Exhibit A: Calculating the Master Schedule

This example illustrates how the system calculates the master schedule quantities by attempting to satisfy demand and match target inventory levels for each period while smoothing the weekly master schedule quantities.  The example pertains to standard master scheduled parts only.

EXAMPLE:

Assumptions:

Part Q has safety stock of 1000 and a target inventory of two weeks.

Period 1 has 4 weeks.  The beginning inventory level of Part Q in Period 1 is 400.

The initial demand looks like this:

1.   Two accumulations are made.  First, the demand for period 1 is summed:

500 + 1000 + 1500 + 1000 = 4000

This calculation is performed for each week in the period, and then for further weeks to cover any target inventory weeks requirement.  In the example, the target inventory is for two weeks, so the demand for the first two weeks in the next period is calculated:

Target Inventory = 2000 + 1000 = 3000

The safety stock quantity must be added to this figure:

Target Inventory = 3000 + 1000 = 4000

Thus:

2.   Second, the requirement for the period must be calculated:

3.   This requirement is then evenly allocated over the weeks in the period, giving the master schedule quantity for each week:

4.   The Projected Inventory for week 1 is then calculated.  This is basically the beginning inventory plus any supply activity minus any demand activity for the week.

Since, in this example, the projected inventory for week 1 is positive, no further processing is needed and 1900 will be used as that week's master schedule quantity.  However, if the projected inventory quantity is negative, the master schedule quantity is increased.

5.   The remaining weeks are calculated similarly, resulting in the following:

The processing has therefore produced an even master schedule over the period, with enough stock remaining in the final week of the period to cover the target requirement.