MASTER SCHEDULING: An Overview

The sections entitled: Uncertainty & Promises and Closed-Loop Planning described
production planning and resource requirements planning, which are aggregate plans of
production and capacity generally taing one to ten years to complete e!ecution" These
plans combine #aggregate$ similar products into product groups, combine demand into
monthly totals, and often group personnel requirements across departments" The time
comes when indi%idual products and ser%ices must be scheduled at specific wor centers"
This is accomplished by master scheduling---producing a plan to manufacture specific
items or pro%ide specific ser%ices within a gi%en time period"
&ough cut capacity planning #&CCP$ is the process of determining if the plan is feasible' it
determines whether the organi(ation has sufficient capacity to carry out the plan" )lthough
&CCP is more refined than resource requirements planning #&&P$, it is called *rough cut+
because it is less refined than capacity requirements planning #C&P$"
,igure - illustrates how master scheduling and rough cut capacity planning relate to the
corporate and operations planning"

Figure 1
This section presents a general picture of master scheduling, the master production
schedule #.P/$ and its relationship to rough cut capacity planning, the pro0ected on hand
#P12$ in%entory and order promising using the a%ailable-to-promise #)TP$ quantity" /ince
these terms and processes are used primarily in manufacturing, we describe them in that
conte!t" 2owe%er, their counterparts e!ist in many ser%ice organi(ations, ) description of
the de%elopment of the master schedule including the )TP, the P12 in%entory, and the
.P/ and its relationship to &CCP follows"
MASTER SCHEDULING & THE MPS
The master schedule #./$ is a presentation of the demand, including the forecast and the
baclog #customer orders recei%ed$, the master production schedule #the supply plan$, the
pro0ected on hand #P12$ in%entory, and the a%ailable-to-promise #)TP$ quantity" The
master production schedule #.P/$ is the primary output of the master scheduling process"
The .P/ specifies the end items the organi(ation anticipates manufacturing each period"
3nd items are either final products or the items from which final assemblies #products$ are
made' as described later in this section" Thus, the .P/ is the plan for pro%iding the supply
to meet the demand" )n e!ample of a master schedule only including the .P/ and the
baclog is shown in Table -" This e!ample is de%eloped further in the section"

Tabe 1
INTERFACES
The master schedule #./$ is a ey lin in the manufacturing planning and control chain"
The ./ interfaces with mareting, distribution planning, production planning, and capacity
planning" 4t also dri%es the material requirements planning #.&P$ system as shown in
Figure 1"
.aster scheduling calculates the quantity required to meet demand requirements from all
sources" Tabe ! shows a case in which the distribution requirements are the gross
requirements for the ./" .aterial requirements planning is used to calculate the quantity
required" ,or e!ample, the -5 units in in%entory at the end of 6ee 7 are subtracted from
the gross requirements, 85 units, of 6ee 9 to determine the net requirements of :; units
for 6ee 9"

Tabe !
The ./ enables mareting to mae legitimate deli%ery commitments to field warehouses
and final customers" 4t enables production to e%aluate capacity requirements in a more
detailed manner" 4t also pro%ides the necessary information for production and mareting to
agree on a course of action when customer requests cannot be met by normal capacity"
,inally, it pro%ides to management the opportunity to ascertain whether the business plan
and its strategic ob0ecti%es will be achie%ed"
<efore describing the acti%ities in%ol%ed in "rea#ing an$ %anaging #&e MS, we e!amine
the different organi(ational en%ironments in which master scheduling taes place" These
en%ironments are determined in large measure by an organi(ation=s strategic response to
the interests of customers and to the actions of competitors" )n understanding of these
en%ironments, of the bill of material, and of the planning hori(on is essential to the first
stage of master planning acti%ities---designing the master schedule"
THE EN'IRONMENT
The competiti%e strategy of an organi(ation may be any of the following:
-" .ae finished items to stoc #sell from finished goods in%entory$
>" )ssemble final products to order and mae components, >; subassemblies, and options
to stoc
7" Custom design and mae-to-order
The competiti%e nature of the maret and the strategy of the organi(ation determine which
of the ./ alternati%e it should use" 4t is not unusual for an organi(ation to ha%e different
strategies for different product lines and, thus, use different ./ approaches"
Ma(e)#*)S#*"(
The competiti%e strategy of mae-to-stoc emphasi(es immediate deli%ery of reasonably
priced off-the-shelf standard items" 4n this en%ironment the .P/ is the anticipated build
schedule of the items required to maintain the finished goods at the desired le%el"
?uantities on the schedule are based on manufacturing economics and the forecast
demand as well as desired safety stoc le%els" )n end item bill of material #<1.$
#described later in this section$ is used in this en%ironment" 4tems may be produced either
on a mass production #continuous or repetiti%e$ line or in batch production" Case 4 in
Figure ! represents this situation" @ote that the .P/ is the same as the final assembly
schedule #,)/$ in this case"
A++e%be), Fini+&), *r Pa"(age)#*)Or$er
4n this en%ironment, options, subassemblies and components are either produced or
purchased to stoc" The competiti%e strategy is to be able to supply a large %ariety of final
product configurations from standard components and subassemblies within a relati%ely
short lead time" ,or e!ample, an automobile may be ordered with or without air
conditioning, an option, and a fast-food restaurant will deli%er your hamburger with or
without lettuce" This en%ironment requires a forecast of options as well as of total demand"
Thus, there is an .P/ for the options, accessories, and common components as well as
final assembly schedule #,)/$" This is Case 44 in Figure !"
Figure !
The ad%antage of this approach is that many different final products can be produced from
relati%ely few subassemblies and components" This reduces in%entory substantially" Figure
- represents such a situation" 3ach final product contains four ma0or subassemblies and a
component" 2owe%er, each subassembly and the component has different %ariations
#alternates$" There are four different %ariations of /)-, two of /)>, four of /)7, three of
/)9, and fi%e of C, which results in 9 ! > ! 9 ! 7 ! 5 or 98; final product configurations"
)ssembling to order enables the firm to stoc 9 A > A 9 A 7 A 5 or -8 different items rather
than 98;"

Figure -
Cu+#*% De+ign & Ma(e)#*)Or$er
4n many situations the final design of an item is part of what is purchased" The final product
is usually a combination of standard items and items custom designed to meet the special
needs of the customer, Combined material handling and manufacturing processing
systems are an e!ample, special trucs for off-the-road wor on utility lines and facilities
are another" Thus, there is one .P/ for the raw material and the standard items that are
purchased, fabricated, or built to stoc and another .P/ for the custom engineering,
fabrication, and final assembly" Case 444 in Figure ! represents this situation"
)s we proceed with the discussion of the policies and procedures of master scheduling and
its relationship to rough cut capacity planning #&CCP$, we will e!amine further the
relationship of these en%ironments to the .P/ tas"
THE .ILL OF MATERIAL
)n inclusi%e definition of a final product includes a list of the items, ingredients, or materials
needed to assemble, mi!, or produce that end product" This list is called a bill of material
#<1.$" The <1. can tae se%eral forms and be used in many ways" 4t is created as part
of the design process and is used by manufacturing engineers to determine which items
should be purchased and which items should be manufactured" Production control and
in%entory planning uses the <1. in con0unction with the master production schedule to
determine the items for which purchase requisitions and production orders must be
released" )ccounting uses it to cost the product"
The <1. is a basic required input for many production planning and control acti%ities, and
its accuracy is crucial" 4n computeri(ed systems the <1. data is contained in <1. files, a
data base organi(ed by the <1. processor that also produces the <1. in the %arious
formats required by the organi(ation"
Singe)Leve .i */ Ma#eria
The way in which the <1. files are organi(ed and presented is called the structure of the
bill of material" The simplest format is a +inge eve .OM, as depicted in Tabe -" 4t
consists of a list of all components needed to mae the end item, including for each
component #-$ a unique part number, #>$ a short %erbal description, #7$ the quantity needed
for each single end item, and #9$ the part=s unit of measure"

Tabe -
Mu#i)Leve Tree S#ru"#ure an$ Leve+
6hile the single le%el <1. is sufficient when a product is assembled at one time from a set
of purchased parts and raw materials, it does not adequately describe a product that has
subassemblies" 4f we decided to mae the base and socet assemblies in Tabe -, then
each of those would ha%e sub-items that were purchased or manufactured" To illustrate the
product structure, we can draw a +tree+ ha%ing se%eral le%els, as shown in Figure 0" @ote
that by con%ention the final product is at Le%el ;= and the le%el numbers increase as one
loos down the tree"
Figure 0
Corresponding to this tree structure is the %u#ieve .OM shown in Tabe 0" 3ach part or
assembly is gi%en a unique number" To aid in understanding the structure, the numbers for
the components of each subassembly are indented under the respecti%e subassembly
numbers" 6hen a component is used in more than one subassembly a common parts bill
may be produced for use by in%entory planning" 4n this type bill there is only one
occurrence of the item along with its total quantity per final assembly"
4f the wiring assembly were itself a subassembly, then its component"= would be listed" 1n
the indented <1., the component part numbers would be further indented, as shown in
Table 5" )s you see, the multile%el product structure is really made up of building blocs of
single le%el product trees" that is, a <1. can be drawn up for each subassembly and only
these single le%el bills need be retained" This is important when producing many different
end items that ha%e common subassemblies, 6e do not need to change e%ery, end item
<1. when an engineering change taes place in a single common subassembly"

Tabe 0

Tabe 1
To illustrate this and se%eral other real-life comple!ities, let=s assume that we manufacture
lamps with three different shades, two alternate base plates, and two types of socets" 1ur
original lamp was designated L);l" 6oring with the different components, we now can
ha%e -> different final products" To clarify this, we can produce a common parts bill in a
matri! format, as shown in Tabe 2" )n e!amination of the matri! shows that some parts
are common to alt models" To ease the planning tas, we could group together the wiring
assembly and the finished shaft with a new part number, say 9;;;, on the bill of material"
)lthough these components are produced independently of one another, they can be
grouped as common parts on the <1. for administrati%e purposes" This part number is
ne%er stoced and so it is called a phantom part" 4ts only purpose is to reduce the number
of items on the <1." 6e can go further with the concept of restructuring our <1.s and,
for some products, create new numbers to represent new subassemblies #for e!ample,
subassemblies of plate, hub, and screws$ in order to shorten lead times"
Tabe 2
)nother type of <1. is often useful in planning and handling engineering charges" 4t is
referred to as a planning bill, a pseudo bill, a phantom bill, a super bill, or family bill" ,rom
the matri! form of the summary bill #Tabe 2$, a simplified product structure diagram
#Figure 1$ can be created for the family of lamps that consisted of pseudo subassemblies-
base assemblies, shades, and socet assemblies" ,or each of these, in place of the
quantity for each unit assembled, the percentage split for each type of component is stated"
@ow, as we plan for a total of -;,;;; lamps for each month, this planning bill can be used
to deri%e the number of each type of component to build" ,urthermore, if we decide to
change to, say, a -B-inch green shade, only this single <1., this modular bill, needs to be
altered"
Figure 1
O3#i*n Over)3anning
4f the e!act percentage split is uncertain, the percentage of each option can be increased
to co%er the uncertainty This results in the total being more than -;; percent, as illustrated
in Figure 2" The amount added can be calculated in the same manner as safety stoc"
Using this procedure to co%er possible high side demand for each option is called option
o%er-planning"
Figure 2
THE PLANNING HORI4ON
) principle of planning is that a plan must co%er a period at least equal to the time required
to accomplish it" This means that the ./ planning hori(on must be at least as long as the
lead time required to fabricate the ./ items" This includes production and procurement
time as well as engineering time in a custom design en%ironment" Celi%ery-to-customer
response times #lead times$ in the different production en%ironments are illustrated in
Figure 56
.any organi(ations di%ide the planning hori(on into periods with different controls on
schedule changes" The closer a period is to the present, the tighter are the controls on
schedule changes" ,or e!ample, rime fences #boundaries between different periods$ may
be established at the fourth wee and the eighth wee #two months$, as shown in Tabe 5 A
The location of the time fences and the nature of the appro%al required depend on the
situation" Darying lead times, maret conditions, and processing fle!ibility mae for different
time fences, sometimes at different plants within the same firm, Time fences should be
tailored to specific product groups as lead time may %ary widely between groups" 4n all
cases, the ./ is the %ehicle for coordinating the achie%ement of mareting and
manufacturing goals"

Figure 5

Tabe 5
In Peri*$ C #a time hori(on beyond two months in Tabe 5$ the .P/ is consistent with the
production plan" ) good production plan will mae preparation of the ./ straightforward in
this time frame"
In Peri*$ . #a time hori(on of four to eight wees in Tabe 5$ things become a bit sticy
when operating at full capacity" ) (ero sum game e!ists' that is, any additions to the
schedule must be counterbalanced by comparable deletions or increases in capacity"
Changes in demand patterns, unusual orders, or equipment failures may warrant changes
in the .P/" These changes are usually negotiated between mareting and manufacturing
with the master scheduler determining their feasibility before the final decision" The product
mi! may change but not the production rate"
In Peri*$ A #a time hori(on of (ero to four wees in Tabe 5$ only an act of Eod or top
management can change the .P/"
)s the time for order e!ecution and manufacturing approaches, labor and material are
committed" ) change in the schedule can be disrupti%e and costly, and the costs must be
compared with the benefits of the change" ,ollowing time-fence-control guidelines, which
reflect realistic lead time constraints and competiti%e factors, will result in an .P/ that
promotes manufacturing stability and producti%ity while pro%iding reasonable fle!ibility in
meeting mareting demands" 2owe%er, the competiti%e en%ironment may force decisions to
restructure the <1., to de%elop a modular <1., to produce to stoc at a higher le%el in
the <1., or to mo%e time fences"
DESIGNING, CREATING, & MANAGING THE MASTER
SCHEDULE
.aster scheduling acti%ities tae place in three stages:
#)$ designing the ./,
#<$ creating the ./, and
#C$ controlling the ./"
A6 De+igning #&e MS in"u$e+ #&e /**wing +#e3+:
-" /elect the items' that is, select the le%els in the <1. structure to be represented by the
items scheduled #both components and final assemblies may be included$"
>" 1rgani(e the ./ by product groups"
7" Cetermine the planning hori(on, the time fences, and the related operational guides"
9" /elect the method for calculating and presenting the a%ailable-to-promise #)TP$
information"
.6 Crea#ing #&e MS in"u$e+ #&e /**wing +#e3+:
-" 1btain the necessary informational inputs, including the forecast, the baclog #customer
commitments$, and the in%entory on hand"
>" Prepare the initial draft of the master production schedule #.P/$"
7" Ce%elop the rough cut capacity requirements plan #&CC&=$"
9" 4f required, increase capacity or re%ise the initial draft of the .P/ to obtain a feasible
schedule"
C6 C*n#r*ing #&e MS in"u$e+ #&e /**wing a"#ivi#ie+:
-" Trac actual production and compare it to planned production to determine if the
planned .P/ quantities and deli%ery promises are being met"
>" Calculate the a%ailable-to-promise to determine if an incoming order can be promised in
a specific period"
7" Calculate the pro0ected on hand to determine if planned production is sufficient to fill
e!pected future orders"
9" Use the results of the preceding acti%ities to determine if the .P/ or capacity should be
re%ised"
Up to this point, this section has emphasi(ed ./ design factors and practices" @ow we are
ready to discuss preparing the initial draft of the master schedule-creating the ./"
2owe%er, as you will note, creating and controlling acti%ities are interwo%en, &emember,
the .P/ lists by period the planned quantity of each .P/ item to be built" The ./ includes
the demand, the a%ailable-to-promise, the pro0ected on hand, and the .P/ quantity by
period"
Crea#ing #&e Ma+#er S"&e$ue
Let=s consider creating the ./ in a mae-to-stoc en%ironment with no safety stoc" Tabe
7 pro%ides the type of information a%ailable for a product group" 4t re%eals that Product 7
has sufficient in%entory to co%er the requirements of 6ees 7>, 77, and 79 but not 6ee
75" Product > has sufficient in%entory to co%er the requirements for 6ees 7> and 77 but
not 6ee 79, Product 4 must be produced in 6ee 7>" )t this point there is no production

Tabe 7
scheduled yet, so the P16 merely equals the P12 of the preceding period minus the
forecast requirements" )n .P/ quantity should be planned in the first wee that an item
has a negati%e P;-9" Thus, Product 4 must be scheduled in 6ee 7>, Product > in 6ee
79, and Product 7 in 6ee 75" 4n some situations an organi(ation may decide that an .P/
quantity should be scheduled whene%er the P12 reaches some safety le%el, >5 units for
e!ample" 4n the latter case, production is planned in the first period that the P;-9 is less
than the safety stoc le%el"
<ased on a weighted a%erage capacity of -8; units per wee, the first plan calls for
manufacturing Product 4 in 6ees 7> and 77, manufacturing Product > in 6ee 79 and the
first part of 6ee 75, and manufacturing Product 7 in the last part of 6ee 75, as shown in
Tabe 8" Calculation of the P12 quantities demonstrates that the plan will co%er forecast
requirements"

Tabe 8
The P12 for the first wee equals the beginning in%entory plus the .P/ quantity minus the
forecast, and, for all remaining wees, it equals the P12 of the preceding period plus the
.P/ quantity minus the forecast requirements of the current period" Thus, the P12 of
Product 4 in 6ee 7> equals -; A -8; - -5; F 9; units' and in 6ee 77 it equals 9; A -8;
G -;; F ->;" The other P12 quantities are calculated in the same manner, The ne!t
question is, +4s there sufficient capacity to produce the .P/ quantitiesH+
R*ug& Cu# Ca3a"i#9 Panning :RCCP;: &CCP calculates the critical wor center
capacity requirements for all items on the .P/" 4t pro%ides an early warning of insufficient
capacity and the need for capacity actions" Capacity in some wor centers---the paint shop,
for e!ample may be well beyond that e%er required, while capacity in other wor centers---
welding and heat treating, for e!ample---may be relati%ely low and a frequent bottlenec"
Planning should focus attention on the potential bottlenec wor centers, Capacity actions
is the term used to describe rectifying a situation in which the a%ailable capacity is less
than the required capacity
Figure 7 shows the relationship of the %arious stages of capacity planning resource
capacity planning #&CP$, rough cut capacity planning #&CCP$, and capacity requirements
planning #C&P$-to the specific production processes of a product group" #&CP was
described in the Closed-Loop Planning section, &CCP and C&P are described in the
&CCP /ection"$ Table -; highlights the salient characteristics of these different stages of
capacity planning"
Figure 7
Tabe 1<
T&e 3ri%ar9 $i//eren"e+ be#ween RCP an$ RCCP 3anning are that the latter plans in
smaller time increments, usually weely rather than monthly, and considers the production
lead time of the %arious components and subassemblies required to produce the products
on the .P/"
Revi+ing #&e MPS: This section re%eals" once again that control taes place in the
planning process" )n initial .P/ is de%eloped for Products -, >, and 7 of Product Eroup )
from the production plan for Product Eroup ) as shown in Table --" The capacity required
by this initial .P/ is shown in Table ->" Calculation of these requirements is described in
the &CCP /ection"
Tabe 11
The comparison of capacity requirements to a%ailable capacity re%eals ii the present .P/
is feasible" Tabe 1! shows a shortfall 7"5B hours of assembly= capacity in both 6ees 7>
and 77 and surplus capacity in 6ees 79 and 75" This presents the master scheduler with
the following options:
-" 4ncrease capacity in 6ees 7> and 77"
>" &educe production quantities in 6ees 7> and 77 and increase production quantities in
6ees 79 and 75"
7" /ome combination of 1ptions 4 and >,

Tabe 1!

Tabe 1-
4n this case the choice is 1ption >, as shown in Tabe 1-, which also re%eals that sufficient
capacity is a%ailable with the re%ised .P/" The re%ise# .P/ quantities were obtained by
scheduling the ma!imum possible quantity ; Product - in 6ees 7> and 77 and completing
those requirements in 6ee 79 The remaining requirements for Products > and 7 were
roughly balanced between 6ees 79 and 75, producing Product > first" The resulting P12
%alue are shown in Tabe 10, which re%eals that sufficient units will be a%ailable to co%er
forecast demand for Product -" /imilar calculations will re%eal that the forecast demands
for Products > and 7 are also co%ered" Later, as orders arri%e, it may be necessary to
re%ise the .P/ again if actual orders are substantially different from the forecast on which
the production plan and the .P/ are based"

Tabe 10
.any organi(ations ha%e computeri(ed the calculation of rough cut capacity requirements
while others ha%e standard forms and procedures that= facilitate manual computations" 4n
any e%ent the rough cut capacity require to implement the .P/ must be compared to
a%ailable capacity to determine if any capacity actions are required" Tabe 1- re%eals that
the .P/ is within the capacity constraints of the assembly department" 4t is also necessary
to %erify that the plan does not require more than the a%ailable capacity in the departments
used in the manufacture of subassemblies and components"
)t first glance this may seem to be a rather complicated procedure" 2owe%er, once it is
understood and the appropriate software obtained or de%eloped, it readily pro%ides
information e!tremely %aluable for planning" 1nce this initial re%ised feasible .P/ is
de%eloped, creating the master schedule is completed"

C*n#r*ing #&e Ma+#er S"&e$ue
The ./ ser%es as a control in three distinct ways" )ctual production is compared to the
.P/ to determine if the plan is being met" The a%ailable-to-promise is calculated to
determine if an incoming order can be promised for deli%ery in a specific period" The
pro0ected on hand is calculated to determine if the supply is sufficient to fill e!pected future
orders"
The )%ailable-to-Promise #)TP$: Promising deli%ery to customers should be based on what
is or will be a%ailable #not committed$" )%ailable-to-promise #)TP$ is defined by the )P4C/
Cictionary #-I8:$ as +The uncommitted portion of a company=s in%entory or planned
production" This figure is normally calculated from the master production schedule and is
maintained as a tool for customer order promising"+ 2owe%er, when one is informed that
there are +>5 units a%ailable-to-promise in 6ee : and >; units a%ailable-to-promise in
6ee 8,+ the meanings are not clear until the method of calculation is nown, The three
basic methods of computing the )TP are the discrete, the cumulati%e without loo-ahead,
and the cumulati%e with loo-ahead, Cescriptions of these methods follow"
Ca"ua#ing #&e Di+"re#e ATP: The discrete a%ailable-to-promise #)TP: C$ is
computed as follows:
-" ,or the first period, the a%ailable-to-promise is the sum of the beginning in%entory plus
the .P/ for the first period #in this case (ero$ minus customer commitments for the first
period and all periods following the first period up to, but not including, the ne!t period for
which an .P/ quantity has been planned"
>" ,or all periods after the first, there are two possibilities:
a" 4f a master production quantity has been scheduled for the period the a%ailable-to-
promise is the quantity scheduled minus all customer commitments for the period and for
all following periods up to but not including, the ne!t period for which a master production
quantity has been scheduled"
b" 4f no master production quantity has been scheduled for the period the a%ailable-to-
promise is (ero, e%en if deli%eries in the period ha%e been promised" The promised
shipments often are shown as baclog #customer commitments$ in the period with the most
recent production #.P/$"
)s an e!ample, suppose after the .P/ has been constructed, total actual orders recei%ed
#total customer commitments$ for Product 4 are as follows: --; units for deli%ery by the end
of 6ee 7>, 8; units for deli%ery by the end of 6ee 77, 5 units for deli%ery by the end of
6ee 79, and -5 units for deli%ery by the end of 6ee 75" The discrete )TP of Product - in
6ee 7> equals -; A -BI G --;F BI units" The discrete )TP in 6ee 79 equals >>->F-:
units" There is no .P/ in 6ee 75 so )TP F ; units" The discrete )TPs for all product=, are
shown in Tabe 11"
4f in addition to the --; units of Product - that had already been promised for deli%ery in
6ee 7>, an order for -5 more units was recei%ed for deli%ery in 6ee 7>, the )TP would
be 59 in 6ee 7> and all the other )TPs would remain the same"

Tabe 11
@ote that in computing the )TP: C it is not necessary to ha%e the forecast and the
pro0ected on hand in%entory in the master schedule, That is because at this time the
master scheduler is not creating a master schedule, but is, instead, managing an e!isting
schedule" The master scheduler is promising deli%ery to customers of units that will be
a%ailable either from units already on hand when construction of the master schedule
began or from units scheduled to be built in accordance with the master production
schedule, Therefore, the forecast and P12 are not included in the tables that follow"
Ca"ua#ing #&e Cu%ua#ive ATP: The cumulati%e method can be used without or with
the +loo-ahead+ calculation" 6e describe both methods" Table -B is an e!ample of the
cumulati%e calculation of the )TP without loo-ahead #)TP:61L$ for Products -, >, and 7"
The cumulati%e )TP without loo-ahead equals the )TP in the preceding period plus the
.P/, minus the baclog #customer commitments$ in the period being considered" Thus, in
6ee 7> the )TP:61L for Product - is
-; A -BI ---; F BI"
4n 6ee 77 it equals
BI A -BI-8;F-58"

Tabe 12
The salient difference between this method and the discrete method is that the )TP in any
period is liely to include units also included in the )TP of other periods" ,or e!ample, the
-58 unit )TP of 6ee 77 includes the BI units in the )TP of 6ee 7>, which are also
included in the )TP of all other wees" ,urthermore, when there is no loo-ahead
procedure, the )TP for a wee may include units committed to fill requirements for a later
wee" ,or e!ample, -5 of the units in the )TP of 6ee 79 are committed to customer
orders promised in 6ee 75, )lthough some planners may function well with such a
system because they understand the data and are able to e!tract accurate information
from it, the data is misleading" The loo-ahead approach resol%es this problem" Table -: is
an e!ample of the cumulati%e with loo-ahead calculation of the )TP #)TP: 6L$"

Tabe 15
The difference between this method and the cumulati%e )TP without loo-ahead is that
units produced in one period and committed for use in a future period are omitted from the
)TP in all periods preceding that in which they are promised" The )TP of Tabe 15 gi%es a
%ery clear picture: there are B> units of Product 7 that can be promised for any of the
6ees 7> through 79, and a total of -;> units, including the B> a%ailable earlier" that can
be promised for deli%ery in 6ee 75, The )TP:6L of a period equals the )TP:6L of the
preceding period plus the .P/ of the period minus the baclog of the period minus the
sum of the differences between the baclogs and master production schedules of all future
periods until, but not including, the period from which point production e!ceeds the
baclogs" This is shown by the following model" )lthough this description and the following
model seem cumbersome, the actual calculations usually are not" This is because proper
management of the ./, including the .P/ and promises to customers, usually will pre%ent
the baclog from e!ceeding the .P/ for an e!tended time"
C*n+u%ing #&e F*re"a+#: This section pre%iously described how to calculate the P12
without changing the forecast or the .P/" Under the consuming-the-forecast concept, the
master schedule presents the forecast as only the quantity yet to be ordered by customers,
as opposed to the initial forecast" Thus, each time an order is recei%ed, the forecast
quantity on the ./ may be changed" Two different situations e!ist when using this
approach"
4n the first case, the e!isting total sales forecast still is seen as an accurate forecast of the
total e%entual units to be sold for deli%ery in the period" The re%ised forecast equals the
original forecast minus the orders recei%ed #the baclog$ for the period' the forecast is
+consumed+ by the orders recei%ed"
This situation is illustrated in 6ees 7>,77, and 79 of Tabe 17" The orders recei%ed ha%e
been subtracted from the forecast" ,or e!ample, the forecast for 6ee 7> now equals -5;
#the initial forecast$ - --; F 9;" The forecast now represents the remaining orders
e!pected, and the P12 equals the P12 of the preceding wee plus the .P/ minus the
sum of the forecast and the baclog #<$" ,or e!ample, the P12 of 6ee 79 equals I8 A >>
- #95 A 5$ F :;" #The resulting %alue of the P12 is the same as when not consuming the
forecast but is calculated differently"$

Tabe 17
The second situation differs in that the e!isting total forecast no longer is %iewed as
accurate, ,or e!ample, suppose an une!pected order is recei%ed from a new customer and
there is no reason to belie%e that the regular customers will not order as forecast" This
situation is illustrated in 6ee 75 of Tabe 17" Ten of the units ordered for deli%ery in 6ee
75 come from a new customer' the planner decides that there will still be additional orders
for 95 units" Thus, only J units of the -5 ordered are subtracted from the forecast" This also
requires that another -; units be subtracted from the P12 in 6ee 75 as the original
forecast for 6ee 75 has effecti%ely been increased by -; units" ,or e!ample, the P12 of
6ee 75 now equals :; A ; - #95 A -5$ F -;, Thus, the P12 for 6ee 75 is different from
that shown in Tabe 10" Consuming the forecast is an effecti%e method of recogni(ing
either potential stoc-outs or e!cessi%e in%entory and the need to re%ise the .P/" The
lielihood of e!cessi%e in%entory would be spotted when present sales suggest that
e%entual total orders will be less than the e!isting forecast"
THE FINAL ASSEM.L= SCHEDULE
The final assembly schedule #,)/$ is a statement of those final products that are to be
assembled from .P/ items in specific time periods" 4n some organi(ations--those
producing power tools, for e!ample-.P/ items and final products are identical, and one
document ser%es as both the .P/ and the ,)/" 4n many other situations, especially when
there are many more final products than there are items at the first <1. le%el, the two are
separate and distinct"
4n some cases final products differ only by the labeling or pacaging of the same .P/
item" 4n others painting or finishes may constitute the difference" 4n still others a %ast
difference may e!ist in the transformation of items into a %ariety of final products" 4n each of
these cases an ,)/ that is distinct from but consistent with the .P/ must be prepared" 4n
the manufacture of automatic washers, for e!ample, the motor, transmissions, control units,
consoles, tubs, sets of assembly hardware, and %arious optional accessories would be
.P/ items, and the different models a%ailable to the customer would be final assemblies"
Thus, the manufacture of motors can be authori(ed long before each motor is committed to
the assembly of a particular model" /ince the ,)/ is constrained by the a%ailability of those
items scheduled on the .P/ plus those in in%entory, the .P/ and the ,)/ must be
coordinated, This is true for both purchased and manufactured components"
Tabe 18 is an e!ample showing the relationship between the ,)/ for an assembly, ),
made-to-order, and an .P/ for two optional subassemblies, /)l and /)>, which are
made-to-stoc with option o%er-planning" The assembly may be ordered with either an /)-
or an /)> subassembly" /ales records re%eal that each has an equal probability of being
selected' each has recei%ed a ma!imum of B; percent of the orders in any wee" Thus,
with an ,)/ for a ma!imum of ten )=s in 6ee >, no beginning in%entory for any item, and
a lead time of one wee for subassemblies, the .P/ calls for si! each of /)l and /)> in
6ee 4" Three possible demand combinations e!ist: fi%e each of /)l and /)>, four of /)l
and si! of /)>, and si! of /)l and four of /)>" Two subassemblies will not be used
immediately' they will be carried in stoc to the ne!t wee"
>ee( 1 3a++e+: )ctual orders are for ten )=s, four with /)l and si! with /)>" Two /)l=s are
in in%entory at the end of the wee" This results in an .P/ calling for producing four /)l=s
and si! /)>=s in 6ee > to assemble a ma!imum of ten )=s in 6ee 7" The ,)/ and the
.P/ are coordinated"
4n an assemble-to-order en%ironment, the ,)/ frequently is stated in terms of indi%idual
customer orders and must be consistent with the shipping schedule" 4n a mae-to-stoc
en%ironment, the ,)/ is a commitment to produce specific quantities of catalog final
products" The shipping schedule depends on a%ailable in%entory and a%ailable capacity"
Capacity is required for assembly and for any items that may be controlled by the ,)/ and
not the .P/" 3!amples are painting, pacaging, crating, and preparing shipping
documents"
4n any e%ent, authori(ation of the final assembly schedule should be held to the last
possible moment" This pro%ides the greatest fle!ibility in meeting actual demand and
impro%es customer ser%ice" /ince assembly lead time and .P/ item a%ailability constrain
the ,)/, any planning and design to reduce this lead time and increase fle!ibility, aid in
achie%ing customer ser%ice ob0ecti%es"
Preparation, measuring of actual output, and control of the ,)/ should rest with the master
scheduler" This enables one indi%idual to control all demands on resources and coordinate
.P/ items and the ,)/, order entry items, and order-promising acti%ities"
T&e Ma+#er S"&e$uer
.ost organi(ations should ha%e a master scheduler, This indi%idual is the lin between
mareting, distribution, engineering, manufacturing, and planning" The tass of the master
scheduler include the following:
-" Pro%ide deli%ery promise dates for incoming orders' match actual requirements with
the master schedule as they materiali(e,
>" 3%aluate the impact of top-down inputs, such as a request for the introduction of a
new product in much less than the normal deli%ery time"
7" 3%aluate the impact of bottom-up inputs, such as anticipated delay reports from the
shop or purchasing indicating that particular components will not be a%ailable as
scheduled or that planned production rates are not being attained,
9" &e%ise the master schedule when necessary because of lac of material or lac of
capacity"
5" Call basic conflicts of demand and capacity to the attention of other members of
management, especially mareting and manufacturing, who need to participate in
resol%ing the problems"
6hether or not a firm has someone formally designated as the master scheduler, the tass
are essential" Combining them under the 0urisdiction of one indi%idual impro%es the
lielihood that they will be coordinated and managed properly" .ost importantly, it pro%ides
a focal point for the required coordination of mareting, manufacturing, distribution, and
planning as well as a place to loo for answers when things are not going as planned"
MPS In/*r%a#i*n S9+#e%+ an$ Ana9+i+
The comple!ity of most manufacturing en%ironments requires a computeri(ed production
planning and control system with human interfaces at appropriate decision points" )s noted
pre%iously, the master scheduler requires such as interface" The requirement for computer
assisted planning is due to a combination of the number of items on the .P/, the large
number of subassemblies=" and components, and the magnitude of recording and
processing in%entory transactions, material requirements, and capacity requirements"
Today, there are literally hundreds of commercial software /ystems a%ailable" /ome are for
use with mainframe computers, others for use with minicomputers, and a growing number
for use with personal computers"
The installation and a%ailability of such a computer system often allows the organi(ation to
perform what-if analyses to answer questions such as:
#-$ 6hat will be the effect of a shift in product mi! on capacity requirementsH
#>$ 6hat will be the effect of a -; percent increase in demand on capacity requirementsH
)nswers to these questions, a%ailable from a computeri(ed simulation run, will enable
management to prepare plans for such contingencies"
SUMMAR= AND COMMENTS
)lthough the preparation and maintenance of all the elements of the master' schedule may
be comple! in some situations, the principles and concepts an not" )ll ha%e been
de%eloped in practice and are well documented in the literature and ha%e been discussed
in this section"
The .P/ is a %ital lin in the operations planning and control systems in .anufacturing,
production, mareting, and engineering #product and process design$" The items on the
.P/, in particular their le%el in the <1., should be consistent with the organi(ation=s
competiti%e strategy" The efficacy of the master scheduling process and the .P/ requires
an accurate and reliable capacity planning system"
The master scheduler plays a ey role in the master scheduling function" This indi%idual
plays a ey role in mareting and manufacturing woring to the same plan"
)%ailable-to-promise information is %ery useful for responding to customer requests for
deli%ery" P12 data is %ery helpful in indicating when the .P/ is inadequate or will result in
e!cessi%e in%entory"
4f actual production is consistently below the planned .P/, it suggests that actual capacity
is less than the +capacity a%ailable+ used in creating the .P/" )nd if actual orders
completed in each period consistently differ substantially from those in the .P/, it
suggests that the priority plan established by the .P/ is not being followed throughout the
system or that the .P/ is not being controlled #re%ised$ as unplanned changes in material,
equipment, or personnel occur"