Supply and demand activities throughout the planning horizon are illuminated in the details section. For example, the 200 units in the master schedule line of period 1 are refl ected as the fi rst entry under master schedule detail. Here, the master scheduler can see that this is more than just a supply of 200 scheduled WA01 units, which is all the planning horizon data reveals. In the master schedule detail sec- tion, it is defi ned as lot number 012. Its required date is period 1; it is a manufacturing work order (MFG); and it has been released to the
3 Different master scheduling systems would display that 22 in several ways—either as shown here or added to the fi rst period’s demand of 100, making it 122 (refer to Chapter 16 for a discussion of forecast consumption).
4 Note: If you have trouble understanding the basic calculations and mechanics, refer to Chapter 3 for a review.
144
145
Figure 5.4 Continued
manufacturing fl oor. And if it’s on the fl oor, the assumption is that the material required to make it is likewise on the fl oor, unless an alloca- tion or shortage shows up on the WA01 components’ material require- ments planning screens.
In period 3, 200 units are also shown on the MPS line. In the master schedule detail for period 3, an action message to release indicates that it’s time to convert the fi rm planned order into a released order. The reason for this action is that the winch has a lead time of two periods, and period 3 is within one period of that lead time. That means it is time to create a work authorization and send it out to manufacturing.
Further down in the master schedule detail is lot 016, a fi rm planned order of 225, with a required date of period 9. Here, the system is recommending a reschedule-in of the order by one period, back to period 8. To the master scheduler, this message is a cue to examine the supply/demand situation in the planning horizon for periods 8 and 9. In period 8, the projected available balance is 96 units, 4 short of the company’s desired safety stock requirement of 100. Therefore, the fi rm planned order of 225 in the MPS line of period 9 needs to be moved back into period 8. The same logic applies to the order in period 17, where another reschedule-in recommendation appears in the master schedule detail (the same situation: the projected available balance has fallen below the desired safety stock level of 100 units).
To ignore the computer’s recommendation on the basis that “we need only 4, not 225 units” would be a legitimate response to the potential safety stock shortfall in period 8. The experienced master scheduler would understand that the forecasted demand in each pe- riod between 1 and 8 is only a prediction or request for product, and that actual demand may easily fall short by 4 or more units over that period, entirely eliminating the need for an early resupply of WA01 winches. Additionally, the experienced master scheduler will check the status of the unconsumed forecast discussed at the beginning of the chapter. And even if the demand does materialize, the company would still have an inventory of 96 units.
Besides the alternatives of slavishly following the computer soft- ware’s recommendation to reschedule-in 225 units from period 9 to period 8, or simply ignoring the recommendation for action al-
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Using the MPS Output in a Make-to-Stock Environment
together, the master scheduler has at least two other alternatives to choose from:
1. Split the lot of 225 scheduled for period 9 into two orders: one for 4 units in period 8, and another for 221 in period 9.
2. Simply change the order of 200 in period 7 to 204.
Either of these options would eliminate the action message. The fi rst, however, might be somewhat costly in that an extra order involves extra paperwork, reporting, material issuing, and possibly changeover costs. In fact, the changeover cost to build just 4 units may, in itself, be suffi ciently high as to disqualify this as a viable solution. The second solution might cause less paperwork, reporting, and changeover but could still disrupt manufacturing.
Both cases contain other issues that need to be addressed before changing the schedule. Chapter 4 discussed six important reschedule change questions that should be answered before any rescheduling is done. It is worth reviewing them here:
1. Has demand changed? The screen merely represents a snapshot of the master schedule and does not provide the data necessary to an- swer this question. However, a working master scheduler in the plant or mill would be able to secure the information necessary. We want to know if we should change.
2. What is the impact of the change on the production plan vol- umes? The production plan is created and approved during the sales and operations planning process. The master scheduler has a respon- sibility to work within the constraints of approved production plan volumes. If a change is made, will the master schedule still summarize up to the approved rates? Here we want to know if we are authorized to make the change.
3. Can the capacity be obtained? In both cases we need to know if there is enough capacity in period 7 or period 8 (depending upon choice) to do the work. If the capacity is not available or cannot be
available, then it will do no good to reschedule. We want to know if we are able to change.
4. Can we obtain the material? In both cases we must know if the required material can be produced or procured in time. To determine what material, we would refer back to the time- phased BOM (Figure 5.3 on p. 141). Drawing a line on the WA01 winch BOM, at period 7 through 9, we see the material that is affected: hard steel (R100), wheel (1100), housing casting (1200C), cable (1300), hook (1400), drum casting (D100C), gear box (G102), motor (M100), and control box (1600). It may not be easy to cut one or two periods of lead time from these items. Again we want to know if we are able to change.
5. What is the cost of changing? Changing schedules generally costs money, in fact, the closer the change comes to the completion date, the greater the cost in overtime, subcontracting, extra shifts, premium payments to suppliers, air freight, expediting, and so on. We want to know the cost of changing.
6. What is the impact on the marketplace? How painful will it be for the company if the master schedule is not changed? Since the ori- gin of this action message is a 4% drop below the safety stock level, it is hard to imagine much pain in the marketplace. However, if this MPS item is under a contractual agreement to maintain an inventory balance of 100 units or else penalties would apply, the decision takes on a different perspective.
Only after the master scheduler has the data to answer these re- schedule change questions can an informed decision be made. No one ever said master scheduling was easy. This is why Class A compa- nies have very creative, organized, and knowledgeable people doing the job.
Finally, period 21 details a system recommendation to convert a computer planned order to a fi rm planned order (PLAN). Here’s why:
The system shows a projected available balance of – 9 in period 21.
The lot sizing rule tells the master scheduling system that any time a computer planned order is placed, it must cover the next two periods
149
Using the MPS Output in a Make-to-Stock Environment
of demand. So, in period 21, nine units are needed, and in period 22 the demand is 125, leaving a projected defi cit of 134 (9 + 125). A total of 134 units will thus cover demand in periods 21 and 22, but the safety stock rules specify that 100 units should always be in stock, so the MPS system recommends releasing an order for 100 additional units, for a total of 234. Since in this example we chose a dynamic lot sizing rule (period order quantity), the computer software will recommend that orders be placed outside the planning time fence equal to the require- ments for two periods plus safety stock.