Master production schedule

What Is Master Production Schedule?

A master production schedule (MPS) is a detailed plan outlining the specific products to be manufactured, in what quantities, and by when, over a defined period. It serves as a crucial link between higher-level production planning and the actual execution of manufacturing activities within an organization. As a core component of supply chain management, the master production schedule helps businesses align their production capabilities with projected demand forecasting and confirmed sales orders, ensuring efficient resource allocation and timely product delivery.⁸⁸, ⁸⁹, ⁹⁰ It is often considered a "contract" between the sales and manufacturing departments, translating customer needs into a concrete build plan.⁸⁵, ⁸⁶, ⁸⁷

History and Origin

The concept of systematic production planning, which underpins the master production schedule (MPS), has roots in early 20th-century industrial management. While the term "master production schedule" itself gained prominence with the advent of computer-based systems, its theoretical antecedents can be traced back to the production planning and control systems described by Frederick W. Taylor.⁸⁴

The evolution of modern production planning tools began in the 1940s and 1950s with the development of Material Requirements Planning (MRP) systems, which utilized mainframe computers to manage inventory management based on a product's bill of materials.⁸³ These early MRP systems focused on calculating material needs to support production.⁸² As manufacturing processes grew more complex, MRP evolved into Manufacturing Resource Planning (MRP II) in the 1980s, which expanded to integrate other business functions like finance and human resources into the planning process.⁸⁰, ⁸¹ The master production schedule became a key input to these increasingly sophisticated systems, providing the high-level plan that subsequent material and capacity calculations would follow.⁷⁸, ⁷⁹ By the 1990s, these systems further integrated into what is now known as Enterprise Resource Planning (ERP) systems, offering comprehensive business management.⁷⁶, ⁷⁷

Key Takeaways

• A master production schedule (MPS) is a detailed plan specifying what products to produce, in what quantities, and when, balancing customer demand with production capacity.⁷³, ⁷⁴, ⁷⁵
• It serves as a critical input for subsequent planning processes, such as Material Requirements Planning (MRP), which determines the necessary raw materials and components.⁷⁰, ⁷¹, ⁷²
• Effective MPS implementation can lead to improved inventory management, reduced production lead times, and enhanced customer satisfaction.⁶⁷, ⁶⁸, ⁶⁹
• The master production schedule requires accurate demand forecasting, realistic capacity planning, and continuous review to remain effective.⁶⁵, ⁶⁶

Formula and Calculation

The master production schedule itself is not a single formula but rather a structured planning table or a set of calculations that derive planned production quantities over specific time periods. It's a dynamic document that uses various inputs to determine outputs.

Key inputs typically include:

• Customer Orders/Firm Demand: Actual sales orders that must be fulfilled.⁶⁴
• Forecasted Demand: Expected future demand based on historical sales data, market trends, and other factors.⁶³
• Current Inventory: The existing quantity of finished goods on hand.⁶²
• Production Capacity: The maximum output capability of the manufacturing facility, considering labor, machinery, and resources.⁶⁰, ⁶¹
• Safety Stock: A buffer of inventory held to guard against unexpected demand spikes or supply chain disruptions.⁵⁸, ⁵⁹
• Lot Size: The predetermined quantity in which a product is typically manufactured.

The MPS calculation aims to maintain a projected available balance of inventory while meeting demand. For each period in the planning horizon (e.g., weekly or monthly), the calculation often involves:

Projected Available Balance (PAB) at the end of a period:

If the Projected Available Balance falls below a certain threshold (e.g., safety stock or zero), a new MPS quantity is scheduled. The system also calculates "Available to Promise" (ATP), which is the quantity of an item that can be promised to customers.

Available to Promise (ATP) for a period:

These calculations ensure that the master production schedule considers existing stock and future production to satisfy demand without overproducing.

Interpreting the Master Production Schedule

The master production schedule (MPS) is interpreted as a precise commitment from manufacturing to produce specific quantities of goods by certain dates. It functions as a roadmap, dictating when and how much of each product will be made.⁵⁶, ⁵⁷ A well-constructed master production schedule provides clear visibility into future production plans, allowing various departments to synchronize their activities.⁵⁴, ⁵⁵

For example, the MPS helps sales teams make realistic delivery commitments to customers by indicating what quantities will be available at what times (known as "available to promise" or ATP).⁵³ For production teams, it sets the pace and identifies potential constraints or bottlenecks in advance, enabling proactive adjustments to resource allocation, such as staffing levels or machinery utilization.⁵⁰, ⁵¹, ⁵² Finance departments can also use the MPS to forecast expected revenues and expenses related to production.⁴⁹ Its interpretation is critical for maintaining a stable and efficient production flow, minimizing disruptions, and ensuring that the business operates with a clear, shared objective.⁴⁷, ⁴⁸

Hypothetical Example

Consider a hypothetical bicycle manufacturer, "CycleWorks," that produces a popular "City Commuter" bicycle. CycleWorks needs to create a master production schedule for the next four weeks.

Here are the inputs for week 1:

• Current Inventory (Start of Week 1): 50 City Commuter bikes
• Sales Forecast (Week 1): 100 bikes
• Confirmed Sales Orders (Week 1): 80 bikes
• Planned MPS Quantity (Week 1): 150 bikes (CycleWorks produces in batches of 50)

Week 1 Calculation:

• CycleWorks starts with 50 bikes.
• They plan to produce 150 bikes, making the total available for the week 50 + 150 = 200 bikes.
• The actual demand to meet is the greater of the sales forecast (100) or confirmed sales orders (80), which is 100 bikes.
• Projected Available Balance (End of Week 1) = 200 - 100 = 100 bikes.

Week 2 Planning:

• Projected Available Balance (Start of Week 2): 100 City Commuter bikes
• Sales Forecast (Week 2): 120 bikes
• Confirmed Sales Orders (Week 2): 90 bikes
• Planned MPS Quantity (Week 2): Assume 150 bikes initially proposed.

Week 2 Calculation:

• Projected Available Balance (End of Week 2) = 100 (start) + 150 (MPS) - 120 (greater of forecast/orders) = 130 bikes.

This step-by-step process is repeated for each subsequent week, adjusting the MPS quantity if the projected available balance drops too low or becomes excessively high, signaling a need to increase or decrease future production. This approach helps CycleWorks maintain optimal inventory management and respond efficiently to customer demand while optimizing production planning.⁴⁶

Practical Applications

The master production schedule (MPS) is widely used across various manufacturing sectors to optimize operations and meet strategic objectives. Its applications span from discrete manufacturing, such as automotive or electronics, to process industries.

Key practical applications include:

• Production Synchronization: The MPS integrates sales orders and demand forecasting with production capabilities, ensuring that what is produced aligns with market needs.⁴⁴, ⁴⁵ This helps in balancing supply with demand and preventing overproduction or shortages.⁴², ⁴³
• Resource Management: By providing a clear plan of finished goods production, the master production schedule enables effective resource allocation for labor, machinery, and raw materials.⁴⁰, ⁴¹ This helps manufacturers identify future capacity requirements and adjust staffing or equipment usage in advance.³⁹
• Supply Chain Coordination: The MPS facilitates communication and coordination throughout the supply chain. It provides essential data for Material Requirements Planning (MRP) systems to determine precisely what components and raw materials need to be purchased or manufactured and when, thereby streamlining procurement and supplier relationships.³⁷, ³⁸
• Performance Benchmarking: By setting clear production targets, the master production schedule allows companies to measure and benchmark their production performance, track on-time delivery rates, and assess overall operational efficiency. The Federal Reserve's Industrial Production Index for Manufacturing can provide a macroeconomic context for manufacturing output, but internal MPS data is crucial for specific company performance evaluation.³⁴, ³⁵, ³⁶
• Financial Planning: The MPS supports financial planning by providing projections of expected production volumes, which in turn inform revenue forecasts, expense budgets, and cash flow management.³³

Limitations and Criticisms

While a vital tool for manufacturing and supply chain management, the master production schedule (MPS) has certain limitations and faces criticisms. Its effectiveness largely hinges on the accuracy of its inputs, particularly demand forecasting. Inaccurate forecasts can lead to either costly overproduction or missed sales opportunities due to stockouts.³¹, ³²

Another significant challenge is managing changes. A rigid master production schedule may struggle to adapt quickly to unforeseen market shifts, urgent sales orders, or sudden disruptions in the supply chain, such as material shortages or equipment breakdowns.²⁹, ³⁰ This lack of flexibility can result in production delays and increased costs.²⁸

Furthermore, the process of developing and maintaining a comprehensive master production schedule can be time-consuming and complex, especially for businesses with diverse product lines or highly variable demand.²⁷ It requires accurate, real-time data from multiple departments, and poor communication or data entry errors can significantly impact its accuracy and viability.²⁵, ²⁶ There can also be internal resistance if the plan is not collaboratively agreed upon by all stakeholders, potentially leading to departments working at cross-purposes.²⁴

Master Production Schedule vs. Material Requirements Planning

The master production schedule (MPS) and Material Requirements Planning (MRP) are often discussed together, as they are integral and sequential parts of a comprehensive production planning system. However, they serve distinct purposes.

The master production schedule focuses on what finished products or specific components (in assemble-to-order environments) will be produced, how much, and when, based on independent demand like customer orders and forecasts.²¹, ²², ²³ It typically operates with a broader, more strategic view over a longer time horizon, often looking weeks or months ahead. The MPS essentially sets the "drumbeat" for production, representing a commitment between sales and manufacturing regarding the planned output.¹⁹, ²⁰

In contrast, Material Requirements Planning (MRP) takes the MPS as its primary input and then focuses on what materials are needed to fulfill that master production schedule.¹⁷, ¹⁸ MRP calculates the precise quantities of raw materials, sub-assemblies, and components required, when they are needed, and whether they need to be purchased or produced internally.¹⁵, ¹⁶ It deals with dependent demand, meaning the demand for these materials is directly derived from the production of the finished goods in the MPS.¹³, ¹⁴ MRP operates at a more granular, detailed level and often runs more frequently to ensure timely material availability and optimize inventory management.¹¹, ¹² Think of MPS as the "what to cook" plan for a chef, while MRP is the "what ingredients to buy and when" plan for the sous-chef.¹⁰

FAQs

What is the primary goal of a Master Production Schedule?

The primary goal of a master production schedule (MPS) is to balance customer demand with the company's production capacity. It aims to ensure that the right products are available in the right quantities at the right time, minimizing both excess inventory and shortages.⁸, ⁹

Who is responsible for creating and maintaining the Master Production Schedule?

Typically, a "master scheduler" or a production planning team is responsible for creating and maintaining the master production schedule. This role often involves collaborating closely with sales, marketing, finance, and manufacturing departments to gather necessary inputs and ensure alignment across the organization.⁶, ⁷

How often should a Master Production Schedule be updated?

The frequency of updating a master production schedule depends on the industry, product volatility, and market conditions. While some companies might review it weekly, others might do so monthly.⁴, ⁵ Continuous monitoring and regular adjustments based on new sales orders, changes in demand forecasting, or supply chain disruptions are crucial for its effectiveness.³

Can a Master Production Schedule prevent all production problems?

No, a master production schedule cannot prevent all production problems. While it significantly improves production planning and coordination, it relies on accurate data and can be affected by unforeseen external factors like supply chain disruptions or sudden shifts in market conditions.¹, ² It is a tool to manage and mitigate risks, not eliminate them entirely.

What is "Available to Promise" (ATP) in the context of MPS?

"Available to Promise" (ATP) is an output of the master production schedule that indicates the quantity of a product that can be committed to a customer by a specific date. It represents the uncommitted portion of a company's inventory and planned production, allowing sales teams to provide realistic delivery dates to customers.