Integral Logistics Management — Operations Management and Supply Chain Management Within and Across Companies

5.2.3b Master Scheduling — Break Down the Production Plan Quantity for a Product Family into Quantity for Each Product of the Family.

Intended learning outcomes: Explain the second task for establishing a master production schedule, which is the break down the production plan quantity for a product family into quantity for each product of the family.

Continuation from previous subsection (5.2.3)

Second task: Break down the production plan quantity for a product family into quantity for each product of the family. We often do not know the exact percentage for splitting the total product family demand into individual product or variant demands. To cover this uncertainty, we increase the percentage of each variant. This percentage is called the option percentage (see here Section 10.5.3). This procedure results in overplanning, which yields protection in the form of safety demand. Figure shows example overplanning in the MPS, assuming an uncertainty of 20 %.

Fig.        The MPS for the first four weeks on the level of assemblies V1, V2, V3, including overplanning due to variant uncertainty.

This safety demand is in effect safety stock, or reserved stock, for the entire planning horizon to be covered. For details, see Section 10.5.4. The safety demand has to be planned at the beginning of the planning horizon. If the forecast indicates a large demand in one of the subsequent periods, the additional safety demand can be planned for that planning period. Figure shows the first overplanning for January. An additional overplanning takes place for March, but only for the part that is not already overplanned in January.

Fig.        The MPS on the level of assemblies V1, V2, and V3, including safety demand (due to variant uncertainty) during the planning horizon.

For the rest of the planning period, the safety stock in the system corresponds to the safety demand for the maximal monthly demand. Because of the general uncertainty in the system, it is sometimes easier to plan the whole quantity at the start of the planning period. A coordinated final assembly schedule (FAS, see Section 7.1.5) maintains the service level at 100 %, meaning that consumption of the assemblies stays within the limits of the safety stock. For more details, the reader may refer to Section 7.2, where it is also explained that this kind of master scheduling is valid only as long as the number of variants to be planned in the MPS is significantly lower than the total demand quantity for the product family. Other­wise, a (customer) order penetration point (OPP) more upstream must be chosen.

Continuation in next subsection (5.2.3c).

Course section 5.2: Subsections and their intended learning outcomes