What is a Master Production Schedule? Guide with Examples

A master production schedule is a handy, easy-to-use tool that can be referenced in your future production planning. It contains data about individual schedules, making it easier to plan for the future.

What is a Master Production Schedule (MPS)?

A Master Production Schedule includes a list of products that needs to be created, in what quantity and when. It also doesn’t go into detail about the materials to be used.

Rather, it is like a contract between your sales and production departments. The deal will balance supply and demand by defining the number of units needed and the schedule for those orders.

Make-to-stock manufacturing environments use a demand forecast to drive production planning. The Master Production Schedule is a vital tool in this scheme. As an MPS is often used as the main driver of production activity, it needs to be accurate and viable for it to have a positive effect on the profitability of a business.

The MPS is also best-suited for specialized, personalized items in an environment where made-to-order production runs are impossible. In this case, the sales forecast and master production schedule are used to plan the inventory needed for production.

A master production schedule is a long-term plan made for each product separately. It has a planning horizon of 3 months to 2 years and at least 1 week as the smallest time bucket specified.

The basic inputs you need to create a viable master production schedule are the following:

  1. Starting inventory. How many units are already available in stock?
  2. Sales forecast. How many orders are expected for the period?
  3. Current order portfolio. How many orders are already planned for the period?
  4. Quantity to produce. How many units need to be produced during the period to keep supply and demand in balance?

Example

Let’s say you produce wooden furniture such as chairs, dining tables, and coffee tables.

At the start of the period, you have 40 chairs in stock. Your sales forecast says that you will sell 200 of them. That means you will need to produce 160 chairs during that period in order to match the demand.

As budgets are limited, you need to be practical. This means producing enough inventory for this period. By doing that, you will be able to ensure that enough chairs are produced for demand

Master Production Schedule and Safety Stock

Just-In-Time manufacturing is great for ensuring you don’t stock up too many products in advance, or design inventory in excess of what is needed. However, it also means that if there’s a sudden spike in demand, it can be difficult to keep up until production catches up.That is why we can complement the master production schedule with:

5. Safety stock. How many units do you want to keep in inventory in case there are spikes in demand?

In the master production schedule, safety stock will be expressed as part of the period’s ending inventory that will be transferred to the next period as beginning inventory.

Example cont.

Now, continuing with the previous example let’s say that you always want to keep 40 chairs as safety stock. Therefore, 160 chairs will not be enough to meet demand and replenish your safety stock during the first period. This means that you will need to produce 200 chairs altogether to satisfy your customers and maintain the required buffer.

Master Production Schedule and Rough-Cut Capacity Planning

When planning production, you always need to keep in mind how much exactly you are able to produce in a given period. If you take in orders that require you to produce a thousand chairs in a month, but you only have the means to produce 500, you will let down your customers and your company. That is why you would always want to account for:

6. Production capacity. How many products would you be able to produce during the period, given that everything is running smoothly?

Rough-cut capacity planning is very useful alongside your production schedule. You will need to know the time it takes for each product and the hours that your shop floor is open.

Once you have created your initial master production schedule, you can test its viability by creating a rough-cut capacity plan according to the MPS. If the capacity plan shows that your production capacity cannot accommodate the production levels in any period set in the MPS, you will need to find ways to increase capacity or modify the MPS.

To master production scheduling and rough-cut capacity planning, you need to keep an eye on both. Any changes to one aspect of this process may affect the other.

Additional considerations regarding MPS

Master Production Schedule freezing

Freezing the MPS means locking the first couple of periods a certain amount of time, e.g. a week or two, before production according to the schedule starts. This is done to prevent last-minute changes that create confusion and bottlenecks that slow down production and, ultimately, ruin your plans.

Available to Promise

Additional capacity (available to promise) is the number of additional units where you can simultaneously promise to deliver them during this period. It takes into account all firm orders and is calculated according to the master production schedule.

Batch criteria

When drawing up a master production schedule, you should always consider your batch sizes, i.e. how many products do you make in one run. That will determine the step of your quantities. For example, if you manufacture in batches of 25 products then your quantity to produce cannot be 240, it needs to be 250 or 225.

Maximum inventory

The MPS is a great tool for planning and preparing early for surges in demand. However, there are physical and practical limitations to the quantities you can store in stock. Even if you had the production capacity, it may not be possible to utilize it if your stock is full. Or beyond a certain inventory level, too much cash may be tied up in inventory.

Benefits of a Master Production Schedule

There are multiple benefits to introducing an MPS in a manufacturing business:

  • It provides a solid base for building, improving, and tracking the sales forecast.
  • It provides a solid base for determining the desired inventory levels.
  • It provides a solid base for calculating the required amount of labor and shifts.
  • It allows optimizing the installed capacity and balancing the load of the plant.
  • The manufacturing department can estimate the production and maintenance costs associated with the workstations.
  • The financial department of the company can derive expected revenues and expenses from the MPS and generate a cash flow forecast. Among other benefits, this will help build investment plans.
  • The HR department can take advantage of the MPS to anticipate the requirements of hiring labor.

The MPS should reflect the business plan as closely as possible. This requires a constant update by all departments of the company.

For example, if the Marketing department plans a sales promotion, then a proportional increase in demand needs to be displayed in the master production schedule and on the forecast. If the Sales team discourages customers from buying one product over another, this should also be reflected

Master Production Schedule vs. Manufacturing Resource Planning

The master production schedule is one of the steps to take when making a manufacturing resource plan. This is just one of many inputs that are being used. Other inputs used are things such as inventory management, bill of materials (BOMS), routing information, material requirements and costs, final forecast data etc.

Production management is a huge task and thus requires a lot of resources. This system saves you the burden of individually checking and requesting for each resource, and instead allows you to focus solely on your company’s production flow.

Producing a master production schedule is not easy, as it’s hard to create one manually without the help of manufacturing resource planning.

There are many software providers offering ERP systems, but many of them have grown out of accounting or inventory management software, and can limit your manufacturing resource capabilities.

In an increasingly competitive market, it’s important to have access to a good MRP system in order to stay on top.