Developing a master production schedule

1. Develop a master production schedule for the breadmaker. What do the projected ending inventory and available-to-promise numbers look like? Has Realco \"overpromised\"? In your view, should Realco update either the forecast or the production numbers? WEEK PROMISED SHIPMENTS 1 23,500 2 23,000 3 21,500 4 15,050 5 13,600 6 11,500 7 5,400 8 1,800 1 Total planned orders Booked orders Projected ending inventory: Master production schedule Available to promise 2 3 4 5 6 7 8 CHAPTER 15 Managing Production across the Supply Chain 513 SE STUDY E REALCO BREADMASTER years ago, Johnny Chang's company, Realco, introduced new breadmaker, which, due to its competitive pricing and - tures, was a big success across the United States. While - ighted to have the business, Johnny felt uneasy about the . of formal planning surrounding the product. He found self constantly wondering, "Do we have enough to meet orders we've already accepted? Even if we do, will we have ugh to meet expected future demands? Should I be doing mething right now to plan for all this?" To get a handle on the situation, Johnny decided to talk to ious folks in the organization. He started with his invenmanager and found out that inventory at the end of last leek was 7000 units. Johnny thought this was awfully high. Johnny also knew that production had been completing _ 000 breadmakers every other week for the last year. In fact, - other batch was due this week. The production numbers e based on the assumption that demand was roughly 20,000 oreedmakers a week. In over a year, no one had questioned =rhetherthe forecast or production levelsshould be readjusted. Johnny then paid a visit to his marketing manager to see at current orders looked like. "No problem," said Jack - nes, "I have the numbers right here." WEEK PROMISED SHIPMENTS 23,500 23,000 21,500 15,050 13,600 11,500 5400 1800 Johnny looked at the numbers for a moment and then asked, "When a customer calls up, how do you know if you can meet his order?" "Easy," said Jack, "We've found from experience that nearly all orders can be filled within two weeks, so we promise them three weeks. That gives us a cushion, just in case. Now look at weeks 1 and 2. The numbers look a little high, but between inventory and the additional 40,000 coming in this week, there shouldn't be a problem." QUESTIONS 1. Develop a master production schedule for the breadmaker. What do the projected ending inventory and available-to-promise numbers look like? Has Realco "overpromised"? In your view, should Realco update either the forecast or the production numbers? 2. Comment on Jack's approach to order promising. What are the advantages? The disadvantages? How would formal master scheduling improve this process? What organizational changes would be required? 3. Following up on Question 2, which do you think is worse, refusing a customer's order upfront because you don't have the units available or accepting the order and then failing to deliver? What are the implications for master scheduling? 4. Suppose Realco produces 20,000 breadmakers every week, rather than 40,000 every other week. According to the master schedule record, what impact would this have on average inventory levels? FERENCES and Articles , W. "Miller SQA: Leveraging Technology for Speed and J(eJia6ility. Supply Chain kltmagement .l?eview 3, no. 2 (Spring 1999): 62-69. Cox, J. F.,and J. H. Blackstone, eds. APICS Dictionary, 10th ed. Falls Church, VA:APICS, 2002