Examples of Master production schedule

The master production schedule is the second input that goes into the MRP plan after the bills of material. The master production schedule (MPS) details how many end items will be produced in the given period of time. To develop a MPS, there are two steps:

1. Calculate the projected on-hand inventory at the end. 
2. Determining the timing and size of production quantities.

Project on hand inventory at the end of this period =
On hand inventory in the last period + MPS quantity due this period – Projected requirements this period.  

Rule: For the projected requirements for this period, we should use the larger quantity known between the forecast and customer orders booked. This helps in avoiding any stock-out situations. 

Let us consider an example to understand the first step.

In the above example, the period is weekly. The manufacturer of this chair produces the chair in stock and needs to develop a master production schedule. 

Let’s consider the “forecast for week 2” is 30, the customer orders booked is 27 and the MPS quantity is 0 as we are not aware of it.

Here, demand is higher than supply, and we will not be able to cater to the entire demand. We will have an opportunity loss of 13 units. (The negative sign shows the loss.) And therefore, the MPS quantity needs to be provided in order to avoid such losses. 

Now, following the same example, let us understand step 2 in detail. In this case, we are going to determine the timing and size of production quantities of specific products. 

The projected on hand quantity is 17 as discussed in the previous example and the projected on hand quantity was (-13) and we don’t want any shortages this time. In this case, the order policy is 150 units i.e., it means that it is most optimal for the facility to produce 150 units. And the lead time is 1 week i.e.m if you want the material to be available in week 2 then it has to be produced in week 1. 

Hence, calculating the matrix given in the table,