Chapter 1

OSCM
MANUFACTURING RESOURCE
PLANNING 14 - 1
Master Production Schedule

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Overview
• Define Master Production Schedule
• Explain MPS
• Discuss How MPS Works

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Master Production Schedule
(MPS)

© 2011 Pearson Education, Inc. publishing as Prentice Hall

 MPS is established in terms of
specific products
 The MPS is a statement of what is to
be produced, not a forecast of
demand
 Must be in accordance with the
aggregate production plan
 Before it is executed, MPS must be
tested for feasibility (Capacity
Requirements Planning) 14 - 5
 Introduction
 The master production schedule is a plan for future production of end items over a short – range planning horizon
that usually spans from a few weeks to several months.The mps sets the quantity of each end item(finished
product) to be produced in each time period (week/month or quarter) of the short-range planning horizon.

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What is MPS?
• Master Production Schedule –
States the requirements for
individual end items by date and
quantity. -APICS

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MPS Explained
• Breaks down, or disaggregates,
the production plan into product
families
• Promotes valid order promises
• Provides a communication
medium between
Marketing/Sales and Operations

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Explanation Continued
• Proactively control ability to
deliver goods to customers
• Resource availability
control
• Proactively control inventory
levels

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Disaggregate the Sales and
Operations Plan

• The production plan is broken

into product families

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Promotes Valid Order Promises

• By validating the capacity for

the MPS through rough cut
capacity planning, alterative
plans can be made when there
are more orders than production

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Marketing
• Marketing communicates
demand through customer
orders and forecasts
• Operations communicates
capacity through inventory
levels and constraints

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Resource Availability Control

• Production shortfalls will be

known ahead of time and
alternative plans can be made.

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WHAT IS MASTER PRODUCTION
SCHEDULE?

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The Master Production Schedule (MPS) is a plan for the production of
individual final items. The MPS breaks down the production plan to show, in
each period, the quantity to produce of each final article.
Each final article is also called Stock Keeping Unit, usually using its acronym
SKU. The Master Production Program, which is developed over a period of
time, is called the planning horizon. The planning horizon generally extends
between 3 and 18 months, depending on the manufacturing cycles of the
item in question.

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The information or input data feeding the MPS is the
following:

1. Aggregate production plan, in product units

2. The forecast of each final article, in product units
3. The current order portfolio
4. The stock inventory level
5. The available production capacity

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The MPS must be verified at any time against the capacity constraints of
the most critical resources. This process is called Rough-Cut Capacity
Planning (RCCP). The RCCP identifies any instance of unfeasibility of
production before the plan is operational. It is recommended to evaluate
its manufacturing feasibility during the planning horizon. Once the MPS
has been executed, the planner will carry out the plan for the next period.

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The planning horizon should be as long as the longest cumulative delivery
time plus a future visibility period. The cumulative delivery time is the
longest period of time required to carry out the manufacturing activities of
the product. It can be determined by the product time structure (BOM),
looking for the longest performance time for each production step.

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How is the MPS used in Manufacturing
Company?
Considering today’s complexity in manufacturing, the MPS helps to decide:

• What to produce
• What batch sizes
• When to produce
• What sequence to adopt
To successfully implement an MPS, it must be understood that its purpose is not to state
the quantities and delivery times of the products. The MPS is in fact a solid contract
between Sales and Production. The MPS defines what Production will produce, and it’s not
a forecast at all.

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How is the MPS used in Manufacturing
Company?
There are manufacturing variables that the planner has to consider when running the
MPS.
These variables are:

1. Batch criteria
2. Sequence constrains
3. Set-up times
4. Capacity over-saturation

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Benefits of working with the MPS
There are multiple benefits when a manufacturing business introduces an MPS. They
are described below:

• It provides a solid base to build, improve and track the sales forecast.
• It provides a solid base to determine the desired inventory levels.
• It provides a solid base to calculate the quantities of parts, subcomponents or raw
materials to buy or produce, as part of the MRP next stage.
• It provides a solid base for calculating the required amount of labor and shifts, as part
of the MRP next stage.
• It allows optimizing the installed capacity and balancing the load of the plant.

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Benefits of working with the MPS

• Manufacturing can estimate the production and maintenance costs associated with the work centers.
• The financial department of the company can get income and expenses, derived from

 the MPS and generate a forecast of the cash flow in the company. It will help to build other financial
statements, such as the Balance sheets, Profit and Loss statements, and the investment plans.
• The Department of Human Resources can take advantage of the MPS to anticipate the requirements of hiring
labor.

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Benefits of working with the MPS

The MPS should reflect the business plan as closely as possible. This requires a
constant update by all departments of the company. If the Marketing department
plans a sales promotion, the increase in demand must be reflected in the MPS and the
forecast. If the sales team discourages the sale of a product line in favor of another
new created line, the MPS and the forecast will be adjusted.

The MPS helps the Marketing and Sales departments when they embark on a
promotional campaign. Thanks to this resource, it’s possible to discuss and confirm the
actual plan with the Planning department.

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Benefits of working with the MPS
The fact of achieving a high level of collaboration between the different departments of
the company is, in itself, a great benefit. The MPS sets the basis for creating the Material
Requirements Plan (MRP). The MRP operates at a higher level of detail, both in time and
in item breakdown.

Remember that the MRP breaks down each item into its components or parts.
Purchasing and Production departments may find possible to meet additional demand
for products.
They will be able to find enough quantities of the components and sub-assemblies
needed
for the product manufacturing.

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You can download a free master production schedule here.
The difference between MPS and
Production Scheduling

The term Master Planning comes from the recursive process of optimization. It means that
the quantities to be produced of each unit are defined based on the aforementioned
inputs and constraints. The final result will be the Production Master Plan. This plan will
not be static, but renew weekly or monthly.

Remember that MPS involves planning, and it’s much more than simply scheduling.

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The difference between MPS and
Production Scheduling
Scheduling just gives answers to when, typically setting a timeline, in chronological
order things to be done. The typical example is when a person schedules things to do.
This will include the list of activities using a calendar and sometimes describing who
will take responsibility.

Instead, the MPS involves planning activities and many categories, departments, resources
and people. These categories can be broken down in higher levels of detail and deliver to
multiple team members. Finally, the team members will coordinate and work
simultaneously to achieve a common business goal.

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The difference between MPS and
Production Scheduling
On the other hand, consider that MPS is not the same as
Production Planning (PP). Production Planning is a previous stage
that defines the levels of production at higher levels and fewer
details. They determine the amount of production in terms of
families, not individual items.

For example, the PP will define the amount of chairs to be produced while the MPS will consider
individual SKUs. The planning horizon in the case of PP is also the middle term, from 6 months
up to 24 months. The PP helps determining the required resources and determines the
inventory levels at higher levels.

It’s a powerful plan for the top management in which they can have visibility of the business
from
the manufacturing point of view.
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Inventory Control
• Proactive approach to inventory
control
– Items are scheduled to arrive when
needed
– Safety stock has less importance

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How MPS Works
• Information needed for MPS
logic
– Lot Size
– Lead Time
– Product Demand
– Starting Inventory

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How MPS Works Cont.

W Inc. MPS for Widgets

2

Lot Size = 25 units

Lead Time = 0 periods
Period 1 2 3 4 5
Demand 30 30 30 30 30
Available 20 15 10 5 0
MPS 50 25 25 25 25
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 Jet Spray Corp. Example

• Jet Spray Corporation

– Markets dispensers for hot & cold
beverages
– Uses an integrated system that
includes:
• MRP
• Capacity Planning
• Shop floor control
• MPS
• Inventory Management

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Brainstorming Exercise
• How can an MPS system be
used in your Firm?

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 You’re the Master Scheduler…

• W2 Inc. is scheduling
production for a new product
called the Widget 5000
• Starting Inventory = 0
• Lot Size = 50
• Lead time = 0

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• MPS breaks the Sales &
Operations plan into product
families
• Maintains Desired Level of
Customer Service
• Allows proactive control of
inventory

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