Master production schedule definition
/What is a Master Production Schedule?
The master production schedule (MPS) is a production plan that states which products will be manufactured, as well as their amounts and start dates. Maintaining an MPS is an essential task for a manufacturing business, since it provides a guideline for the materials management staff in determining which materials must be ordered, as well as how work will be scheduled for the production process.
Maintaining an MPS can be difficult, since the scheduler has to balance the conflicting goals of producing enough for actual customer orders, while also producing sufficient additional inventory to cover anticipated customer demand. The scheduling chore is further complicated when there are raw material shortages, lengthy ordering lead times for raw materials, bottlenecks in the production process, equipment failures, and reduced staffing situations.
When to Use a Master Production Schedule
A master production schedule is useful in the following situations:
Make-to-stock environments. In industries producing standard products for inventory, MPS helps plan production to meet forecasted demand efficiently. It ensures that sufficient stock is available to fulfill customer orders promptly without overproducing.
Make-to-order environments. For customized products, MPS assists in managing production based on confirmed orders. It helps schedule start dates and allocate resources to ensure timely delivery without holding excessive inventory.
Complex product manufacturing. In scenarios with multi-level bills of materials, MPS aids in coordinating the production of components and final assemblies. It ensures that parts are ready at the right time to prevent bottlenecks and maintain a smooth production flow.
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Advantages of a Master Production Schedule
There are several advantages associated with using a master production schedule, including the following:
Improved inventory management. An MPS helps businesses maintain optimal inventory levels by aligning production with actual demand, reducing excess stock and minimizing storage costs. It ensures that raw materials and finished goods are available when needed, preventing stockouts and production delays.
Enhanced production efficiency. By providing a clear schedule, an MPS enables better utilization of resources such as labor, equipment, and materials. This leads to smoother workflows, reduced downtime, and increased productivity on the manufacturing floor.
Accurate demand forecasting. The MPS uses historical data and market trends to predict future demand accurately. This allows companies to plan production more effectively, avoiding overproduction or shortages.
Better customer service. With a well-organized MPS, businesses can commit to reliable delivery dates and improve customer satisfaction. Meeting promised deadlines strengthens customer trust and helps build long-term relationships.
Cost control. An MPS minimizes waste and reduces costs by ensuring that only necessary products are manufactured. Efficient planning also helps in controlling overtime and emergency production expenses.
Facilitates coordination. The MPS serves as a communication tool across various departments like procurement, sales, and production. It aligns these functions by providing a unified plan, enhancing collaboration and decision-making.
Contents of a Master Production Schedule
An MPS is presented in tabular format, and contains the following information:
Demand forecast. This is the company’s best estimate of the amount of customer demand for its products.
Allocated. This is actual customer orders that have been accepted into the system.
Reserved. This is production slots reserved by management, on the expectation that actual customer orders will be received.
Unplanned. This is production slots for unexpected customer orders that were not included in the demand forecast.
Net demand. Within the time fence, this is a subtotal of the allocated, reserved, and unplanned line items. Outside of the time fence, this is the demand forecast.
Firm planned orders. This is orders that have already been released to the production floor, and so only appear near the beginning of the MPS.
Planned orders. This is orders that have been automatically calculated by the planning system, or which have been manually entered into it. They usually appear in the MPS for periods after which firm planned orders have already been stated. The formula for a planned order is:
Safety stock + Net demand – Projected available balance (prior period) – Firm planned orders
= Planned orders
Projected available balance. This is the projected number of available units. The formula for the projected available balance is:
Projected available balance (prior period) + Planned orders + Firm planned orders – Net demand
= Projected available balance
Available to promise. This is the number of units available for new customer orders.