6.1 Master Production Scheduling (MPS)
2 min read•july 25, 2024
() is a crucial tool in supply chain management. It specifies the quantity and timing of end items produced, bridging the gap between and detailed scheduling while coordinating production, sales, and inventory management.
MPS development involves gathering input data, determining , and calculating requirements. The process considers , inventory costs, and . Impact analysis of MPS changes helps managers understand the effects of demand or capacity fluctuations on production schedules.
Understanding Master Production Scheduling
Role of master production scheduling
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- Master Production Scheduling (MPS) specifies quantity and timing of end items produced over several weeks to months
- Bridges gap between aggregate planning and detailed scheduling serves as basis for ()
- Coordinates production, sales, and inventory management balances supply and demand
- Provides basis for guides lower-level production and purchasing activities
Inputs and outputs of MPS
- Inputs: demand forecasts (customer orders, sales projections), production capacity, inventory levels, aggregate production plan, product structure (bill of materials)
- Outputs: planned production quantities for each end item, production schedule by time periods (weekly), () quantities, ()
Developing and Analyzing the Master Production Schedule
Development of production schedules
- Gather input data (forecasts, orders, inventory levels)
- Determine time buckets (weekly)
- Calculate gross requirements
- Adjust for inventory on hand and scheduled receipts
- Calculate net requirements
- Determine and
- Schedule production quantities
- Consider capacity constraints, , , customer service levels
- Implement , ,
Impact analysis of MPS changes
- Demand increase may require overtime, subcontracting, or backorders
- Demand decrease may lead to excess inventory or idle capacity
- Capacity increase creates opportunity to reduce backlogs or increase production
- Capacity decrease may require rescheduling or prioritizing orders
- Analyze using , what-if scenarios, ATP analysis
- Measure performance with , , customer service level, capacity utilization
Key Terms to Review (31)
Aggregate planning: Aggregate planning is the process of developing, analyzing, and maintaining a preliminary, approximate schedule of the overall operations of an organization. It involves balancing supply and demand by determining the optimal production levels, workforce size, and inventory levels to meet customer demand while minimizing costs. This planning process connects directly to the specifics of scheduling and sequencing production activities efficiently.
ATP: ATP, or Available to Promise, is a key concept in supply chain management that refers to the quantity of a product that is available for customers to order at any given time. It takes into account the inventory on hand, any outstanding customer orders, and production schedules. ATP helps businesses manage customer expectations and fulfill orders effectively by providing a clear picture of what can be promised to customers without overcommitting resources.
Available-to-promise: Available-to-promise (ATP) is a crucial metric used in supply chain management that indicates the unallocated inventory available to fulfill customer orders. It helps businesses determine how much product can be promised to customers on a specific date without overcommitting existing stock. This concept is vital for efficient production planning, ensuring that companies can meet customer demand while maintaining optimal inventory levels.
Capacity constraints: Capacity constraints refer to the limitations on the production capabilities of a supply chain, which can affect the ability to meet demand for products or services. These constraints can arise from various factors such as equipment limitations, workforce availability, and operational inefficiencies. Understanding capacity constraints is crucial for optimizing supply chain performance, ensuring effective master production scheduling, and managing risks associated with insufficient capacity in the face of fluctuating market demands.
Capacity Planning: Capacity planning is the process of determining the production capacity needed by an organization to meet changing demands for its products. It involves analyzing current resources, forecasting future demands, and making strategic decisions about scaling operations up or down to ensure efficiency and meet customer needs. This process is crucial as it connects different elements of the supply chain, ensuring that there is a proper balance between supply and demand.
Customer Service Levels: Customer service levels refer to the measure of how well a company meets the expectations and needs of its customers in terms of product availability, responsiveness, and support. High customer service levels are essential for building customer loyalty, enhancing brand reputation, and ensuring efficient supply chain operations. These levels are influenced by various factors including inventory management, order fulfillment processes, and the alignment of production schedules with customer demand.
Demand forecasting: Demand forecasting is the process of estimating future customer demand for a product or service based on historical data and market analysis. It plays a crucial role in guiding inventory management, production planning, and supply chain strategies, helping businesses align their resources with expected demand fluctuations.
Demand Time Fence: The demand time fence is a specific timeframe within the master production scheduling process that delineates the period where demand changes can be accommodated without causing significant disruptions. This concept helps in managing and stabilizing production plans by setting limits on how much the demand can change based on timeframes, which ultimately aids in better resource allocation and inventory management.
Demand variability: Demand variability refers to the fluctuations in customer demand for products or services over time, which can be influenced by factors such as seasonality, market trends, and external events. Understanding this variability is crucial for effective inventory management, production planning, and supply chain operations. It affects how companies determine safety stock levels, create master production schedules, and design their supply chain networks to meet changing customer needs efficiently.
Finite Capacity Scheduling: Finite capacity scheduling is a production planning technique that allocates resources based on their actual capacity limits, ensuring that production schedules do not exceed what can realistically be achieved. This method considers constraints such as machine availability, labor hours, and material supply, which helps to create a more accurate and feasible master production schedule that aligns with real-world capabilities.
Inventory holding costs: Inventory holding costs refer to the total costs associated with storing and maintaining unsold goods over a certain period of time. These costs can include warehousing expenses, insurance, depreciation, spoilage, and opportunity costs of capital tied up in inventory. Understanding these costs is crucial for effective inventory management as it directly impacts supply chain efficiency and financial performance.
Inventory Turnover: Inventory turnover is a financial ratio that measures how many times a company sells and replaces its inventory within a specific period, usually a year. A high inventory turnover rate indicates efficient inventory management, as products are sold quickly, while a low turnover rate may signal overstocking or weak sales performance.
Lead Times: Lead times refer to the amount of time that passes from the initiation of a process until its completion. This concept is crucial in understanding how long it takes to fulfill customer orders or produce goods, impacting everything from inventory management to production scheduling. Lead times play a significant role in ensuring that supply chains operate smoothly and efficiently, as they affect planning, resource allocation, and overall customer satisfaction.
Lot Sizes: Lot sizes refer to the quantity of units that are produced or ordered in a single batch during manufacturing or procurement processes. Understanding lot sizes is crucial for balancing production efficiency with inventory management, as it impacts the overall supply chain performance, including lead times, carrying costs, and production scheduling.
Master production scheduling: Master production scheduling (MPS) is a process that determines what products need to be produced, in what quantities, and when they should be completed. It plays a crucial role in balancing supply and demand, ensuring that production aligns with customer orders while optimizing resources and minimizing costs.
Material Requirements Planning: Material Requirements Planning (MRP) is a production planning and inventory control system that ensures the right materials are available for manufacturing at the right time and in the right quantities. It uses information from the master production schedule to determine material needs, coordinating production schedules with inventory levels to minimize waste and optimize resources.
MPS: Master Production Scheduling (MPS) is a plan for individual commodities to be produced in each time period, such as production, staffing, inventory, and customer demand. It serves as a crucial link between the strategic goals of a company and the day-to-day operations by outlining what needs to be produced, when, and in what quantities. MPS helps in managing resources efficiently and ensuring that production aligns with market demands.
MRP: Material Requirements Planning (MRP) is a production planning and inventory control system that helps manufacturers manage their materials, scheduling, and production processes efficiently. By determining the quantity and timing of raw materials and components needed to meet production schedules, MRP aids in minimizing inventory costs while ensuring that products are available for manufacturing when required. This process is closely linked to Master Production Scheduling (MPS), as MPS provides the framework for what needs to be produced, which MRP then translates into specific material requirements.
Pab: PAB, or Production Activity Control, is a method used in Master Production Scheduling to manage and control the production process effectively. It focuses on ensuring that the right quantities of products are produced at the right time, optimizing resource utilization, and maintaining balance between demand and production capacity. PAB plays a crucial role in streamlining operations, reducing lead times, and minimizing production costs.
Planning time fence: The planning time fence is a specific period in the master production scheduling process that defines the timeframe during which any changes to production plans can be made without significant repercussions. It establishes a boundary for decision-making, helping to minimize disruptions and stabilize production schedules, thus allowing for better resource management and forecasting accuracy.
Production efficiency: Production efficiency refers to the optimal use of resources in the manufacturing process to maximize output while minimizing waste and costs. Achieving production efficiency is crucial for companies to remain competitive, as it directly impacts profitability and customer satisfaction. Efficient production processes lead to shorter lead times, reduced inventory costs, and improved quality of goods produced.
Production planner: A production planner is a professional responsible for managing and coordinating the production process to ensure that products are manufactured efficiently and meet customer demand. This role involves analyzing production schedules, materials, and resources to optimize workflow and minimize costs, while also aligning production activities with overall business objectives.
Production Time Fence: A production time fence is a crucial concept in master production scheduling that establishes boundaries for planning and executing production activities. It separates different planning horizons, helping managers decide which changes can be made to production schedules and which are too close to the actual production dates to modify without causing disruptions. By creating these fences, companies can better balance flexibility and stability in their operations.
Projected available balance: The projected available balance refers to the anticipated amount of inventory or resources that will be on hand at a specific future date after considering factors like demand forecasts, production schedules, and any outstanding orders. This concept is crucial for effective planning and decision-making in production environments, as it helps businesses determine whether they will have enough inventory to meet future demands without excess stock.
Resource constraints: Resource constraints refer to the limitations in the availability of essential inputs required for production processes, such as labor, materials, equipment, and time. These constraints significantly impact decision-making and scheduling in production environments, as they determine what can be produced and when. Understanding resource constraints is crucial for effective planning and optimizing production schedules to meet demand without overextending resources.
Rough-Cut Capacity Planning: Rough-cut capacity planning is a process used to determine if the production capacity is sufficient to meet the demands specified in the master production schedule (MPS). This method provides an early assessment of capacity constraints and ensures that resources are appropriately aligned with planned production activities, allowing companies to identify potential shortfalls before committing to production schedules.
Schedule adherence: Schedule adherence is a measure of how closely actual production aligns with the planned schedule in a manufacturing or production environment. It reflects the efficiency and effectiveness of the scheduling process, revealing how well resources are utilized and how closely production output matches expectations. High schedule adherence indicates a well-functioning operation, while low adherence can signal issues such as delays, inefficiencies, or resource constraints.
Setup costs: Setup costs are the expenses incurred to prepare equipment or processes for production. These costs often include labor, materials, and any necessary modifications to machinery, and they play a crucial role in determining the efficiency of production schedules. Understanding setup costs is essential for managing inventory levels and optimizing production runs.
Supply chain manager: A supply chain manager is a professional responsible for overseeing and coordinating all aspects of the supply chain, including planning, sourcing, production, and logistics. This role is crucial in ensuring that products are delivered efficiently and effectively, balancing costs while meeting customer demands. Supply chain managers play a key role in inventory management and demand forecasting, as well as in developing strategies that enhance service levels and maintain safety stock.
Time Buckets: Time buckets are discrete time intervals used in planning and scheduling to organize production activities and resource allocation. They serve as a framework for managing production schedules by breaking down the planning horizon into manageable segments, allowing businesses to forecast demand and align their operations accordingly.
Time Fences: Time fences are predefined periods that segment the planning horizon in Master Production Scheduling (MPS), helping to manage changes in production schedules. These fences create boundaries for when changes can be made to orders and provide a framework for decision-making regarding production, inventory, and capacity. By establishing these time boundaries, organizations can enhance efficiency and responsiveness while minimizing disruptions.