Procedure for developing MPS

Time Interval and Planning Horizon for MPS:

The time interval used (for example, weekly, monthly, or quarterly) depends upon the type, volume and component lead times of the products being produced.

The time horizon covered by the MPS also depends upon product characteristics and lead times. The time horizon may vary from a few weeks to a year or more and should encompass the lead times for all purchased and assembled components.

Time fences in Master Production Schedules (MPS):

MPS can be divided into four sections, each section separated by a point of time called a ‘time fence’. The first section includes the first few weeks of the schedule and is referred to as ‘frozen’ the second of a few weeks is referred to as ‘firm’, the third section is referred to as ‘full’ and section of a few weeks is referred to as ‘open’.

1. ‘Frozen’ means that this early part of the MPS cannot be changed except under extraordinary circumstances and only with authorization from the highest levels in the organization. It is not desirable to change this section of MPS because it would be costly to reverse the plans to purchase materials and produce the parts that go into the products belonging to this section of MPS.

2. ‘Firm’ means that changes can occur in this section of MPS but only in exceptional situations.

3. ‘Full’ means that all the available production capacity has been allocated to orders. Changes in this section of the schedule can be made and production costs will be only slightly affected but the effect on customer satisfaction is uncertain.

4. ‘Open’ means that, not all of the production capacity has been allocated and in this section of MPS, new orders are ordinarily slotted.

Procedure for developing MPS:

The total demand for the end items (produced) from all sources is estimated, orders are assigned to production slots, and Delivery promises are made to customers before detailed calculations are made of the workload on work centers for a MPS.

As orders are slotted in the MPS, the effects on the lading of the production work centers are checked. This preliminary checking of the MPS is called as ‘rough-cut capacity planning’. The main goal in rough-cut capacity planning is to identify any week in the MPS, when under-loading or overloading of the production capacity occurs and to revise the MPS as required.

Guidelines for Master Scheduling:

Although master scheduling depends on the type of demand (i.e. forecast versus firm orders) and planning horizon, the following guidelines are widely applied:

1. Work from an aggregate production plan.
2. Schedule common modules when possible.
3. Load facilities realistically.
4. Release orders on a timely basis.
5. Monitor inventory levels closely.
6. Reschedule as required.

Updating of MPS:

The MPS is usually updated weekly, i.e. after one week has passed, one week is taken off the front end of the MPS, one week is added on to the back end and the demands for the whole MPS are estimated anew. The early part of the MPS tends to be dominated by actual on hand customer orders, whereas the latter part of the schedule tends to be dominated by forecasts. In the middle of the schedule, the demand estimate is a combination of actual orders and forecasts.

MPS in Produce-to-stock and Produce-to-order firms:

Master scheduling procedures differ according to whether a firm is a produce-to-stock or produce-to-order production system.

The elements of the MPS that are affected by the type of production system are

(a) Demand management,
(b) Lot-sizing; and
(c) No. of products to be scheduled (product-mix).

In produce-to-order system, the focus in demand management is customer orders. The MPS is worked out, based on the back-log of customer orders and product demand forecasts may not be used. The lot size and the number of products to be produced on an order are determined by the customer order. For example, if a customer orders 100 numbers of a particular product, 100 numbers of the products will be produced on that order. This approach to lot sizing is called lot-for-lot (LFL). Because produce-to-order firms have many product designs, the number of products and orders that have to be placed in the MPS is high and much effort is required to prepare the MPS.

In produce-to-stock firms, the orders for products come mainly from warehouse orders within the company. These orders are based on the forecasts of future demand for products from many customers. Hence, forecasts play an important role in demand management in produce-to-stock firms.

The lot sizes of orders in produce in produce-to-stock firms depend on economies. A balance must be struck between the set-up costs of production and costs of carrying the inventory of the products in determining the economic lot sizes in produce-to-stock firms. Because produce-to-stock firms produce only a few standard product designs, the effort required to prepare the MPS is relatively less than in produce-to-order firms.