Operations management Master production schedule - YouTube

Today we are going to talk about master production schedule, which is a very important tool of

the operations management.

First of all, let's see our problem: Our firm produces tables.

According to the forecasts, there will be demand for 200 tables during the next four

weeks, and 250 from week 5 to week 8, but costumers have previously ordered 210; 80;

40 and 70 pieces for the first four weeks.

We also know that we have an on-hand inventory of 400 tables, order policy is 200 units and

lead time is 1 week.

MPS order was not made before week one.

Let's develop an MPS!

Master production schedule is a supply plan for providing the amount of product (service)

is needed, within a certain period.

So, it is a plan for bringing supply and demand together.

Please, note that timing is a really important factor in this case.

Formally, master production plan is a table like the one you can see here.

If we want to be very practical, we can say, that filling this kind of table is master

production scheduling, but there are some very well established theoretical foundation

behind it, so you should not forget, that this is just the problem solving section.

So, let's start!

First of all, let's read to the text and insert the useful information to the suitable cells

of the table.

Our firm produces tables, so we can write "Table" as product.

We know that forecasted demand is 200 from week 1 to week 4 and 250 from week 5 to week

8, so we can fill in the row named "forecast".

However, we know costumer orders for the first four periods, we can fill that part, as well.

We also know that on-hand inventory is 400, that means we have 400 tables as a stock at

the beginning of the process.

Order policy contains 200 tables, so if we make an order, we will get at least 200 tables

from the factory.

If it is needed we can order two, three, or even more series, but we will get 400,600

et cetera number of tables.

Lead time is one week, so if we make an order this week, we will get the tables on the next

week.

So, let's start solving the task.

Ont he first week, forecasted demand is 200, but our costumers ordered 2100, so we need

to be able to sell 210 tables.

No problem, because we have four hundred tables as inventory, so after we sell 210, our projected

on-hand inventory will be 400 minus 210, that makes 190.

We don't receive any tables from the factory, as we didn't not make an order in the previous

week.

So, after we sell 210 tables, we will have 190 by the end of the first period.

As the forecasted demand for the second period is 200, we have to make an MPS order in the

first week, in order to get 200 tables by the second week.

On the second week, forecasted demand is 200, costumers have previously ordered 80 tables.

Demand must always meet the actual needs, so our firm must be able to sell 200 tables

in this period.

Let's see we have on-hand inventory of 190 tables, and fortunately we ordered a series

last week, that we get by this period.

So before we sell anything, we have 190 plus 200 tables.

It's 390.

After we sell that two hundred, our projected inventory will consist of 390 minus 200, that

makes 190.

We have already dicussed, that the tables we ordered last week were produced by this

period, that's why we had 390 before selling 200.

As there is a demand for 200 tables on week three, and we have only 190 at the end of

week two, we have to order one series this week as well.

At the beginning of week three we will get 200 tables from the factory, as the order

of the previous week arrives.

There is a demand for 200 tables, we have on-hand inventory of 190 from the previous

week.

So, at the beginning of this period we have 390.

We sell 200 items, there remains 190 as on-hand inventory.

As there is a demand for 200 tables on week four, and we have only 190 in

the stores, we have to make an order for one series in order to get another 200 tables

for the next week.

At the beginning of week four we get 200 tables from the factory and we have 190 in our stores,

so we have 390 again.

We sell 200, so there remains 190 on-hand inventory, as usually.

But things change a little bit, as demand grows 250 for the fifth week.

We have 190 at the end f this week, and if we order one series, we will have 390 again,

that must be far enough, so we shall order just one series in this period, as well.

At the beginning of the fifth period, we get 200 tables from the assembly department, together

with the on-hand inventory from the last week, we have 390 tables again.

If we sell 250, the predicted on-hand inventory changes to 140.

Forecasted demand is 250 for the sixth week, we have to make an order for one series again.

200 tables arrive by the beginning of the sixth week, we have 140 from the previous

period, it is 340 at the beginning of the week.

If we sell 250, on-hand inventory reduces to 90.

Forecasts suggest that there is demand for 250 tables on the seventh week, so an MPS

order must be scheduled.

We get 200 tables from the assembly for the seventh period and we still have 90 from last

week.

If we sell 250, on-hand inventory will be as little as 40.

There is a demand for 250 on the last week, so if we order 200 tables, there would be

a lack of tables by the last period.

Consequently, we must schedule an order for two series, that contains 400 tables.

400 tables arrive by the beginning of the last period, so we will have 440 before any

transactions are made.

After selling 250, on-hand inventory will be 190 again.

It does not mean a problem, because our purpose here is not to minimize inventory, but ensuring

appropriate supply for existing demand.

Furthermore, we don't need to schedule MPS order, as last period and our task is ended.

Thank you for watching!