Master Production Schedule

The Master Production Schedule (MPS) is a comprehensive plan outlining the production quantities, timing, and specific products to be manufactured. It is an essential process that bridges the gap between production planning and execution, enabling the company to fulfill customer demand efficiently.

The MPS is a popular production planning tool that ultimately aims to enhance operational efficiency, save time, and provide a foundation for scaling a manufacturing business. It is not a scheduling but a planning process since it proactively determines the products to be manufactured and the raw material or other resources that will be required for the potential production.

• A Master Production Schedule (MPS) refers to a production planning process that determines the product to be manufactured, its production quantity, and the time frame.
• It identifies and fills the gap between customer demand and production.
• The various functions involved in an MPS process are translating production plans, assessing alternative schedules, determining capacity requirements, enabling information processing, and utilizing capacity.
• The objectives of MPS include production stability, seamless demand flow, smooth business communication, short lead times, serving customer demand efficiently, and improving overall production efficiency.

A Master Production Schedule (MPS) is an indispensable part of the manufacturing planning process that backs critical production decisions such as – 

• The maximum number of sales orders a unit is capable of fulfilling,
• Issues and hurdles in the desired production,
• Production units that require resource allocation optimization, and
• The level of raw materials, stock consumed in work in progress, and finished inventory.

Creating an effective MPS begins with proper demand planning using historical sales data. A well-structured MPS aligns production with demand, optimizes resource utilization, and enables agile responses to dynamic market conditions. Let us understand them:

• Product List: The product list includes all manufactured products, prioritizing the most frequently ordered ones at the top.
• Product Sub-Lists: Within the product list, sub-lists categorize variations or stock-keeping units (SKUs).
• Time Frames: The MPS divides schedules into manageable time frames, usually months and weeks, thus ensuring periodic reviews to facilitate prompt adjustments in response to changing demand.
• Production Quantities: Gauging the raw material consumption is a critical aspect of MPS. It involves calculating quantities for each product type, including variations or SKUs, guiding the allocation of resources, and ensuring efficient production planning.

The master production schedule is adaptable to different production workflows and techniques, including:

1. Make-to-stock (MTS): In this scenario, a minimal quantity of items is combined to create a more significant number of components. The focus of MPS here is on completing valuable items.
2. Make-to-order (MTO): This involves using minimal raw materials to produce diverse finished goods, such as in the manufacturing of automobiles. The primary goal of MPS is to arrange customer orders periodically.
3. Assemble-to-Order (ATO): Raw materials are used to produce subassemblies and essential components. These components and subassemblies then collaborate to form various finished goods. The MPS, in this case, emphasizes the subassembly.

The master production schedule in operations management plays several vital roles in the robust planning of the production processes. It performs the following tasks:

1. Translating Production Plans: The MPS facilitates the analysis of demand, labor requirements, and equipment capabilities to decide the quantity of items to produce within a specific timeframe.
2. Assessing Alternative Schedules: It further aids in surging multiple manufacturing routes to ascertain the most suitable schedule, taking into account the potential issues along the production line.
3. Determining Capacity Requirements: Through rough-cut capacity planning, the MPS helps determine the realistic capacity needed to serve the potential demand, optimize profits, and curtail costs.
4. Enabling Information Processing: MPS enables setting reorder points for timely deliveries and facilitates coordination among various management information systems (MIS), such as sales, finance, and human resources.
5. Utilizing Capacity: The MPS further determines the requirements for machine load and utilization in the production process.

Let us consider the below examples for contemplating the significance of a master production schedule in operations management:

Example #1

Suppose a tires manufacturing company, XYZ Tires, makes a Master Production Schedule for its High-Performance Tires for the first quarter of 2024:

This is a strategic plan that outlines the production quantities for XYZ Tires' high-performance tires over the first quarter of the year. The schedule enables the company to align its production with market demand, facilitating effective resource allocation and ensuring it meets customer needs. XYZ Tires can make adjustments to the plan based on actual sales data and market dynamics to optimize production efficiency.

Example #2

Following is a master production schedule template for a winter wear manufacturing company for January 2024:

This table presents a monthly production plan for various winter wear items, considering forecasted demand, planned production, and inventory adjustments. The aim is to balance manufacturing capacity with anticipated demand while optimizing inventory levels.

Although MPS is a widely used production planning tool across different industries, it is essential to recognize its various benefits and drawbacks, as discussed below: 

Advantages

• Optimized production planning: The MPS aligns production plans with overall business objectives, ensuring resource efficiency.
• Inventory management: Through forecasting and planning, MPS helps maintain optimal inventory levels, minimizing excess and shortages.
• Customer satisfaction: Meeting customer demands on time enhances satisfaction and loyalty; a key benefit facilitated by the MPS.
• Resource optimization: MPS aids in the effective allocation of resources, such as workforce and machinery, promoting efficiency and cost-effectiveness.
• Visibility and control: The MPS offers a clear overview of production activities, facilitating monitoring, control, and schedule adjustments.
• Reduced lead times: Streamlining production processes through MPS contributes to minimizing lead times and improving responsiveness to market demands.
• Risk management: Proactive identification and mitigation of potential disruptions are facilitated by the MPS, reducing the impact of unforeseen events.
• Improved communication: Enhanced communication between departments is fostered by the MPS, promoting collaboration across the entire supply chain.
• Cost savings: Effective planning and resource utilization lead to cost savings by reducing wastage, overtime, and carrying costs.
• Flexibility: The MPS allows for adjustments in response to changes in demand, market conditions, or unforeseen disruptions, enhancing the adaptability of production processes.

Disadvantages

• Lack of adaptability: The MPS may need more adaptability, making it difficult to respond to sudden changes in demand or production constraints.
• Complexity: Managing a detailed MPS can be complex, particularly in large-scale manufacturing settings. The intricate coordination required for various products, resources, and timelines can result in increased administrative complexity.
• Dependency on accurate forecast: The effectiveness of MPS heavily relies on accurate demand forecasts. Inaccurate forecasts can lead to overproduction or stockouts, impacting overall efficiency and customer satisfaction.
• Time-consuming: Developing and maintaining a comprehensive master production schedule can be time-consuming. It could be a drawback in dynamic industries where quick adjustments are often necessary.
• Costly process: Implementing an MPS may require a significant investment in information systems and technology. The initial costs and ongoing maintenance expenses may pose a challenge, especially for smaller businesses.
• Supply chain risks: External factors such as supply chain disruptions, raw material shortages, or transportation issues can affect the ability to adhere to the master production schedule. This risk increases with global and interconnected supply chains.
• Human error: Errors in data entry, communication, or interpretation can impact the accuracy of the master production schedule, potentially leading to inefficiencies and production delays.
• Resistance to change: Implementing an MPS may be difficult for employees who are accustomed to previous production methods.

This has been a guide to what is Master Production Schedule (MPS). Here, we explain the concept with its examples, functions, advantages, & disadvantages. You can learn more about financing from the following articles –

• Rough-Cut Capacity Planning
• Production Department
• Batch Production