_IE3026_

PRODUCTION
Merve ER
Asst. Prof. Dr. PLANNING &
CONTROL II
Marmara University
2023
CHAPTER 4
Master Production
Schedule
WHAT IS MASTER PRODUCTION
SCHEDULE (MPS)?
Production Planning Decisions
 Dependent Demand
u The demand for one item is related to the demand
for another item
u Given a quantity for the end item, the demand for
all parts and components can be calculated
u In general, used whenever a schedule can be
established for an item
u MRP is the common technique

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 Dependent Demand
Effective use of dependent demand inventory models
requires the following
1. Master production Schedule (what is to be made
and when)
2. Specifications or bill of material (materials and
parts required to make the product)
3. Inventory availability (what is in stock)
4. Purchase orders outstanding (what is on order,
also called expected receipts)
5. Lead times (how long it takes to get various
components)

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 MASTER PRODUCTION
SCHEDULE (MPS)
A timetable that specifies what is to be made and when

• Must be in accordance with the aggregate production plan

• MPS disaggregates the aggregate production plan
• The production plan states the overall level of output in broad
terms (e.g. Product families, standard hours, or dollar volume)
• The plan includes a variety of inputs including financial plans,
customer demand, engineering, supplier performance
• As the process moves from planning to execution, each step
must be tested for feasibility
• The MPS is the result of the production planning process

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 MASTER PRODUCTION
SCHEDULE (MPS)
• While aggregate production plan is established in gross terms
such as product families or tons of steel, MPS is established in
terms of specific products
• Schedule must be followed for a reasonable length of time
• The MPS is quite often fixed or frozen in the near term part of
the plan
• The MPS is a rolling Schedule (e.g. A fixed 7-week plan has an
additional week added to it as each week is completed, so a 7-
week fixed Schedule is maintained)
• The MPS is a statement of what is to be produced, not a
forecast of demand

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 MASTER PRODUCTION
SCHEDULING (MPS)
POLICY GUIDELINES
l Work from an aggregate production plan
l Schedule common modules when possible
l Load facilities realistically
l Release orders on a timely basis
l Monitor inventory levels closely
l Reschedule as required

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 The Planning Process
Production Marketing Finance
Capacity Customer Cash flow
Inventory demand

Procurement Human resources

Supplier Manpower
performance planning

Management Engineering
Return on Aggregate Design
investment production completion
Capital plan

Change
production
Master production plan?
schedule

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 The Planning Process
Master production
schedule Change
master
Change production
requirements? Material schedule?
requirements plan

Change
capacity?
Capacity
requirements plan

No Is capacity Is execution
Realistic? plan being meeting the
met? plan?
Yes
Execute capacity
plans

Execute
material plans

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 Aggregate production plan is the basis
for development of detailed MPS
Table shows the MPS for 3 stereo models that flow from aggregate
production plan for a family of stereo amplifiers

Months January February

Aggregate Production Plan 1,500 1,200
(Shows the total
quantity of amplifiers)
Weeks 1 2 3 4 5 6 7 8
Master Production Schedule
(Shows the specific type and
quantity of amplifier to be
produced
240-watt amplifier 100 100 100 100
150-watt amplifier 500 500 450 450
75-watt amplifier 300 100

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 MPS Example
For 2 of Nancy’s Specialty Foods

Gross Requirements for Crabmeat Quiche

Day 6 7 8 9 10 11 12 13 14 and so on
Amount 50 100 47 60 110 75

Gross Requirements for Spinach Quiche

Day 7 8 9 10 11 12 13 14 15 16 and so on
Amount 100 200 150 60 75 100

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 Master Production Schedule
(MPS)
Can be expressed in any of the
following terms:

1. A customer order in a job shop (make-to-

order) company
2. Modules in a repetitive (assemble-to-order or
forecast) company
3. An end item in a continuous (stock-to-
forecast) company

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 Focus for Different
Process Strategies
Make to Order Assemble to Order Stock to Forecast
or Forecast
(Process Focus) (Repetitive) (Product Focus)
Number of
inputs

Schedule orders
Typical focus of the
master production Schedule modules
schedule

Number of
end items Schedule finished
product

Examples: Print shop Motorcycles Steel, Beer, Bread

Machine shop Autos, TVs Lightbulbs
Fine-dining restaurant Fast-food restaurant Paper

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 14 - 15
Whitehead, E. (2014)
 14 - 16
Whitehead, E. (2014)
 FUNCTIONS OF MASTER
PRODUCTION SCHEDULE
 FUNCTIONS OF MASTER
SCHEDULE

• Translate aggregate plans into specific end items

• Evaluate alternative schedules
• Generate material requirements
• Generate capacity requirements
• Facilitate information processing
• Maintain valid priorities
• Effectively utilize capacity
INPUTS & OUTPUTS
OF MPS
MASTER PRODUCTION SCHEDULING (MPS)
* MRO: Maintenance, repair and operations Whitehead, E. (2014)
 What is the Master Production
Schedule and How Does it Work - MPS

https://www.youtube.com/watch?v=3fqHdoAPCB0

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BENEFITS OF MPS
Whitehead, E. (2014)
 DEVELOPING A MASTER
PRODUCTION SCHEDULE
Krajewski et al. (2016). Operations Management: Processes and Supply Chains, 11th ed. Pearson.

Developing a Master
Production Schedule
STEP 1: Calculating the projected on-hand inventory
STEP 2: Determining the timing and size of the production
quantities of specific products

Ladder-Back Chair
For simplicity, we assume that
EXAMPLE

• the firm does not utilize safety stocks

for end items, even though many firms
do.
• Use weeks as our planning periods,
even though hours, days, or months
could be used
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Krajewski et al. (2016). Operations Management: Processes and Supply Chains, 11th ed. Pearson.

EXAMPLE: Ladder-Back Chair

The manufacturer produces the chair to stock and

needs to develop an MPS for it.

Step 1.
Calculate Projected On-Hand Inventories
• an estimate of the amount of inventory
available each week after demand has been
satisfied

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Krajewski et al. (2016). Operations Management: Processes and Supply Chains, 11th ed. Pearson.

EXAMPLE: Ladder-Back Chair

• Marketing has forecasted a demand of 30 chairs for the first week of
April, but actual customer orders booked are for 38 chairs.

• Current on-hand inventory: 55 chairs.

• No MPS quantity is due in week 1. Because ‘actual orders for week 1’ >
‘forecast’

• The scheduler uses that figure for actual orders to calculate the
projected inventory balance at the end of week 1:

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 Krajewski et al. (2016). Operations Management: Processes and Supply Chains, 11th ed. Pearson.

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Krajewski et al. (2016). Operations Management: Processes and Supply Chains, 11th ed. Pearson.

EXAMPLE: Ladder-Back Chair

Step 2.
Determine the Timing and Size of MPS Quantities
• The goal is to maintain a nonnegative projected on-
hand inventory balance.
• As shortages in inventory are detected, MPS
quantities should be scheduled to cover them.
• The first MPS quantity should be scheduled for the
week when the projected on-hand inventory reflects
a shortage, such as week 2.

• The scheduler adds the MPS quantity to the projected on-hand

inventory and searches for the next period when a shortage occurs.
• This shortage signals a need for a second MPS quantity, and so on.

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 Krajewski et al. (2016). Operations Management: Processes and Supply Chains, 11th ed. Pearson.

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Krajewski et al. (2016). Operations Management: Processes and Supply Chains, 11th ed. Pearson.

EXAMPLE: Ladder-Back Chair

• A shortage of 13 chairs in week 2 will occur unless the scheduler

provides for an MPS quantity for that period.
• Our convention is to show blanks instead of zeroes in all rows, which
improves readability and is often used in practice. The only exception is
in the projected on-hand inventory row, where a number is always shown,
even if it is a 0 or negative number.
• Once the MPS quantity is scheduled, the updated projected inventory
balance for week 2 is

The scheduler proceeds column by column through the MPS record until it
reaches the end, filling in the MPS quantities as needed to avoid shortages.

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Krajewski et al. (2016). Operations Management: Processes and Supply Chains, 11th ed. Pearson.

• 137 units will satisfy

forecasted demands until
week 7

• When inventory shortage in

the absence of an MPS
quantity is 7 + 0 - 35 = -28.
This shortage signals the need
for another MPS quantity of
150 units.
• Updated inventory balance = 7
+ 150 - 35 = 122 chairs for
week 7

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Krajewski et al. (2016). Operations Management: Processes and Supply Chains, 11th ed. Pearson.

EXAMPLE: Ladder-Back Chair

• The last row indicates the periods in

which production of the MPS quantities
must begin so that they will be
available when indicated in the MPS
quantity row.
• In the upper-right portion of the MPS
record, a lead time of 1 week is
indicated for the ladder-back chair; that
is, 1 week is needed to assemble 150
ladder-back chairs, assuming that items
B, C, D, and E are available.

• For each MPS quantity, the scheduler works backward through the lead time to
determine when the assembly department must start producing chairs.
• Consequently, a lot of 150 units must be started in week 1 and another in week 6.
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Krajewski et al. (2016). Operations Management: Processes and Supply Chains, 11th ed. Pearson.

Available to promise is
the projected amount
of inventory you have
left available to sell, not
including
allocated inventory.

In week 7, the ATP is

150 units because
there are no booked
orders in week 7 and
beyond.

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 DIFFERENT MPS
APPROACHES
• Time-Phased Method
• Rolling through Time
Time-Phase Method
 TIME-PHASED RECORD
• Record by periods
• Available: projected inventory balance at the end of the period
[available from prior period + MPS – forecast]
• MPS: quantity and time of completion of production
• On hand: Beginning inventory for the first period

MPS techniques:
• Leveling: MPS constant. Excess inventory to meet future
forecasts
• Chase: MPS matches forecast. No inventory except safety stock
• Mixed (hybrid): Lot-sizing approach that falls between the two
strategies. Inventory for future periods called cycle stock.
 MASTER PRODUCTION SCHEDULING (MPS)

The Time-Phase Method

A Level Production MPS Approach

Weeks
1 2 3 4 5 6 7 8 9 10 11 12 TOTAL
Forecast 15 10 25 15 10 20 10 5 15 15 25 15 180
Available 20 25 15 15 20 15 20 30 30 30 20 20
MPS 15 15 15 15 15 15 15 15 15 15 15 15
On hand 20

20 + 15 - 10= 25 units 180 / 12

= 15 units/week
MASTER PRODUCTION SCHEDULING (MPS)

The Time-Phase Method

A Level Production MPS Approach to Seasonal Sales

Week

1 2 3 4 5 6 7 8 9 10 11 12 TOTAL
Forecast 5 5 5 5 5 5 15 15 15 15 15 15 120

Available 25 30 35 40 45 50 45 40 35 30 25 20
MPS 10 10 10 10 10 10 10 10 10 10 10 10
On hand 20

120 / 12 = 10 units/week
MASTER PRODUCTION SCHEDULING (MPS)

The Time-Phase Method

A Chase Production MPS Approach to Seasonal Sales

Week

1 2 3 4 5 6 7 8 9 10 11 12 TOTAL
Forecast 5 5 5 5 5 5 15 15 15 15 15 15 120

Available 20 20 20 20 20 20 20 20 20 20 20 20
MPS 5 5 5 5 5 5 15 15 15 15 15 15
On hand 20
MASTER PRODUCTION SCHEDULING (MPS)
The Time-Phase Method

Lot Sizing in the MPS

(Whenever [ending] available inventory level falls below 5 units an MPS will be
scheduled to produce annual demand in 4 equal lots)

Week
1 2 3 4 5 6 7 8 9 10 11 12
Forecast 5 5 5 5 5 5 15 15 15 15 15 15
Available 15 10 5 30 25 20 5 20 5 20 5 20
MPS 30 30 30 30
On hand 20 15 10 5 30 25 20 5 20 5 20 5

Total demand 120 units / 4 periods = 30 units

 Rolling
through
Time
 ROLLING THROUGH TIME
• MPS is periodically updated – changes in forecast, orders,
production, etc., may require adjustment for future periods
• One «pointer» would be negative available balances
• A counter-balancing force would be feasibility of change
MASTER PRODUCTION SCHEDULING (MPS)

Rolling through Time

Week
2 3 4 5 6 7 8 9 10 11 12 13

Forecast 10 10 10 10 10 15 15 15 15 15 15 15

Available 0 -10 10 0 -10 -25 -10 -25 -10 -25 -10 -25

MPS 30 30 30 30

On hand 10 0 -10 10 0 -10 -25 -10 -25 -10 -25 -10

MASTER PRODUCTION SCHEDULING (MPS)

Rolling through Time

Week

2 3 4 5 6 7 8 9 10 11 12 13

Forecast 10 10 10 10 10 15 15 15 15 15 15 15

Available 30 20 10 30 20 5 20 5 20 5 20 5
MPS 30 30 30 30 30

On hand 10 30 20 10 30 20 5 20 5 20 5 20
MASTER PRODUCTION SCHEDULING (MPS)

Order Promising
• Available-to-promise: deduct existing booked orders from available
inventory

Week

1 2 3 4 5 6 7 8 9 10 11 12

Forecast 5 5 5 5 5 5 15 15 15 15 15 15

Orders
Available 15 10 5 30 25 20 5 20 5 20 5 20
ATP

MPS 30 30 30 30

On hand 20 15 10 5 30 25 20 5 20 5 20 5
MASTER PRODUCTION SCHEDULING (MPS)

Order Promising

Week

2 3 4 5 6 7 8 9 10 11 12 13

Forecast 10 10 10 10 10 15 15 15 15 15 15 15

Orders
Available 30 20 40 30 20 5 20 5 20 5 20 5
ATP

MPS 30 30 30 30 30

On hand 10 30 20 10 30 20 5 20 5 20 5 20
MASTER PRODUCTION SCHEDULING (MPS)

Order Promising

Week

3 4 5 6 7 8 9 10 11 12 13 14

Forecast 10 10 10 10 15 15 15 15 15 15 15 15

Orders
Available
ATP
MPS 30 30 30 30

On hand 30
 CONSUMING THE FORECAST
• Negative available- need a MPS lot (if feasible)

• ATP calculated by using only actual orders and scheduled

production

• Use both available and ATP rows for MPS planning: negative
available quantities represents a «potential» problem, but a
negative ATP is a real problem
 EXAMPLE
Time-phased method &
Customer order promising
20 + 70 – 30 = 60 units (70 + 20) – (13 + 8) = 69
 70 – 4 = 66
60 – 30 = 30 units
8+30=38
EXAMPLE
Rolling through time
Actual demand in Period 1 was 25 units. So
beginning inventory in Period 2 will be
45 units (!)
Rolling through time
Time Period
1-8
2 to 9
REFERENCES

• Heizer, J. & Render, B. (2011).

Operations Management. Pearson.
• Krajewski, L.J., Malhotra, M.K.,
Ritzman, L.P. (2016). Operations
Management: Processes and
Supply Chains, 11th edition,
Pearson.
• Whitehead, E. (2014)
https://slideplayer.com/slide/119
53448/
• https://slideplayer.com/slide/510
2536/
• https://slideplayer.com/slide/471
0388/