Unit 3 Scheduling Operations
Chapter 12: Aggregate Planning Lesson 39- MASTER SCHEDULING AND ROUGH-CUT CAPACITY PLANNING
Learning Objectives After reading this lesson you would be able to understand Master production plan Master schedule Rough cut capacity planning
Well, my friends, let’s get started. As we all very well know, the production plan represents a firm's aggregate measure of manufacturing output. Once this plan is made, it is the responsibility of marketing to sell it and production to implement it. To do so requires a desegregation of the production plan into individual products. Recall that the master production schedule (MPS) is a statement of how many finished items are to be produced. Typically the master schedule is developed for weekly time periods over 6-12 months horizon. An example of partial MPS is shown in figure 7.
1 A B
X
Totals (Aggregate production plan)
150
2
3
4
200 200
200 200
10
19
0
0
75
5
6
7
8
350 350 120
75
75
60
500 800 350 600 280 750 420
300
FIGURE .7 A portion of a master production schedule Master scheduling is generally a complex problem, especially for products with large number of operations For example, in Dow Corning there are 12 MPS, who are responsible for scheduling 400 packed products over a 26-week time horizon. In process
industries with only a few different operations, master production scheduling is somewhat easier. In order to illustrate the basic concepts of master production scheduling and rough-cut capacity planning, let us turn to an example Developing a Master Schedule Let us suppose that Gulden’s management has decided to use the production plan in Table 8. Since the company produces two products, Golden Brew and Golden Delight,' the master scheduler must translate the aggregate production plan into a weekly schedule for each product. Gulden’s beer is produced in cases of twenty-four 16-ounce cans (3 gallons). Each barrel consists of 32 gallons; the product mix, which is determined by historical sales data, is relatively constant, a 70-30 percent split between Golden Brew and Golden Delight. With this information, we can project the monthly production for each product for the first 6 months is shown in Table 9.
Table 8 Alternate Production Inventory Plan MONT MONTH H PROD PRODUC UCTI TION ON INVE INVENT NTOR ORY Y Jan Feb Mar April May June July August Sept Oct Dec
1500 1500 1500 2800 2800 2800 2800 2800 2200 2200
1000 1500 1100 1300 1300 1000 600 4000 600 1800
Nov
2200 1500
1500
LOST LOST SALES 0 0 0 0 0 0 0 0 0 0 2200 0
CUMULATIVE PRODUCTION 2500 4000 5500 8300 11100 13900 16700 19500 21700 23900 0 26100 2700
Table 9
AGGREGATE PRODUCTION MONTH BARR BARREL ELS S Januar uary
1500
PRODUCT MIX
GOLDEN BREW CASE CASES S (CAS (CASES ES)) 16,000
11,200
GOLDEN DELIGHT (CASES) " 4800
Febr Februa uary ry
1500 1500
16,0 16,000 00
11,2 11,200 00
4800 4800
Average Weekly Production Requirements for Golden Breweries March April May June July
1500 2800 2800 2800 2800
16,000 29,867 29,867 29,867 29,867
11,200 20,907 20,907 20,907 20,907
4800 8960 960 8960 8960 8960
A Master Sc e u e or Go en Brewer es
a e
To simplify our calculations, we assume there are 4 weeks in each month. Then the average weekly production required is given in Table 10. At Gulden’s plant, only one product at a time can be produced, since they share common facilities such as mixing equipment, bottling, capping, and case packing. Using a master schedule as determined by Table 10 would probably not be economical, since there would be frequent changeovers of products and thus high setup costs. One method of reducing the number of product changeovers is to produce in large batch sizes. Table 11shows a possible master schedule in which products are alternated on a weekly basis. A Feas e Master Pro uct on Sc e u e or Go en Breweries We have not determined whether there is sufficient capacity available on a short-term basis to be able to achieve this schedule. We previously stated that under normal conditions, the plant has a capacity of 2200 barrels per month, or 5867 cases per week. With overtime, the capacity can be increased) to 2800 barrels per month, or 7467 cases per week. These restrictions are due to the physical limitations of the production equipment. From Table 11, we see that up to week 12, we are able to produce within capacity. Beyond this, the planned schedule for Golden Brew cannot be achieved within
PROD UCT Golden Brew
1 2
3
4
2800 2800 2800 2800
5
6
7
' \ 2800 2800 2800 2800
8
9
10 11 12 13 14 15 16 17 18 19 20 21 22 23
2800 2800 2800 2800
5227 522 522 522 522 522 522 522 522 52 5227 7 7 7 7 7 7 7 7 7
Golden 1200 120 120 1200 1200 12 120 120 129 120 2240 224 224 224 224 224 224 224 224 22 1200 0 0 1200 00 0 0 0 0 2240 0 0 0 0 0 0 0 0 0 the limitation of 7467 cases per week. We would therefore say that this master
Delight
Table 10
PROD UCT Golde n Brew
1
2
3
4
5
6
7
8
9
560 0 560 5600 0 0 560 5600 0 0 5600 0 5600 0
1 11 12 13 14 15 16 17 18 19 20 21 22 23 0
0 5600
0 746 7
0
597 746 746 4 1 7
Golde n Deligh 0 149 0 2400 0 2400 0 2400 0 2400 0 2400 0 7467 t 3892 3 Table 12 A feasible Master Schedule for Golden Breweries
0
0
0 5974
74 746 67 7
746 1493 0 7
0
0
59 4
746 14 7 3
WEEK PRO 1 2 3 4 5 6 7 8 9 10 11 12 13 14 14 15 16 17 18 19 20 21 22 2 DUCT Golde n 10,45 0 560 0 0 0 Brew 0 0 10,454 0 10,4 10,454 54 0 10,4 10,454 54 0 10,4 10,45 5 0 5600 5600 0 5600 5600 4 10,454 0 5600' 5600 5600 Golde n Deligh 0 0 240 0 0 0 2400 0 2400 0 2400 0 0 4480 0 4480 0 4480 0 t 2400 2400 0 4480 4480 Schedule is infeasible. This is the essence of rough-cut capacity planning-namely, determining if a master schedule is feasible with respect to capacity limitations. If not, then the master scheduler must revise the MPS to stay within capacity constraints. In some cases, it may even be necessary to revise the aggregate production plan. Table 12 shows a feasible master schedule, developed by trial and error, which. meets the capacity limitations in each month. Note that as in Table 11, two product changeovers each month must be made. For example, in weeks 14 and 15, Golden Delight will be produced and. early in week 15, a changeover will be made to Golden Brew. This will be produced until week 18, when a changeover to Golden Delight will be made, and so on. It is a good idea to check planned inventory levels in relation to an MPS. We may use Equation 1 on a weekly basis to do this. Equation 1 = Beginning inventory +Production – Projected sales – ending inventory. Using the projected demand from Table 13 and translating this into cases per week, we arrive at Table 14., which shows the projected short-term fluctuations in Inventory for both products and can be used in assessing the feasibility of the master schedule from the viewpoint of safety stock.
Table 13 Demand forecast for Golden Breweries. Month Jan Feb Mar April May June July August Sept Oct Dec
Demand ( Barrels) 1500 !000 1900 2600 2800 3100 3200 3000 2000 1000 Nov
Cumulative Demand 1500 2500 4400 7000 9800 12900 16100 19100 21100 22100 1800
2200 26100
23900 26100
Inventory Analysis for Golden Breweries' Master Production Schedule GOLDEN BREW GOLDEN DELIGHT PRODUCT INVENTOR DEMAN PRODUCTI WEEK DEMAND INVENTORY. ION Y. D ON 1 2800 5600 10,267 1200 0 2000 2 2800 0 7,467 1200 2400 3200 3 2800 5600 10,267 1200 0 2000 2400 4 2800 0 7,467 1200 3200 TABLE 14.
5 6 7 8
1867 1867 1867 1867
5600 0 5600 0
11,200 9,333 13,066 11,199
800 800 800 800
0 2400 0 2400
2400 4000 3200 4800
1520
0
3280
1520 1520
2400 0
4.160 2640
9 10 11
3547 3547 3547
5600 0 5600
13,252 9,705 11,758 11,7 58
12
3547
0
8,211
1520
3892
5012
13 14 15
4853 4853 4853
7467 0 5974
10,825 10,8 25 5,972 7,093
2080 2080 2080
0 7467 1493
2932 8319 7732
16
4853
7467
9,707
2080
0
5652
17 18 19 20
5227 5227 5227 5227
7467 0 5974 7467
11,947 11,9 47 6,720 7,467 9,707
2240 2240 2240 2240
0 7467 1493 0
3412 8639 7892 5652
21 22 23 24
5787" 5787 5787 5787
7467 0 5974 7467
11,387 5,600 5,787 7,467
f480 2480 2480 2480
0 7467 1493 0
3172 8159 7172 4692
25 5973 7467 8,961 2560 0 26 5973 0 2,988 2560 7467 ,. .Initial inventory = 1000 barrels (7467 cases of Golden Brew and 3200 cases of Golden Delight)
2132 7039
Using the Master Schedule It is clear from this simple example that master scheduling can be a complicated process. Let us summarize some of the observations we made through the Golden Breweries example. First, the master production schedule should relate to the aggregate production plan; that is, the planned monthly schedule
should equal the aggregate plan when totaled over all products. Second, rough-cut capacity planning assists the master scheduler in developing a feasible schedule by determining potential production bottlenecks. Often, the master schedule must be revised several times until it is feasible. Third, other ways of evaluating a master production schedule include the and cost of setups or product changeovers and short-term inventory fluctuations. The master schedule is important, since it forms the basis for future production-planning activities. Therefore, it must be adaptive to changes in the environment. Seldom will forecasted demands be realized or production plans be adhered to perfectly. As each week passes, operations managers must compare scheduled production with actual results. This may result in changes to the MPS-master scheduling is a full time job! Too many changes, however, indicate that master scheduling is not being performed correctly and can result in poor productivity and low levels of customer service. With that, we have come to the end of today’s discussions. I hope it has been an enriching and satisfying experience. See you around in the next lecture. Take care. Bye.
