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 the schedule 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 an MPS is properly managed, it can minimize both finished goods shortages and the expediting of orders through the production process, while also minimizing overtime, machine usage, and expedited freight charges. A well-managed MPS should be able to do the following:

  • Act as the guiding document for the management of the manufacturing function.

  • Be the link between overall business planning and detailed production operations.

  • Allow for the issuance of reliable delivery commitments to customers.

  • Enhance the efficiency of the manufacturing process.

  • Assist in the planning of how available production capacity will be used.

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.

Related Courses

Accounting Information Systems