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 2 3 4 5 6 7 8
A 200 200 350
10 19
B 150 120
0 0

X 75 75 75 60

Totals
(Aggregate production plan) 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

MONTH PRODUCTION INVENTORY LOST CUMULATIVE
SALES PRODUCTION
Jan 1500 1000 0 2500
Feb 1500 1500 0 4000
Mar 1500 1100 0 5500
April 2800 1300 0 8300
May 2800 1300 0 11100
June 2800 1000 0 13900
July 2800 600 0 16700
August 2800 4000 0 19500
Sept 2200 600 0 21700
Oct 2200 1800 0 23900
Nov 2200 2200 0 26100
Dec 1500 1500 0 2700

Table 9

AGGREGATE
PRODUCT MIX
PRODUCTION
MONTH GOLDEN
GOLDEN DELIGHT
BREW
BARRELS CASES (CASES) (CASES) "
January 1500 16,000 11,200 4800
 February 1500 16,000 11,200 4800

Average Weekly Production Requirements for Golden

Breweries WEEK
March 1500 16,000 11,200 4800
April 2800 29,867 20,907 8960
May 2800 29,867 20,907 8960
June 2800 29,867 20,907 8960
July 2800 29,867 20,907 8960

A Master Schedule for Golden Breweries

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.
Table 12 A Feasible Master Production Schedule for Golden
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
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23
UCT
Golden ' \
2800 2800 2800 2800 2800 2800 5227 522 522 522 522 522 522 522 522 522
Brew
2800 2800 2800 2800 2800 2800 5227 7 7 7 7 7 7 7 7 7
Golden
1200 120 120 1200 1200 12 120 120 129 120 2240 224 224 224 224 224 224 224 224 224
Delight
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

Table 10
PROD 1
1 2 3 4 5 6 7 8 9 11 12 13 14 15 16 17 18 19 20 21 22 23
UCT 0
Golde
n
0
560 597 746 746 74 746 597
Brew 0 5600 0 5600 0 5600 0 5600 0 5600 746 0 0 5974 0
0 4 1 7 67 7 4
7
Golde
n
Deligh 0 149 746 746 149
0 2400 0 2400 0 2400 0 2400 0 2400 0 7467 0 0 1493 0 0
t 3892 3 7 7 3
Table 12 A feasible Master Schedule for Golden Breweries
WEEK
PRO
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23
DUCT
Golde
n
560 0 0 0 10,45 0
Brew 0 5600 0 5600 0 0 10,454 0 10,454 0 10,454 0 10,45
0 5600' 5600 5600 4 10,454
Golde
n
Deligh 0 0 240 0 0
0 2400 0 2400 0 2400 0 0 4480 0 4480 0 4480 0 4
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.
e
Month Demand ( Barrels) Cumulative Demand
Jan 1500 1500
Feb !000 2500
Mar 1900 4400
April 2600 7000
May 2800 9800
June 3100 12900
July 3200 16100
August 3000 19100
Sept 2000 21100
Oct 1000 22100
Nov 1800 23900
Dec 2200 26100
26100
 Inventory Analysis for Golden Breweries' Master
TABLE 14.
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
4 2800 0 7,467 1200 2400 3200
5 1867 5600 11,200 800 0 2400
6 1867 0 9,333 800 2400 4000
7 1867 5600 13,066 800 0 3200
8 1867 0 11,199 800 2400 4800
9 3547 5600 13,252 1520 0 3280
10 3547 0 9,705 1520 2400 4.160
11 3547 5600 11,758 1520 0 2640
12 3547 0 8,211 1520 3892 5012
13 4853 7467 10,825 2080 0 2932
14 4853 0 5,972 2080 7467 8319
15 4853 5974 7,093 2080 1493 7732
16 4853 7467 9,707 2080 0 5652
17 5227 7467 11,947 2240 0 3412
18 5227 0 6,720 2240 7467 8639
19 5227 5974 7,467 2240 1493 7892
20 5227 7467 9,707 2240 0 5652
21 5787" 7467 11,387 f480 0 3172
22 5787 0 5,600 2480 7467 8159
23 5787 5974 5,787 2480 1493 7172
24 5787 7467 7,467 2480 0 4692
25 5973 7467 8,961 2560 0 2132
26 5973 0 2,988 2560 7467 7039
,.
.Initial inventory = 1000 barrels (7467 cases of Golden Brew and 3200
cases of Golden Delight)

Using the Master Schedule

It is clear from this simple example that master scheduling can be a compli-
cated 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.