The master schedule has three inputs: the beginning inventory, product forecasts, and customer orders. Customer order quantities may not be committed forecasts. The master schedule has three outputs: projected inventory, master production schedule, and available-to-promise (ATP).
For example, a company that makes industrial pumps wants to prepare a master production schedule for June and July. Marketing has forecasted demand of 120 pumps for June and 160 pumps for July.
By evenly distributing over the four weeks in each month, we have 30 per week in June and 40 per week in July. Now, suppose that there are currently 64 pumps in inventory and there are customer orders that have been committed and must be filled. These inputs result in the following table. Next, we need to use this information to determine projected inventory, master production schedule (MPS), and ATP. If no production is planed, projected inventory becomes negative from week 3. This is a signal that production is needed to replenish inventory.
Suppose that a production lot size of 70 pumps is used, 70 pumps will be produced, whenever the projected inventory becomes negative. As a result of the negative projected inventory, we need to have production in weeks 3, 5, 7 and 8. After MPS is created, it is now possible to determine the amount of inventory that is uncommitted, and hence available to promise. A “look-ahead” procedure sums booked orders week by week until (but not including) a week in which there is an MPS amount.
The Research paper on Methods Of Increasing Productivity Utilizing Inventory Control Systems
I. Introduction The scope of this research paper is to discuss inventory control systems as they relate to the overall production for a company. I will first discuss production factors for companies and costs associated with high inventories. Then, switch the focus to describe, discuss, and compare Just-in-time (JIT) Production and Material Requirements Planning (MRP) processes as methods to ...
For the first week, this procedure results in summing customer orders of 33 (week 1) and 20 (week 2) to obtain 53. Then, the amount is subtracted from the beginning inventory of 64 pumps plus the MPS in the two week 1 to obtain the amount that is available to promise, i. e. , 64 + 0 – (33+20) = 11. For weeks other than the first week, the beginning inventory drops out of the computation, and ATP is the look-ahead quantity subtracted from the MPS quantity.
Thus, for week 3, the promised amounts are 10+4=14, and the ATP is 70-14=56. The same procedure is applied to weeks 5, 7, and 8 and we have the following table. The ATP in week 1 is not committed and it can be delivered in either week 1 or 2, or part of it can be delivered in week 1 and part of it in week 2. As additional orders are booked, these would be entered in the schedule, and the ATP amounts would be updated to reflect these orders. Marketing can use the ATP amounts to provide realistic delivery dates to customers.
