Supplement D
Queuing Theory
Operations Management
by
R. Dan Reid & Nada R. Sanders
4th Edition © Wiley 2010
© Wiley 2010
1
Learning Objectives




Explain the role of the master production schedule
and describe the objectives of master production
scheduling.
Develop a master production schedule and project
the capacity needed using rough-cut capacity
planning.
Calculate available-to-promise quantities.
Describe time fence policies.
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2
Master Production Scheduling
MPS: The anticipated build schedule
 The Master scheduler is the person
responsible for managing, developing,
reviewing and maintaining the master
schedule
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3
MPS As a Basis
of Communication
Master production schedule linkages
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4
Objectives of Master Scheduling
The master scheduler considers these points
when developing the (master) schedule:



Achieve the desired customer service level either
by maintaining finished goods inventory or by
scheduling completion of the item or service to
meet the customer’s delivery needs.
Make the best use of the company’s resources:
material, labor, and equipment.
Ensure that the inventory investment is at the
appropriate level.
© Wiley 2010
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Developing an MPS
The master scheduler:




develops a proposed MPS,
checks the schedule for feasibility in terms of
available capacity,
modifies as needed, and
authorizes the MPS.
The master scheduler uses the finished MPS
records to develop a proposed master
production schedule, which is then checked
for feasibility with a rough-cut capacity
planning technique.
© Wiley 2010
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The MPS Record
W eek
BI
1
2
3
4
5
6
7
8
9
10
11
12
50
50
50
50
75
75
75
75
50
50
50
50
110
60
10
-4 0
BI
1
2
3
4
5
6
7
8
9
10
11
12
50
50
50
50
75
75
75
75
50
50
50
50
60
10
85
35
-4 0
F o re c a s t
P ro je c t e d a va ila b le
Q= 125 units
MPS
W eek
F o re c a s t
P ro je c t e d a va ila b le
MPS


110
125
Projected Available = beginning inventory + MPS shipments forecasted demand
The MPS row shows when replenishment shipments need to arrive to avoid a
stock out (negative projected available)
© Wiley 2007
Revised and Completed MPS Record
W eek
BI
F o re c a s t
P ro je c te d a va ila b le
110
1
2
3
4
5
6
7
8
9
10
11
12
50
50
50
50
75
75
75
75
50
50
50
50
60
10
85
35
85
10
-6 5
MPS
W eek
125
BI
F o re c a s t
P ro je c te d a va ila b le
MPS
110
125
1
2
3
4
5
6
7
8
9
10
11
12
50
50
50
50
75
75
75
75
50
50
50
50
60
10
85
35
85
10
60
110
60
10
85
35
125
125
125
125
© Wiley 2007
125
Rough-Cut Capacity Planning

Rough-cut capacity planning (RCCP): The process of converting
the master production schedule into requirements for key resources such
as direct labor and machine time

Demonstrated capacity: Proven capacity calculated from actual
performance data

Capacity planning using overall planning factors (CPOPF):
A rough-cut capacity planning technique. MPS items are multiplied by
historically determined planning factors for key resources. See Procedures
for CPOPF below:
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Rough Cut Capacity Problem: a shoe company produces two models of
dance shoes. Over the past 3 years 72,000 pairs of Model M have been
produced using 21,600 direct labor hours and 5760 machine hours, and
108,000 pairs of Model W using 43,200 hours of labor and 12,960 hours of
machine time.

Step 1: Determine the Planning factors:

Labor Factors

Machine Factors
© Wiley 2007
Step 2:Calculate the Workload Generated
by This Schedule
A
B
C
Planning Factors (hours per pair)
Direct
Machine
Labor
Time
Model M 0.30
0.08
Model W
0.40
0.12
D
E
4
5
6
7
8
9
10 Quarterly Master Production Schedule (MPS) (pairs)
11
Q1
Q2
Q3
Q4
12
Model M 6000
5500
9500
6500
13
Model W 10000
12000
7500
10100
© Wiley 2007
F
Totals
27500
39600
Step 3: Calculate the Capacity Needs for
Each Resource for Each Time Period
A
B
C
Direct Labor Hours Required
Q1
Q2
Model M
1800
1650
Model W
4000
4800
Totals
5800
6450
15
16
17
18
19
20
21 Machine Time (Hours) Required
22
Q1
Q2
23
Model M
480
440
24
Model W
1200
1440
25
Totals
1680
1880
D
E
F
Q3
2850
3000
5850
Q4
1950
4040
5990
Totals
8250
15840
24090
Q3
760
900
1660
Q4
520
1212
1732
Totals
2200
4752
6952
© Wiley 2007
Step 4: Calculate Individual Workcenter
Capacity Needs Based on Historical
Percentage Allocation
A
B
C
D
27 Work Center Historical Breakdown
28
Direct
Machine
29
Labor
Time
30 Center 101
60%
60%
31 Center 102
40%
40%
32
33 Direct Labor Hours Required by Work Center
34
Q1
Q2
Q3
35 Center 101
3480
3870
3510
36 Center 102
2320
2580
2340
37
Totals
5800
6450
5850
38
39 Machine Time Hours Required by Work Center
40
Q1
Q2
Q3
41 Center 101
1008
1128
996
42 Center 102
672
752
664
43
Totals
1680
1880
1660
© Wiley 2007
E
F
Q4
3594
2396
5990
Totals
14454
9636
24090
Q4
1039.2
692.8
1732
Totals
4171.2
2780.8
6952
Evaluating and Accepting the
MPS



The master scheduler checks that promised
customer delivery dates are met.
He also ensures that the MPS provides
enough flexibility to cover new customer
orders.
Once the master scheduled has evaluated
and accepted the MPS, the authorized MPS
is entered into the MRP system.
© Wiley 2010
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Using the MPS


One use of authorized MPS is order
promising (the process of making orderdelivery commitments).
Order promising relies on available-topromise (ATP), which is the uncommitted
portion of a company's inventory and
planned production that is maintained in the
MPS to support order processing.
© Wiley 2010
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Using the ATP records


The ATP records show how much inventory
is available to satisfy customer demand.
Two rules to help manage the ATP:


A negative number is the projected available
row is sometimes a problem.
A negative number in the available-to-promise
row is always a problem.
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Using the MPS to “Order Promise”


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The authorized MPS is used to promise orders to customers
The MPS table is expanded to add customer orders and
available-to-promise rows (inventory to satisfy new orders)
ATPAction Bucket = (beginning inventory + MPS shipment) less
(customer orders before next replenishment). Available in period 1
ATP=MPS shipment – Customer orders between current MPS
shipment and next scheduled replenishment in periods 3,5,7,8, & 11
W eek
1
2
3
4
5
6
7
8
9
10
11
12
F o re c a s t
50
50
50
50
75
75
75
75
50
50
50
50
C u s t o m e r o rd e rs
35
25
25
20
0
15
0
0
10
0
0
10
60
10
85
35
85
10
60
110
60
10
85
35
110
125
115
115
125
125
125
125
P ro je c t e d a va ila b le
A va ila b le -t o -p ro m is e
MPS
BI
110
50
80
125
© Wiley 2007
Example of Revising the ATP MPS Record: A customer calls
marketing willing to purchase 200 units if they can be delivered in
period 5. The two tables below show how the system logic would
first slot the 200 into period 5 and then how the order would be
allocated across periods 1, 3, and 5 and adjusting the ATP row.
© Wiley 2007
Stabilizing the MPS
The master scheduler tries to minimize the changes made to
an authorized MPS – each change can impact the feasibility
of the MPS.
This figure shows the
demand time fence
and the planning time
fence which split the
MPS into three parts.
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MPS & Rough-cut Capacity Planning
within OM: How it all fits together

In most companies, the operations manager develops the
aggregate plan, which determines the resources available to
operations to execute the master production schedule. The
plan will clearly indicate the size of the workforce and the
aggregate production rate. The master production scheduler
then develops the master production schedule. The only
feasible plan that can be developed is one by the scheduler
working with marketing, operations, demand management,
and the customers. The master scheduler’s job is to develop
an MPS that achieves the company’s desired customer
service level, uses capacity effectively, and minimizes the
inventory investment. To make sure that the master
production schedule is feasible, rough-cut capacity planning
is done.
© Wiley 2010
20
Supplement Highlights
 The MPS shows how the resources authorized by the aggregate
plan will be used to satisfy the objectives of the organization.
The MPS specifies the products and quantities to be built in
each time period. The MPS is a common organizational
document used to facilitate communication between different
functional areas. The master scheduler develops a proposed
MPS based on input received from the aggregate plan and
demand management. This MPS is checked for feasibility using
a rough-cut capacity planning technique.
 The objectives of master scheduling are to satisfy customer
service objectives, use resources effectively, and minimize costs.
An MPS is developed by looking at individual MPS records and
calculating when replenishment quantities are needed. The
individual MPS records are summed together to show the total
proposed workload.
© Wiley 2010
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