Item table:
| Item | Qnty | ProdSched |
| a | 1 | 1 |
| b | 2 | 1 |
| c | 3
Let's hit this in two phases. First, although this is not the exact format you wanted, you can get the data you asked for as follows:
Select item, ProdSched, max(qty)
from Item1
group by item,ProdSched
Now, to get the data in the format you desired, one way of accomplishing it is a PIVOT table. You can cook up a pivot table in SQL Server as follows:
Select item, [1] as ProdSched1, [2] as ProdSched2
from ( Select Item, Qty, ProdSched
from item1 ) x
Pivot ( Max(qty) for ProdSched in ([1],[2])) y