Basics of Supply Chain Management : BSCM

Chapter 3. Master Planning.

Main Issues :

· Understand Five Major Levels in the Manufacturing Planning and Control

· Understand Characteristics of Business Plan and S&OP.

· Developing S&OP in Manufacturing Environment.

· Understand A Preliminary Master Production Schedule and a Rough-Cut Capacity Plan.

· Understand MPS and MPS applications : ATP, Time Fence Policies.

1. Manufacturing Planning and Control.

□ What is Planning ?

- Managerial activities that determine objectives for the future and the appropriate means

for achieving those objectives.

- Planning is needed to ensure availability of resource (material and capacity) to satisfy

customer demand.

- Planning always includes four elements :

1. Objectives.

2. Actions needed to achieve the objectives.

3. Resource required.

4. Implementation plan.

□ Priority and Capacity

- Priority

· The relative importance of jobs, i.e., the sequence in which jobs should be worked on.

· Priority refers to what is needed, how much is needed, and when it is needed.

- Capacity

· The capacity of a worker, machine, work center, plant, or organization to

produce output per time period.

· In any workable plan, capacity must be equal to or greater than the workload.

Ch.3 Master Planning.

Figure 1. Manufacturing Planning and Control System

□ Five Major Levels in the MPC.

- Strategic Business Plan.

· Long-range strategic plan.

· Broad items.

· Top management.

- Sales & Operation Plan.

· Medium-range plan

· Product groups

· Production rates

· Management of inventory/backlog

· Resource requirement planning

- Master Production Schedule.

· Final level of master planning

· Process includes

1. Forecasted demand,

2. Production leveling,

3. Inventory and backlog adjustment,

4. New product introductions,

5. On hand, on order, actual demand, safety stock.

· Result of the process : The master production schedule (MPS)

1. Quantities to be produced.

2. By part number.

3. By week or day.

· Horizon must be greater than the longest lead time.

- Material Requirement Plan.

· What items?  How many?  When?

· MPS times required component quantities per end item = Component gross requirements.

· On hand, on order, and safety stock considered.

· If more needed, net requirement.

· Order rules applied to determine how many.

· Lead time applied to determine when.

· Process continuous level by level.

· Capacity Requirement Planning. (closed loop MRP)

: Calculate labor and equipment load.

: Base on planned and released orders.

: Compare to capacity.

: Balance capacity and load.

- Production Activity Control

· Make detailed plans and schedules.

· Check resource availability.

· Release orders.

· Obtain feedback/update/make adjustments.

Figure 2. Level of detail vs. Planning horizon

2. Characteristics of Business Plan and S&OP.

□ The Strategic Business Plan

- The strategic business plan is a statement of the major goals and objectives that the

company expects to achieve over the next two to ten years or more.

- It is a statement of the broad direction of the firm and shows the kind of business -

product lines, markets, and so on - the firm wants to do in the future.

- It is based on long-range forecasts and includes participation from marketing, finance,

production and engineering.

Figure 3. Business Plan

1. Marketing

· It is responsible for analyzing the marketplace and deciding the firm's response.

· The markets to be served, the products supplied, desired levels of

customer service, pricing, promotion strategies, and so on.

2. Finance

· It is responsible for deciding the sources and uses of funds available to

the firm, cash flows, profits, return on investment, and budgets.

3. Production

· Production must satisfy the demands of the marketplace.

· It does so by using plants, machinery, equipment, labor, and materials as

efficiently as possible.

4. Engineering

· It is responsible for research, development, and design of new product or

modifications to existing ones.

· Engineering must work with marketing and production to produce designs

for products that will sell in the marketplace and can be made most

economically.

□ Sales and Operations Planning (S&OP)

- S&OP is a process for continually revising the strategic business plan and coordinating

plans of the various department.

- While the strategic business plan is updated annually, S&OP is a dynamic process in

which the company plans are updated on a regular basis, usually at least monthly.

Figure 4. Sales & Operations Planning.

- The S&OP process :

· The sales and marketing departments assess the market potential, and forecast demand.

· The updated marketing plan is communicated to manufacturing, engineering, and finance.

· If these departments find they cannot accomodate the new marketing plan, then

the marketing plan must be adjusted.

- In this way, the strategic business plan is continually revised throughout the year and

the activities of the various departments are coordinated.

- S&OP is medium range and includes the marketing, production, engineering, and finance plan.

- Some benefits.

· It provides a means of updating the strategic business plan as conditions change.

· It provides a means of managing change.

The S&OP forces management to look at the economy at least monthly and

places it in a better position to plan changes.

· Planning ensures that the various department plans are realistic, coordinated, and

support the business plan.

· It provides a realistic plan than can achieve the company objectives.

· It permits better management of production, inventory, and backlog.

3. Developing Production Plan.

□ Production plan is concerned with

- Planning for each product group.

- Meeting desired inventory levels.

- Determining resources needed.

- Comparing with available resources.

□ Characteristics.

- The time horizon may be more or less than 12 months, depending on the

manufacturing cycle.

- Demand is seasonal for many products, but not all.

- A plan is made for families or groups.

- Management will have a variety of objectives.

□ Basic Strategies for Developing PP.

- Demand matching (Chase strategy) : produce the amounts that are demanded at any time.

- Level production : continuously produce an amount equal to the average demand.

- In addition to the above pure strategies, a combination (hybrid) strategy may be used.

- Subcontracting.

□ Costs of PP Alternatives.

- The base (per-units) costs.

- Inventory costs.

1. Costs of carrying.

2. Costs of acquisition-order or setup.

3. Costs of stock-out and back-order.

4. Costs of shrinkages (spoilage, pilferage, obsolescence).

- One-time production rate-change costs.

1. Costs of hiring or releasing employees.

2. Costs of additional storage facilities.

3. Costs of facility start-up or shut-down.

- Capacity costs.

1. Costs of overtime and undertime.

2. Costs of part-time and temporary employees.

3. Costs of subcontracting and outsourcing.

4. Costs of cooperative agreements.

5. Costs of changes in administrative overhead.

6. Costs of resource over or underuse.

□ Chase (Demand Matching) Strategy

-  The goal of the chasing strategy is to produce the amounts demanded at any time.

-  Because inventory does not build up, the cost of inventory is kept at minimum.

-  Advantages :

· Stable inventory.

· Varied production to meet sales requirements.

- Disadvantages :

· Cost of hiring, training, overtime, and extra shifts.

· Costs of layoffs and impact on employee morale.

· Possible unavailability of needed work skills.

· Maximum capacity needed.

□ Level Production Strategy

- The goal of this strategy is to continuously produce an amount equal to the average demand.

- Advantages.

· Smooth, level production avoid labor costs of demand matching.

- Disadvantages.

· Buildup of inventory.

· Requires accurate forecast.

Figure 5. Demand Matching Strategy

Figure 6. Levelling Strategy

□ Combination Strategy

- Combination Strategy is produces at or close to full capacity for some part of the cycle.

- It produces at a lower rate (or does not produce) during the rest of the cycle.

- A combination strategy therefore makes use of available capacity, yet limits inventory

buildup and inventory carrying costs.

□ Subcontracting

- Subcontracting allows production at the minimum demand level at all times,

- Additional demand is met by subcontracting.

- It is a means of acquiring additional capacity quickly.

- It enables a company to meet fluctuations in demand.

- Alternative methods of meeting demand fluctuations include adding a shift or having

employees work overtime.

Figure 7. Combination Strategy

Figure 8. Subcontracting

□ Examples.

	PERIOD
	0	1	2	3	4	5	6	7	8	9	10	11	12	Total Units
Sales		5	5	5	15	25	35	35	35	35	25	15	5	240
·Level Strategy
Production		20	20	20	20	20	20	20	20	20	20	20	20	240
Inventory	30	45	60	75	80	75	60	45	30	15	10	15	30	540
Capacity △		-	-	-	-	-	-	-	-	-	-	-	-	0
·Chase Strategy
Production		5	5	5	15	25	35	35	35	35	25	15	5	240
Inventory	30	30	30	30	30	30	30	30	30	30	30	30	30	360
Capacity △		-	-	-	1	1	1	-	-	-	1	1	1	6
·Compromise Strategy
Production		0	0	0	0	40	40	40	40	40	40	0	0	240
Inventory	30	25	20	15	0	15	20	25	30	35	50	35	30	300
Capacity △		-	-	-	-	1	-	-	-	-	-	1	-	2

□ A Example Situation

-  Base costs are $10 per unit for a per-period capacity of 20 units or 240 units per year

-  Inventory carrying costs are $3 per unit per period

-  Rate-change costs are $5 per hiring or firing transaction

-  $50 for each capacity change

-  The costs of carrying and of stockout and backorder are noted as inventory costs.

-  Assuming that the one employee is required for each unit produced.

-  Start-up and shut-down costs would be computed at $50 per change.

	Level		Chase		Compromise
	Units	Dollars	Units	Dollars	Units	Dollars
· Base Costs Capacity = 20 units/pd ($10/unit)	240	2400	240	2400	240	2400
· Inventory Costs Costs of Carrying ($3/unit/pd)	540	1620	360	1080	300	900
· Rate Change Hiring/Firing (H/F) ($5/Transaction) Capacity Change ($50/Capacity△)	0 0	0 0	30/30 6	300 300	40/40 2	400 100
TOTAL COSTS	$ 4020		$ 4080		$ 3800

4. S&OP and Manufacturing Environment.

□Make-to-Stock

- Makers of such items must project requirements and produce them to stock.

- The lead time for customer = The order processing and shipment time.

- The production rate is a function of the production plan divided by the number of periods

- The booking rate(or shipping rate) is a function of the volume of sales divided by the

number of periods.

- Production Plan = Sales Plan ± Finished goods inventory change

- Production Rate = Production Plan / Number of Periods

Figure 9. Production Rate : Make-to-Stock

□Assembly-to-Order

- Material and subassemblies are prepositioned.

- The production plan or rate is equal to the sales plan or rate except for changes in

both the semifinished inventory and in the backlog

- The relatively short lead time = Assembly, test, and shipment.

- Production Plan = Sales plan ± Semifinished goods inventory change ± Backlog change

- Production Rate = Production plan / Number of Periods

Figure 10. Production Rate : Assembly-to-Order

□Make-to-Order

- Some products are built to customer requirements from predetermined materials.

- The design and the material procurement can be done in advance.

- Make-to-Order environments are characterized by a wide variety of end items.

- The production plan or rate is equal to the sales plan or rate.

- The backlog vary both in volume and in amount of time from order to shipment.

- Backlog

· All the customer orders received but not yet shipped.

· Sometimes referred to as open orders or the order board.

- Production Plan = Sales Plan ± Backlog Change

- Production Rate = Production Plan / Number of Periods

Figure 11. Production Rate : Make-to-Order

□ Production Planning : Make-to-Stock.

- Given :

· Four-Period Forecast   = 600.

· Beginning Inventory     = 200.

· Target Ending Inventory = 100.

· Level Production Plan required.

- Calculation.

· Production Plan = Ending Inventory - Beginning Inventory + Forecast

= 100 - 200 + 600 = 500.

· Production Rate = 500 / 4 = 125 per period.

- Planning Table.

Period	0	1	2	3	4
Forecast		150	150	150	150
Production Plan		125	125	125	125
Inventory	200	175	150	125	100

□ Production Planning : Make-to-Order.

- Given :

· Four-Period Forecast   = 600.

· Beginning Backlog      = 200.

· Target Ending Backlog  = 100.

· Level Production Plan required.

- Calculation.

· Production Plan = Beginning Backlog - Ending Backlog + Forecast

= 200 - 100 + 600 = 700.

· Production Rate = 700 / 4 = 175 per period.

- Planning Table.

Period	0	1	2	3	4
Forecast		150	150	150	150
Production Plan		175	175	175	175
Backlog	200	175	150	125	100

5. Resource Requirements Planning.

□ Critical Resource

- The following resources, one or several of which may be defined as critical in a

particular situation, are listed.

· Equipment time.

· Labor.

· Material or components with uncertain available or long lead time.

· Financial resources.

· Research and development assets.

· Storage facilities.

- It is important to identify the one critical resource because the use of the critical

resource will be computed in step 3 of the four-step resource-planning process.

□ The Four-Step Process

Step 1. Obtain the production plan.

Step 2. Determine the product structure.

Step 3. Find the bill of resource.

The bill of resources.

- A listing of the required capacity and key resources required to manufacture

one unit of a selected product, family, or group.

- Resource planning may use a form of this bill to calculate long range

resource requirements from the production plan.

Step 4. Calculate the total resource requirements.

□ Resource Planning vs. Rough-Cut Capacity Planning

	Inputs	Period	Outputs	Method
Resource Planning	·Product groups or items ·Production Plan	·Quarterly/Monthly ·no offset	Resource Plan	Bill of Resource
Rough-Cut Capacity Planning	·Products and Components ·Master Production Schedule	·Weekly/Daily ·lead-time offset	Rough-cut Capacity plan	Detailed product load profile

□ Resource Planning Process

* Pre-step : Identification of the critical resource

Step 1. Obtain a production plan

Level.

	1	2	3	4	5	6	7	8	9	10	11	12
Sales	10	10	10	20	20	20	30	30	30	70	55	35
Production	30	30	30	30	30	30	30	30	30	30	30	30
Inventory 0	20	40	60	70	80	90	90	90	90	50	25	20

Chase.

	1	2	3	4	5	6	7	8	9	10	11	12
Sales	10	10	10	20	20	20	30	30	30	70	55	35
Production	30	10	10	20	20	20	30	30	30	70	55	35
Inventory 0	20	20	20	20	20	20	20	20	20	20	20	20

Compromise.

	1	2	3	4	5	6	7	8	9	10	11	12
Sales	10	10	10	20	20	20	30	30	30	70	55	35
Production	15	15	15	25	25	25	35	35	35	45	45	45
Inventory 0	5	10	15	20	25	30	35	40	45	20	10	20

Step 2. Determine the product structure

			Product Group S
Product 1 Assembly 40%						Product 2 Assembly 60%

Step 3. Find the bill of resources

· Assembly Labour Product Group S

Product	Product Mix	Standard Assembly Hours/unit	Average Assembly Time
Product 1	40%	3.5 Hours/unit	1.4 Hours
Product 2	60%	6.0 Hours/unit	3.6 Hours
Total	100%		5.0 Hours

Step 4. Calculate the total resource requirements

Level

	1	2	3	4	5	6	7	8	9	10	11	12
Production	30	30	30	30	30	30	30	30	30	30	30	30
Capacity required*	150	150	150	150	150	150	150	150	150	150	150	150
Capacity available	175	175	175	175	175	175	175	175	175	175	175	175
Short-Fall

* Capacity required = Plan × Std Hours (5 hours).

Chase

	1	2	3	4	5	6	7	8	9	10	11	12
Production	30	10	10	20	20	20	30	30	30	70	55	35
Capacity required	150	50	50	100	100	100	150	150	150	350	275	175
Capacity available	175	175	175	175	175	175	175	175	175	175	175	175
Short-Fall										-175	-100

Compromise

	1	2	3	4	5	6	7	8	9	10	11	12
Production	15	15	15	25	25	25	35	35	35	45	45	45
Capacity required	75	75	75	125	125	125	175	175	175	225	225	225
Capacity available	175	175	175	175	175	175	175	175	175	175	175	175
Short-Fall										-50	-50	-50

□ Evaluating the Plan

- The Level Method

· Capacity : OK

· Capacity change : OK

· Inventory : 725 periods-units, very high

- The Chase Strategy

· Capacity : Over capacity in October and November

· Capacity change : Above 10,000 in February, October, November and December

· Inventory : 240 period-units, lowest

- The Compromise Strategy

· Capacity : Slightly over capacity in October, November, and December

· Capacity change : OK

· Inventory : 275 period-units, low

6. Master Production Schedule.

□ Roles of the MPS

1. It forms the link between production planning and what manufacturing will actually build (MRP).

2. It forms the basis for calculating the capacity and resources needed.

3. The MPS drives the material requirement plan. As a schedule of items to be built, the

MPS and bills of material determine what components are needed from manufacturing

and purchasing.

4. It keeps priorities valid. The MPS is a priority plan for manufacturing.

□ Objectives of Master Scheduling.

1. Maintain the desired level of customer service.

2. Make the best use of resources.

3. Keep inventories at the desired level.

□ Inputs to Master Scheduling Process.

- The production plan.

- The forecast, orders from customers and additional independent demand.

- Inventory levels.

- Capacity constraints.

□ Relationship to Production Plan.

Figure 12. Relationship to S&OP

7. Developing An MPS

□ Steps in Making an MPS

- Develop a preliminary MPS.

- Check the preliminary MPS against available capacity.

- Resolve differences between the preliminary MPS and capacity availability.

□ Preliminary Master Production Schedule

- MPS Example

. On hand = 80 units

Lot size  = 100 units

Week		1	2	3	4	5	6
Forecast		60	60	60	60	60	60
Projected Available	80	20	60	0	40	80	20
MPS			100		100	100

· Assume the product is made to stock, and an inventory is kept, and the product

is made in lots.

· A particular item is made in lots of 100 units.

· The expected opening inventory, projected available on hand, is 80 units.

· Projected available n = Projected available n-1 - Forecast n

· If projected available n is less than zero, MPS is built in based on lot size.

□ Example Problem

The Hotshot Lightning Rod Company makes a family of two lightning rods, Models H and           I. It bases its production planning on months. For the present month, production is

leveled at 1000 units. Opening inventory is 500 units, and the plan is to reduce that to

300 units be the end of the month. The MPS is made using weekly periods. There are

four weeks in this month, and production is to be leveled at 250 units per week. The

forecast and projected available for the two lightning rods follows. Calculate an MPS for

each item.

Solution)

1. Production Plan.

Week		1	2	3	4	Total
Forecast		300	350	300	250	1200
Projected Available	500	450	350	300	300
Production Plan		250	250	250	250	1000

2. Master Production Schedule.

- Model H

Week		1	2	3	4	Total
Forecast		200	300	100	100	700
Projected Available	200	250	200	100	100
MPS		250	250		100

- Model I

Week		1	2	3	4	Total
Forecast		100	50	200	150	500
Projected Available	300	200	150	200	200
MPS				250	150

□ Rough-Cut Capacity Planning.

- RCCP checks whether critical resources are available to support the preliminary master

production schedules.

- Critical resources include bottleneck operations, labor, and critical materials (perhaps

materials that is scarce or has a long lead time)

- The process is similar to resource requirements planning used in the production

planning process.

- In resource requirements planning, the bill of resource assumes a typical product. Here

the bill of resource is for a single product.

- Example :

· Suppose a firm manufacture four models of desktop computers assembled in a

work center that is a bottleneck operation.

· MPS for Models in a particular week.

1. model D24 : 200 units.           2. model D25 : 250 units.

3. model D26 : 400 units.           4. model D27 : 100 units

· The bill of resource

Desktop Computer Assembly
Computer	Assembly Time (standard hours)
model D24	0.203
model D25	0.300
model D26	0.350
model D27	0.425

· The capacity required on this critical resource is :

1. model D24 200 × 0.203 =  40.6 standard hours.

2. model D25 250 × 0.300 =  75.0 standard hours.

3. model D26 400 × 0.350 = 140.0 standard hours.

4. model D27 100 × 0.425 =  42.5 standard hours.

Total.  298.1 standard hours.

□ Resolution of Difference

- If available capacity is greater than the required capacity, the MPS is workable.

- If not, methods of increasing capacity have to be investigated.

· To adjust the available capacity

(Overtime, Extra workers, Routing through other work centers, Subcontracting)

· To revise the MPS.

- Judgement criteria on the MPS.

· Resource use : Is the MPS within capacity restraints in each period of the plan ?

· Customer service : Will due dates be met and will delivery performance be acceptable ?

· Cost : Is the plan economical, or will excess costs be incurred for overtime,

subcontracting, expedition, or transportation ?

□ Master Schedule Decisions.

- The MPS should represent as efficiently as possible what manufacturing will make.

- If too many items are included, it will lead to difficulties in forecasting and managing

the MPS. Therefore, master scheduling should take place where the smallest number of

product options exist.

- Figure 13 shows the level at which items should be master scheduled.

Figure 13. Manufacturing Environment.

· Make-to-stock products.

: A schedule of finished-goods items.

: Limited number of standard items assembled from components.

: Stocked as finished goods for shipment.

· Assemble-to-order products.

: A schedule of basic components and subassemblies.

: Many items made from common subassemblies, which are stocked for

: assemble to : customer orders.

· Make-to-order products.

: A schedule of the actual customer orders.

: Many items made from limited number of base materials, based on customer

: orders.

□ Planning Horizon

- The planning horizon is the time span for which plans are made.

- It must cover a period at least equal to the time required to accomplish the plan.

- For master production scheduling, the minimum planning horizon is the longest

cumulative or end-to-end item lead time

- The longer the horizon than the

Figure 15. BOM and Cumulative LT

lead time, the greater the "visibility"

and the better management's ability

to avoid future problems or to take

advantage of special circumstances.

- For example, firms might take

advantage of economical purchase

plans, avoid future capacity

problems, or manufacture in more

economical lot sizes.

- The planning horizon for a FAS

must include time to assemble a

customer's order.

□ Final assembly schedule (FAS)

Figure 14. MPS, FAS, and other planning activities

- This last step, assembly to customer order, is generally planned using a final assembly schedule.

- This is a schedule of what will be assembled.

- It is used when there are many options and it is difficult to forecast which combination

the customer will want.

- The final assembly takes place only when a customer order is received.

- It responsible for scheduling from the MPS through final assembly and shipment to the customer.

8. Production Planning, Master Production Scheduling, and Sales.

□ Production Planning, Master Production Scheduling, and Sales.

- The production plan reconciles total forecast demand with available resources.

- The MPS is built from forecast and actual demands for individual end items.

- The production plan and the MPS uncouple the sales forecast from manufacturing by

establishing a manufacturing plan.

Figure 16. Forecast, PP, and MPS

Figure 17. The MPS & delivery promises

□ The MPS and Delivery Promises

- In a make-to-stock environment, customer orders are satisfied from inventory. However,

in make-to-order or assemble-to-order environment, demand is satisfied from

productive capacity.

- As orders are received, they "consume" the available inventory or capacity.

- Any part of the plan that is not consumed by actual customer orders is available to

promise to customers.

- Available-to-promise (ATP)

· The uncommitted portion of a company's inventory and planned production,

maintained in the master schedule to support customer order promising. The

ATP quantity is the uncommitted inventory balance in the first period and is

normally calculated for each period in which an MPS receipt is scheduled.

- Calculations of ATP

· On-hand balance(1st period only) + MPS - Sum of customer orders before next MPS.

- Example

On-hand Inventory : 100 units.

Period	1	2	3	4	5
Forecast	80	50	50	50	50
Customer Orders	80	10	10		30
Projected Available 100	20	70	20	70	20
MPS Receipts		100		100
ATP	20	80		70

□ Time Fences and Zones.

- Changes to the MPS will occur

· Customer cancel or change orders.

· Machine break down or new machines are added, changing capacity.

· Supplier have problems and miss delivery dates.

· Process create more scrap than expected.

- Results of changes to production schedule

· Cost increase due to rerouting, rescheduling, extra setups, expediting, and

buildup of WIP.

· Decreased customer service. A change in quantity of delivery can disrupt the

schedule of other orders.

· Loss of credibility for the MPS and the planning process.

- The time fence

· Time Fence.

: A policy or guideline established to note where various restrictions or

: changes in operating procedures take place.

: Changes to the master production schedule can be established easily beyond                     : the cumulative lead time, while changes inside the cumulative lead time

: become increasingly more difficult to a point where changes should be resisted.

· Demand Time Fence(DTF).

: A future master schedule period inside of which changes to the MPS are

: typically not accepted due to the excessive cost caused by schedule disruption.

· Planning Time Fence(PTF).

: A future master schedule period inside of which changes to the MPS are

: evaluated to prevent costly schedule disruption.

: The MPS is typically stated as firm planned orders inside the PTF.

Figure 18. MPS and Time fences.

■ Performance Check

1. Which basic production planning strategy will build inventory and avoid the costs of excess capacity ?

A. Chase strategy.                      B. Level production strategy.

C. Cycle counting strategy               D. Demand matching strategy.

2. For the purpose of production planning, product groups should be established on the basis of

A. Market segments.                     B. Similarity of manufacturing process.

C. The availability of materials.            D. The availability of machinery.

3. If the opening inventory is 100 units, sales are 500 units, and the ending inventory is 200 units, what will manufacturing produce ?

A. 300 units.         B. 400 units.          C. 500 units.           D. 600 units.

4. Under which of the following circumstances will firms generally make to stock ?

A. Demand is unpredictable.               B. Many product options exist.

C. Required delivery times are shorter than the time needed to make the product.

D. Customers require special engineering.

5. The information needed to develop an MPS will come from which of the following ?

A. The capacity requirements plan.          B. The forecast of individual end items.

C. Production activity control                D. The material requirements plan.

6. Which of the following is a characteristic of the MPS ?

A. It facilitates forecasting.

B. It works with families of products.

C. It is an agreed-upon plan between production and marketing/sales.

D. It cannot be used for order promising.

7. Which of the following is an objective of an MPS ?

A. To maximize utilization of equipment.

B. To keep the sales department happy.

C. To maintain the desired level of customer service.

D. To minimize inventory investment.

8. Which of the following statements is most accurate about the MPS ?

A. It is an agree-upon plan between finance and manufacturing.

B. If it is poorly done, we can expect past-due schedules and unreliable delivery promises.

C. It is a plan for families of products that manufacturing expects to make over some period

in the future.

D. It provides input to the production plan.

9. What is the portion of inventory or production that is not committed to customer orders called ?

A. Free stock.      B. Available-to-promise.        C. Excess production.        D. Waste.

10. Which of the following is true about time fences in an MPS system ?

A. Changes far out in the planning horizon can be made with little or no cost to

manufacturing.

B. In the "frozen zone," capacity and materials can easily be committed to new orders.

C. Changes in the near future on the planning horizon are less costly to make than changes

far out.

D. The master planner should be authorized to make changes in the frozen zone.

Solutions ;

1  2  3  4  5  6  7  8  9  10

B B D C B C C B B A