what is master production schedule

What is a Master Production Schedule and Why is it Important?

A master production schedule (MPS) is a critical planning tool for manufacturers that helps align production with demand. It breaks down the production plan into specific products, quantities and timeframes. Developing an effective MPS enables companies to optimize inventory levels, production capacity and material requirements. This leads to increased efficiency, profitability and service levels.

In this comprehensive guide, we will dive into what a master production schedule is how it works, key benefits best practices and real-world examples. Let’s get started!

What is a Master Production Schedule?

A master production schedule is a plan for each product indicating how many units need to be produced in specific time periods. It acts as the central plan in a manufacturing facility around which other functions like procurement, capacity planning and inventory management are organized.

The key elements of an MPS typically include

• Product or SKU The specific product or stock-keeping unit covered in the schedule

• Time Buckets: The timeline broken down into weeks, months etc.

• Demand Forecast: The expected or forecasted customer demand for the product in each time period.

• Beginning Inventory: The opening inventory level for each period.

• Orders: The quantity of existing customer orders for each period.

• Planned Production: The number of units to be manufactured in each time bucket.

• Ending Inventory: Closing inventory level after planned production and demand.

The goal is to ensure enough products are manufactured in each period to meet demand as well as target inventory levels. MPS enables synchronization of supply and demand.

Why Have a Master Production Schedule?

There are several compelling reasons to implement a master production schedule in manufacturing:

• Optimization of inventory – By scheduling production to match demand, excess inventory can be avoided. This reduces carrying costs. Shortages are also prevented through better planning.

• Improved forecasting – Comparing actual production with the MPS helps improve demand forecasting over time.

• Capacity planning – The production quantities in the MPS facilitates rough cut capacity planning.

• Procurement planning – MPS drives material requirement planning since quantities and timings are known.

• Labor planning – HR can use MPS to anticipate hiring needs.

• Financial planning – Expected revenues and costs can be projected using the production schedule.

• Customer service – On time fulfillment of orders improves through better demand-supply coordination.

In essence, an MPS provides visibility and structure to the entire manufacturing organization to execute production plans effectively.

Where is MPS Used?

A master production schedule is most commonly associated with make-to-stock environments where production is based on a forecast. However, it can provide value in other manufacturing setups too:

• Make-to-order – An MPS can help plan capacity even when production is driven by actual customer orders.

• Assemble-to-order – When products are assembled from components, the MPS helps coordinate component availability with final assembly.

• Batch production – Determining optimal batch sizes and sequencing of batches for efficiency can be guided by an MPS.

• Mass customization – The MPS helps coordinate the production of common components with final customization to order.

Even high-mix low-volume job shops can build an MPS for their standard products or product families to create a backbone schedule. The key is to align the type of schedule with the manufacturing system.

Master Production Schedule Inputs

Constructing an effective master production schedule relies on accurate inputs. Here are some of the key inputs required:

• Beginning Inventory: This is the opening stock of finished goods available at the start of the first period. It is required to calculate net production needs.

• Demand Forecast: A data driven estimate of expected customer demand over the planning horizon. This drives the required production quantities.

• Customer Orders: Actual booked orders help firm up requirements and adjust forecasts.

• Planned Production: The quantity to be manufactured in each time period based on demand and availability.

• Bill of Materials: The material composition of each product is needed to derive material plans.

• Inventory Policy: Targets for safety stock, maximum inventory etc. guide production scheduling.

• Production Capacity: Available production resources constrain MPS feasibility.

Updating the MPS as these inputs change ensures synchronization of the plan with realities on the ground. Collaboration between sales, manufacturing, procurement and senior management ensures inputs are aligned.

Master Production Schedule Best Practices

To maximize the value from an MPS, companies should follow certain best practices:

• Set realistic time buckets: The periods in the schedule should align with business needs. Very short periods create constant churn while long ones lack adequate control. Monthly or weekly buckets are commonly used.

• Collaborate with sales: Sales provides demand forecasts based on market insights while manufacturing grounds projections in reality. Close coordination ensures optimal alignment of the MPS.

• Account for seasonality: Use historical data on seasonal demand swings for products when creating the schedule. This results in a better matched supply.

• Build safety stock into plan: Instead of excessive safety stock, use the MPS to plan appropriate inventory buffers proactively based on uncertainties.

• Consider capacity constraints: Rough cut capacity planning should match MPS with available production resources to ensure the plan is feasible.

• Integrate material planning: Use the MPS together with BOMs to derive material requirements and optimize procurement.

• Limit last minute changes: Avoid frequent adjustments to the frozen initial periods of the schedule. This causes instability.

• Measure schedule accuracy: Regularly monitor metrics like projection accuracy, schedule attainment and inventory turns to improve MPS performance.

With strong coordination and disciplined execution, an MPS provides stability along with flexibility to the manufacturing function.

Example of a Master Production Schedule

Let’s understand how a sample MPS would look with an example:

A furniture manufacturer assembles dining tables to stock based on demand forecasts. Their MPS for the item for January could be:

Item: Dining Table
Time Bucket: Weekly

Week 1
Beginning Inventory: 25 units
Demand Forecast: 20 units
Planned Production: 30 units
Ending Inventory: 35 units

Week 2
Beginning Inventory: 35 units
Demand Forecast: 15 units
Planned Production: 20 units
Ending Inventory: 40 units

Week 3
Beginning Inventory: 40 units
Demand Forecast: 25 units
Planned Production: 35 units
Ending Inventory: 50 units

Week 4
Beginning Inventory: 50 units
Demand Forecast: 30 units
Planned Production: 25 units
Ending Inventory: 45 units

In this schedule, production is adjusted weekly based on the demand forecast and target closing inventory. The planning ensures availability of dining tables to meet customer orders without excessive overproduction.

Integrating Master Production Schedule and MRP

While an MPS provides the overall production plan, material requirements planning (MRP) helps plan the components needed. The integration happens as follows:

1. The MPS provides the demand for end items as planned production quantities.

2. MRP uses this demand together with BOMs and inventory data to calculate requirements for sub-assemblies, parts etc.

3. These material requirements are then consolidated across end items to derive purchase orders and production plans for components.

4. As actual production occurs, inventory is updated and component requirements re-calculated.

So MPS facilitates high-level coordination while MRP focuses on material coordination. Together they synchronize the entire manufacturing ecosystem.

A master production schedule is a foundational planning tool for aligning supply with demand. It breaks down the production plan into specific products, quantities and timeframes. An MPS provides visibility into the manufacturing future of a company. By managing it effectively and integrating it with sales, inventory, procurement and capacity planning, manufacturers can optimize their production ecosystem. The end result is improved productivity, service levels and profitability. With the techniques discussed here, you can make your MPS a competitive advantage.