difficult to apply in an engineer-to-order environment where a final assembly schedule is used in place of a master production schedule? Resource planning is designed to close the loop with master scheduling, but not with final assembly scheduling There may be little or no order history because of dissimilarity among orders upon which to base hours per key work center The final assembly schedule only applies to final assembly and that may not be where the constraining work centers are Resource planning is an iterative process but final assembly scheduling is only performed once for a customer order

There may be little or no order history because of dissimilarity among orders upon which to base hours per key work center Resource planning requires a resource profile, and lack of history may prevent one from existing; resource planning is used at the production level, not the MPS; resource planning would not necessarily be iterative in an engineer-to-order environment.

High rate of schedule changes

These are symptomatic of the absence of time fence policies and poor anticipation of customer needs.

Unreliable delivery promises

These create credibility problems among customers. Causes include quoting unrealistic delivery promises and poor communication between sales and master scheduling.

The five whys

This is an iterative question-asking approach used to explore cause-and-effect relationships and get at the underlying cause of a problem.

Managing output

This technique reduces the master schedule to demonstrated output and then slowly increases it to grow capacity. The gradual rise will draw attention to capacity constraints such as labor, bottlenecks, delivery issues, etc.

Which of the following is a tool for reducing material requirements planning (MRP) system nervousness? Scheduled downtime Dynamic lot sizing Pull signals Time fences

Time fences Nervousness in this context refers to instability when changes in higher-level records cause significant changes in lower-level schedules or orders. Devices such as time fences, which restrict changes, introduce stability into the master schedule. Dynamic lot sizing creates an order quantity that is subject to recalculation. Pull signals are used to indicate when to produce or transport an item in a pull production system. Scheduled downtime refers to planned shutdown of equipment for maintenance.

The techniques used by the master scheduler to plan and coordinate changes to the master projection schedule include

Time fences and time zones The engineering control process Available-to-promise Projected available balance

Top management intervention

Top management intervention is a sign of a lack of master scheduling discipline and undermines the schedule.

Which of the following choices will improve a company's responsiveness to customer demand? Drum-buffer-rope Two-level master schedule Increased productivity Large lot sizes

Two-level master schedule A company using a two-level master schedule would allow flexibility in the last operations based on actual demand.

There are three approaches to rough-cut capacity planning.

capacity planning using overall factors (CPOF) bill of labor resource profile

three other important topics that impact schedule integrity

firm planned orders, safety stock, and hedges

feature

A distinctive characteristic of a good or service. The characteristic is provided by an option, accessory, or attachment. For example, in ordering a new car, the customer must specify an engine type and size (option), but need not necessarily select an air conditioner (attachment).

indented bill of material

A form of multilevel bill of material. It exhibits the highest-level parents closest to the left margin, and all the components going into these parents are shown indented toward the right. All subsequent levels of components are indented farther to the right. If a component is used in more than one parent within a given product structure, it will appear more than once, under every subassembly in which it is used.

Master schedule

A format that includes time periods (dates), the forecast, customer orders, projected available balance, available-to-promise, and the master production schedule. It takes into account the forecast; the production plan; and other important considerations such as backlog, availability of material, availability of capacity, and management policies and goals.

bill of material (BOM)

A listing of all the subassemblies, intermediates, parts, and raw materials that go into a parent assembly, showing the quantity of each required to make an assembly. It is used in conjunction with the master production schedule to determine the items for which purchase requisitions and production orders must be released. A variety of display formats exists for bills of material, including the single-level bill of material, indented bill of material, modular (planning) bill of material, transient bill of material, matrix bill of material, and a costed bill of material.

Multilevel master schedule

A master scheduling technique that allows any level in an end item's bill of material to be master scheduled. To accomplish this, MPS items must receive requirements from independent and dependent demand sources.

Two-level master production schedule

A master-scheduling approach in which a planning bill of material is used to master schedule an end product or family, along with selected key features (options and accessories).

Master production scheduling takes into account

Capacity limitations Production costs Resource considerations The S&OP plan

APS outputs to MPC/ERP:

Data used to optimize S&OP

relationship of master scheduling to Distribution planning

Demand management Logistics planning

The master scheduler is responsible for the following:

Disaggregating the production plan to create the MPS or reconciling the MPS with the product family plan Maintaining and making changes to the MPS records Resolving tradeoffs, working with top management to reach solutions that are consistent with the organization's customer service and strategic objectives Monitoring execution of the production schedule against the MPS and the production plan Reconciling the MPS to the aggregate production plan and ensuring that a process is in place for this task, resulting in -Reduction in the quantity of the MPS to match the production plan -Authorization from top management to raise/increase the production plan -A combination of these Launching the FAS Reviewing and managing change requests from customers, plants, and suppliers and rescheduling in accordance with the master schedule policy

Planning hierarchy

Distribution orders have the same level of importance as customer orders.

Demand management

Distribution requirements planning provides the rolled-up forecast and customer order information from inventory stocking locations. This information is used to develop the aggregate demand forecast at the S&OP level and ultimately makes its way to the MPS, where it is disaggregated to the end-item level.

The master scheduler works with top management to reduce the impact of any changes to either supply or demand inside the demand time fence such as

Expedited requests for customers New orders from customers Last-minute revisions to an order Serious supply disruptions requiring top management involvement in handling both suppliers and key customers

Priority

In a general sense, the relative importance of jobs (i.e., the sequence in which jobs should be worked on). It is a separate concept from capacity.

each item contained in the MPS grid

Item Quantity on hand Lot size Forecast Customer orders Projected available balance MPS quantity Available-to-promise

A stable master production schedule is the ideal condition, as it

Leads to stable component schedules Improves plant operations performance

BOM level

Link each part or assembly to a number to detail where it fits within the hierarchy of the BOM. This allows any employee with a basic understanding of the BOM structure to be able to quickly decipher the BOM.

Description

Provide a detailed description of each part that will help employees distinguish between similar parts and identify specific parts more easily.

Supply

Quality issues arising in processes and products Reliability of the supplier Supply-demand balance Manufacturing flexibility Product mix Ripple effect from untimely deliveries of raw materials

It is best to understand a master schedule as a balance that is influenced by factors such as

The environment The product structure

The stability of the master production schedule relates to

The frequency of changes in timing and quantity over a period for end items that appear in the MPS The discipline of the organization in following processes from forecasting all the way to customer delivery Organizational goals/objectives, particularly in the area of customer service commitments.

Master scheduling

The process where the master schedule is generated and reviewed and adjustments are made to the master production schedule to ensure consistency with the production plan. The master production schedule (the line on the grid) is the primary input to the material requirements plan. The sum of the master production schedules for the items within the product family must equal the production plan for that family.

relationship of master scheduling to S&OP and production plan

The production plan produced by the S&OP process provides the aggregate demand that needs to be reflected in the master production schedule. The S&OP production plan could be listed in physical or monetary units, but it is disaggregated and stated in production units at the end-item or product-mix level in the MPS.

MPS grid: Lot size

The rules that are in place for the volume/size of a production run.

Product structure

The sequence of operations that components follow during their manufacture into a product. A typical product structure shows raw material converted into fabricated components, components put together to make subassemblies, subassemblies going into assemblies, and so forth.

Quality issues arising in processes and products

This impacts schedule, capacity, or material.

maintaining the master schedule requires

A consistent periodic review and update cycle Timely transaction processing, as in the recording and reporting of data

Make-to-stock approach to scheduling

A number of standardized products are assembled from many components. -The range of finished goods is smaller than the range of raw materials needed to create the finished goods. -MPS and FAS support the building of finished items to forecast. -The decoupling point is at finished goods inventory. -Examples of products produced in this environment include: beer, bread, steel, light bulbs, televisions, small appliances, office supplies, petroleum products, and consumer packaged goods

Master schedule items

A part number selected to be planned by the master scheduler. The item is deemed critical in its impact on lower-level components or resources such as skilled labor, key machines, or dollars. Therefore, the master scheduler, not the computer, maintains the plan for these items. A master schedule item may be an end item, a component, a pseudo number, or a planning bill of material.

planning time fence (PTF)

A point in time denoted in the planning horizon of the master scheduling process that marks a boundary inside of which changes to the schedule may adversely affect component schedules, capacity plans, customer deliveries, and cost. Outside the planning time fence, customer orders can be booked and changes to the master schedule can be made within the constraints of the production plan. Changes inside the planning time fence must be made manually by the master scheduler.

Time fences

A policy or guideline established to note where various restrictions or changes in operating procedures take place. For example, changes to the master production schedule can be accomplished easily beyond the cumulative lead time, while changes inside the cumulative lead time become increasingly more difficult to a point where changes should be resisted. Time fences can be used to define these points.

production forecast

A projected level of customer demand for a feature (option, accessory, etc.) of a make-to-order or an assemble-to-order product. Used in two-level master scheduling, it is calculated by netting customer backlog against an overall family or product line master production schedule and then factoring this product's available-to-promise by the option percentage in a planning bill of material.

final assembly schedule (FAS)

A schedule of end items to finish the product for specific customers' orders in a make-to-order or assemble-to-order environment. It is also referred to as the finishing schedule because it may involve operations other than the final assembly; also, it may not involve assembly (e.g., final mixing, cutting, packaging). The FAS is prepared after receipt of a customer order as constrained by the availability of material and capacity, and it schedules the operations required to complete the product from the level where it is stocked (or master scheduled) to the end-item level.

Overstated master production schedule

A schedule that includes either past due quantities or quantities that are greater than the ability to produce, given current capacity and material availability. An overstated MPS should be made feasible before MRP is run.

forward scheduling

A scheduling technique where the scheduler proceeds from a known start date and computes the completion date for an order, usually proceeding from the first operation to the last. Dates generated by this technique are generally the earliest start dates for operations.

back scheduling

A technique for calculating operation start dates and due dates. The schedule is computed starting with the due date for the order and working backward to determine the required start date and/or due dates for each operation.

MPS grid: Available-to-promise

A technique that enables sales and customer service to determine whether a customer order can be fulfilled as requested.

Manufacturing execution:

Allocation and monitoring of resources Short-term plant schedules to control assembly lines Dispatching/managing the movement of materials and goods Identification of capacity constraints; collection or reporting of data on labor, quality, and work completion Feedback to APS and MPC/ERP

Logistics planning

Along with rough-cut capacity planning, logistics capacity planning determines if key distribution resources are available or are in short supply. Once this is determined, steps can be taken to resolve the shortages. Resources include labor, storage, transportation, materials, and equipment.

The rules of the process call for resolving most issues at the pre-S&OP meeting, consolidating issues such as the following for review by senior executives at the monthly executive meeting that concludes the monthly S&OP process:

Authorization of changes in production and procurement rates when significant costs or other consequences, such as customer service or revenues, are involved Adjustments that are needed to the sales and operations plan to keep the production plan and the financial goals of the business plan on target Issues relating to customer service performance, new product introduction, and special projects

Because one of the primary functions of the BOM is to ensure that the product is built right, it is important to include specific pieces of product-related data in the BOM. The following are examples of the data that should be included.

BOM level Part number Part name Description Quantity

Slushy zone

Changes can be made relatively easily if the right components are available. Product mix can vary through tradeoffs within overall volume limits, with limited flexibility provided by overtime. Customer orders and forecasts (the greater of) are considered in calculating the projected available balance. Changes Approved by: Master scheduler, within predetermined rules

Three techniques support the creation of the master production schedule:

Creating a time-phased master schedule grid (determining supply and demand relationships over time) Preparing the production schedule according to the strategy (chase, level, hybrid) Calculating the projected available-to-promise (for multiple available-to-promise activities)

Product structure is not independent of the expectations of the marketplace or customers or of manufacturing requirements, because it takes into account tradeoffs among

Customer service levels Production efficiency Inventory costs

Customer orders

Demand management provides customer order information used in determining aggregate demand during the S&OP process and also the master scheduling process. In the MPS, customer orders will "consume the forecast."

Forecasting

Demand management provides forecasts to S&OP of customer and end-item demand, warehouse replenishments, interplant transfers, and spare parts requirements. These are used to develop the aggregate demand upon which the production plan is based and is later disaggregated to end-item units in the MPS.

the main components of APS systems are

Demand planning Production planning Production scheduling Distribution planning Transportation planning

Competition in the marketplace

Demands driven by particular customers or groups of customers.

In summary, preparing the production schedule according to strategy leads to the following:

For leveling: The MPS is constant. There is excess inventory available to meet future forecasts. For chase: The MPS matches the forecast. There is no inventory except safety stock. For mixed (hybrid): This is a lot-sizing approach that falls between the two strategies.

There are a few other issues related to master scheduling that can be avoided or resolved through robust senior executive involvement and commitment. Those senior executives should be responsible for the following actions:

Ensuring that customers are treated fairly when it comes to allocations because of production shortages Ensuring collaboration between sales and operations on abnormal demand, especially as it relates to tradeoffs among customer service (for existing customers), windfall revenue opportunities, and new long-term business relationships Ensuring that the forecasting process is taken seriously (Forecasts that are overstated or understated, not challenged, and compiled rather than integrated can have serious consequences.)

relationship of master scheduling to Material requirements planning (MRP)

Finally, the validated master production schedule provides the gross requirements of end-item units for the MRP system, which executes the detailed scheduling and planning activities that plan materials and suggest order release dates. Some end units may have independent demand; these could be replacement parts. For example, they could be subassemblies or even purchased items.

the inputs used to create a master production schedule include

Forecasts Customer orders Supply lot size Production lead time Capacity

Supply chain partners

If not shipping direct to the customer, then the actions of various partners can trigger demand changes.

Reliability of the supplier

If there is a change in the reliability of a supplier, there is a cascade effect.

ATP

Ignore Ignores the forecast and focuses on customer orders only Is calculated for the first period on the master schedule grid Is then calculated only for each period in which there is an MPS receipt Consists of two methods of calculation: discrete and cumulative

When used to the full extent of its capabilities, APS can

Improve throughput times Improve delivery times Optimize inventory levels Show better utilization rates Improve customer service levels Reduce costs Improve sequencing for setup efficiency

Master schedules focus on different items depending on the strategy of the organization

MTO organizations—MPS focuses the schedule on the inputs or the raw materials. ATO organizations—MPS focuses the schedule on the subassembly or module stage. MTS organizations—MPS focuses the schedule on the end items or the final product.

MTS

Needs: High unit volumes with standard designs, narrow product variety, flow-based manufacturing, schedule stability. Choice: High-volume batch or line/repetitive manufacturing.

ATO

Needs: Standard and special product designs, medium to high volumes, configuration of many end items from many master-scheduled standardized product options, accommodation of changes in product mix, short lead times. Choice: Medium- to high-volume batch or cellular production.

MTO/ETO

Needs: Wide product variety and design, low unit volumes, overlapping schedules for different items in the order, broad range of production capabilities. Choice: Intermittent job shop and low-volume batch.

Assemble-to-order approach to scheduling

Organizations that use ATO are focused on customization. This approach is called two-level master scheduling. -The range of finished goods is larger than the range of raw materials needed to create the finished goods. However, the range of raw materials is greater than the components and subassemblies (called standardized options or modules) which are produced prior to a customer order. -The MPS supports the building of options from raw materials. The FAS supports the production of end products from options after the receipt of orders. -The decoupling point is at standardized options (subassemblies and components). -Examples of products produced in this environment include automobiles, motorcycles, customized personal computers, and packaged pharmaceuticals.

Engineer-to-order approach to scheduling

Organizations that use ETO are focused on waiting until a customer order has been received before any components can be prepared. The forecasting of requirements is accomplished through MPS. The MPS and FAS planned items are the same. Similar to MTS, MPS is based on customer demand. FAS is based on actual customer orders and as a result it may experience shortages.

Make-to-order approach to scheduling

Organizations that use the MTO scheduling approach are process-focused. These products are more customized than MTS products. In this environment, finished units are produced after orders have been received from customers. -The range of finished goods is much larger than the narrow range of raw materials needed to create the finished goods. -The MPS supports the planning of raw materials and components; the FAS supports the building of the final product to match the customer order. -The decoupling point is at raw materials and components. The FAS awaits receipt of a customer order. -Examples of products produced in this environment include print shop outputs, shopping carts, scaffolding from steel, fabrics made from synthetic and natural fibers, ships, buildings, special tools, industrial machinery, and specialty chemicals.

Liquid zone

Outside the PTF, this zone allows changes in mix and, subject to the constraints of the production plan, in volume. Changes often are made by planning software. Customer orders and forecasts (the greater of) are considered in calculating the projected available balance. Changes Approved by: No approval necessary if consistent with sales and operations plan.

relationship of master scheduling to Rough-cut capacity planning (RCCP)

RCCP analyzes the master production schedule for potential production resource constraints. Shortages of key labor, materials, equipment, and plant capacity need to be discovered and resolved in the master scheduling process.

Quantity

Record the number of parts to be used in each assembly or subassembly to help guide purchasing and manufacturing decisions and activities.

Part number

Record the part number of each part or assembly in order to reference and identify the parts quickly.

Part name

Record the unique name of each part or assembly. This will help employees identify the parts more easily.

demand time fence (DTF)

That point in the future inside which changes to the master schedule must be approved by an authority higher than the master scheduler. Note, however, that customer orders may still be promised inside the demand time fence without higher authority approval if quantities are available-to-promise (ATP). Beyond the demand time fence, the master scheduler may change the MPS within the limits of established rescheduling rules without the approval of higher authority.

item record

The "master" record for an item. Typically, it contains identifying and descriptive data and control values (lead times, lot sizes, etc.) and may contain data on inventory status, requirements, planned orders, and costs. Item records are linked by bill-of-material records (or product structure records), thus defining the bill of material.

Capacity management

The function of establishing, measuring, monitoring, and adjusting limits or levels of capacity in order to execute all manufacturing schedules (i.e., the production plan, master production schedule, material requirements plan, and dispatch list). Capacity management is executed at four levels: resource requirements planning, rough-cut capacity planning, capacity requirements planning, and input/output control.

Materials management

The grouping of management functions supporting the complete cycle of material flow, from the purchase and internal control of production materials to the planning and control of work in process to the warehousing, shipping, and distribution of the finished product.

Sales and marketing initiatives

The impact of a marketing promotion, new packaging, incentive programs (consumer or sales).

MPS grid: Forecast

The input of the sales forecast from the S&OP production plan.

MPS grid: Quantity on hand

The number of the item that the organization has currently available less any allocations.

Variations in product transportation

The number of times a product is moved; the numbers of shipping modes.

option overplanning

Typically, scheduling extra quantities of a master schedule option greater than the expected sales for that option to protect against unanticipated demand. This schedule quantity may be planned only in the period where new customer orders are currently being accepted, typically just after the demand time fence. This technique is usually used on the second level of a two-level master scheduling approach to create a situation where more of the individual options than of the overall family are available. The historical average of demand for an item is quantified in a planning bill of material, and option overplanning is accomplished by increasing this percentage to allow for demands greater than forecast.

advanced planning system

Unlike previous types of systems, APS simultaneously plans and schedules production based on available materials, labor, and plant capacity. It takes into account both business constraints and parameters to provide real-time planning and scheduling, decision support, and ATP and CTP capabilities by generating multiple scenarios for consideration by management. It indicates whether the MPS is optimal.