Master Production Scheduling (MPS) Fundamentals

Master Production Scheduling (MPS) Fundamentals – A Complete Guide for CPIM Exam Success

Introduction

Master Production Scheduling (MPS) is one of the most critical planning tools in manufacturing and supply chain management. It sits at the heart of the internal supply planning process and serves as the bridge between high-level strategic plans (such as the Sales & Operations Plan) and the detailed execution plans (such as Material Requirements Planning). For the CPIM exam, a thorough understanding of MPS fundamentals is essential because questions frequently test your ability to interpret, construct, and manage a master production schedule.

Why Is MPS Important?

The Master Production Schedule is important for several key reasons:

1. Links Strategy to Execution: MPS translates the aggregate production plan into specific product-level schedules. Without it, there is no actionable plan for what to produce, when, and in what quantities.

2. Drives Material Requirements Planning (MRP): MRP cannot function without a valid MPS. The MPS feeds the MRP system with the independent demand items that need to be produced, which in turn drives the planning of all dependent demand (components, raw materials, and subassemblies).

3. Manages Customer Commitments: Through the Available-to-Promise (ATP) function, MPS enables organizations to make reliable delivery promises to customers.

4. Balances Demand and Supply: The MPS ensures that production capacity and material availability are aligned with market demand, preventing both overproduction and stockouts.

5. Provides Visibility: It gives all stakeholders — from sales and marketing to manufacturing and procurement — a common reference point for what will be produced and when.

6. Supports Financial Planning: The MPS directly affects inventory investment, labor costs, and capacity utilization, all of which have significant financial implications.

What Is a Master Production Schedule (MPS)?

The MPS is a time-phased plan that specifies what end items or product families a manufacturer plans to produce, how many of each, and when they will be completed. It is stated in terms of specific configurations, quantities, and dates.

Key characteristics of the MPS include:

• It deals with end items or finished goods (items subject to independent demand).
• It is expressed in planning periods (typically weekly buckets, though daily or monthly may also be used).
• It is a statement of anticipated manufacturing output, not a statement of demand or a sales forecast.
• It must be realistic and achievable — it should reflect actual capacity constraints and material availability.
• It is the disaggregation of the production plan into specific item-level detail.

Key Inputs to the MPS

• Production Plan (from S&OP): The aggregate plan that sets overall production levels by product family.
• Demand Forecasts: Statistical or judgment-based forecasts of future customer demand.
• Customer Orders: Actual confirmed orders from customers.
• Inventory Levels: Current on-hand inventory and scheduled receipts.
• Capacity Constraints: Information about available production capacity.
• Company Policies: Safety stock targets, lot-sizing rules, frozen zone policies, etc.

Key Outputs of the MPS

• Planned Production Quantities and Dates: Specific schedules for end items.
• Projected Available Balance (PAB): The running inventory balance projected into the future.
• Available-to-Promise (ATP): Quantities available to commit to new customer orders.
• Input to MRP: The gross requirements that drive material and component planning.

How Does MPS Work? — The MPS Grid Explained

The MPS is typically displayed in a grid (or matrix) format with the following rows:

1. Forecast: The anticipated demand for the item in each period.
2. Customer Orders (Actual Demand): Confirmed orders booked against each period.
3. Projected Available Balance (PAB): The expected ending inventory for each period after accounting for supply and demand.
4. MPS (Planned Orders / Scheduled Receipts): The planned production quantities.
5. Available-to-Promise (ATP): The uncommitted portion of inventory and planned production.

Projected Available Balance (PAB) Calculation

PAB is calculated for each period as follows:

PAB = Prior Period PAB + MPS (Scheduled Receipts) − Greater of (Forecast, Customer Orders)

The logic of using the greater of forecast or customer orders is critical. This approach avoids double-counting demand. In the near term, customer orders typically exceed the forecast (as the forecast has been consumed by actual orders). In the far term, the forecast is usually larger because not all future demand has been converted to firm orders yet.

If the PAB drops below the safety stock level (or below zero), the master scheduler must add an MPS order to bring inventory back to acceptable levels.

Available-to-Promise (ATP) Calculation

ATP tells the sales team how much product can be promised to customers without changing the existing MPS. There are two common methods:

Discrete ATP (Period-by-Period):
• For the first period: ATP = On-hand inventory + MPS quantity − Customer orders (until the next MPS receipt).
• For subsequent periods with an MPS receipt: ATP = MPS quantity − Customer orders (between this MPS receipt and the next one).
• Periods without an MPS receipt do not generate a separate ATP figure.

Cumulative ATP: Adds up all discrete ATP values cumulatively. This method shows the total uncommitted supply available through any given period.

Demand Fence and Planning Fence (Time Fences)

Time fences are critical MPS concepts that define zones of planning flexibility:

1. Frozen Zone (Inside the Demand Time Fence - DTF):
• No changes are allowed without senior management approval.
• The schedule is based on actual customer orders only (forecast is ignored or assumed fully consumed).
• Changes here are very costly and disruptive.

2. Slushy Zone (Between DTF and Planning Time Fence - PTF):
• Changes can be made by the master scheduler with some trade-offs.
• Demand is based on the greater of forecast or customer orders.
• The MPS can be adjusted, but impacts on capacity and materials must be evaluated.

3. Liquid Zone (Beyond the PTF):
• Changes are relatively easy and can often be made automatically by the system.
• Planning is primarily driven by the forecast.
• Maximum flexibility exists in this zone.

MPS and Manufacturing Environments

The level at which the MPS is set depends on the manufacturing environment:

• Make-to-Stock (MTS): MPS is set at the finished goods level. The schedule is driven by forecasts.
• Make-to-Order (MTO): MPS is set at the raw material or component level. The schedule is driven by actual customer orders.
• Assemble-to-Order (ATO): MPS is set at the major subassembly or module level. A Final Assembly Schedule (FAS) is used to configure the final product based on customer orders. The MPS for modules is forecast-driven.
• Engineer-to-Order (ETO): MPS may be set at the raw material or even design level, driven entirely by customer specifications.

The Role of the Master Scheduler

The master scheduler is responsible for:
• Maintaining a valid and realistic MPS.
• Ensuring the MPS stays within the production plan boundaries set by S&OP.
• Managing time fence policies and controlling changes.
• Resolving conflicts between demand and supply.
• Communicating the plan to all relevant stakeholders.
• Using rough-cut capacity planning (RCCP) to validate that the MPS is feasible given available resources.

Rough-Cut Capacity Planning (RCCP)

Before the MPS is finalized, it must be validated against available capacity. RCCP is a high-level capacity check that evaluates whether key resources (work centers, labor, equipment) can support the proposed MPS. If RCCP reveals overloads, the master scheduler must adjust the MPS or request additional capacity.

Common RCCP techniques include:
• Capacity Planning Using Overall Factors (CPOF)
• Bill of Labor (Resource Profile)
• Resource Bills

Lot Sizing in MPS

Lot-sizing rules determine the quantity of each MPS order. Common methods include:
• Lot-for-Lot (L4L): Produce exactly what is needed each period.
• Fixed Order Quantity (FOQ): Always produce a set quantity.
• Period Order Quantity (POQ): Cover a fixed number of periods' requirements.
• Economic Order Quantity (EOQ): Balance setup costs and carrying costs.

Key Principles to Remember

• The MPS is a statement of what the company plans to produce, not what it hopes to sell.
• A valid MPS is the foundation for a valid MRP run. Garbage in = garbage out.
• The MPS must be consistent with the production plan (aggregate level).
• Stability in the MPS is crucial — frequent changes (nervousness) disrupt the entire supply chain.
• The MPS should never be overstated (inflated beyond realistic capacity) because this leads to unreliable delivery promises, excess WIP, and longer lead times.

Exam Tips: Answering Questions on Master Production Scheduling (MPS) Fundamentals

Tip 1: Master the PAB Calculation
Practice the Projected Available Balance formula repeatedly. Remember: PAB = Previous PAB + MPS − max(Forecast, Customer Orders). Many exam questions will give you a partially completed MPS grid and ask you to calculate PAB for specific periods. Work through the grid period by period.

Tip 2: Know the ATP Calculation Methods
Understand both discrete and cumulative ATP. Be able to identify the first-period ATP calculation (which includes on-hand inventory) versus subsequent period calculations (which do not). ATP questions are very common and are often calculation-based.

Tip 3: Understand Time Fences Thoroughly
Know the three zones — frozen, slushy, and liquid. Be able to identify which demand source (forecast vs. customer orders vs. greater of both) drives planning in each zone. Exam questions often present scenarios and ask what the master scheduler should do within a particular zone.

Tip 4: Distinguish Between Manufacturing Environments
Know where the MPS is set in MTS, MTO, ATO, and ETO environments. A common exam question asks at what level the MPS should be placed for an ATO company (answer: at the module/subassembly level, using a planning bill of material).

Tip 5: Remember the Role of the Master Scheduler
The master scheduler is responsible for maintaining a realistic, achievable schedule. They do NOT inflate the MPS to satisfy unrealistic demand. They manage within the constraints set by the production plan.

Tip 6: Understand the Relationship Between S&OP, MPS, and MRP
The hierarchy flows: Strategic Business Plan → S&OP (Production Plan) → MPS → MRP. Each level provides constraints and inputs to the next. Exam questions often test whether you understand that the MPS must be consistent with the production plan.

Tip 7: Know When to Use the Greater Of Rule
In the slushy zone, demand = max(Forecast, Customer Orders). In the frozen zone, demand = Customer Orders only. Beyond the PTF, demand = Forecast. This rule prevents double-counting and is a frequently tested concept.

Tip 8: Be Prepared for Scenario Questions
Many CPIM questions present real-world scenarios: a customer wants to place a large order, the forecast has changed, or a machine has broken down. Think about what the master scheduler would do, considering time fences, capacity, and the impact on ATP and PAB.

Tip 9: Don't Confuse MPS with the Forecast
The MPS is NOT the forecast. The forecast is an input. The MPS is the planned manufacturing response. If an exam question implies that the MPS equals the forecast, it is likely a distractor answer.

Tip 10: Practice with MPS Grids
Work through as many MPS grid examples as possible. Set up grids with different lot-sizing rules, varying forecasts and customer orders, and different on-hand balances. The more comfortable you are with the mechanics, the faster and more accurately you will answer exam questions.

Tip 11: Understand Nervousness and Stability
System nervousness refers to frequent, unnecessary changes to the MPS that cascade through MRP. Time fences, firm planned orders, and lot-sizing policies help reduce nervousness. Exam questions may ask about tools or techniques to improve MPS stability.

Tip 12: Link MPS to RCCP
Remember that RCCP validates the MPS from a capacity perspective. If RCCP shows that a work center is overloaded, the master scheduler must revise the MPS or negotiate for additional capacity. The MPS cannot be released if it exceeds capacity.

Summary

The Master Production Schedule is the engine of production planning. It converts high-level plans into actionable, item-level schedules that drive MRP, capacity planning, and customer order promising. For the CPIM exam, focus on understanding the MPS grid mechanics (PAB and ATP calculations), time fence management, the role of the master scheduler, and how MPS interacts with other planning levels. Consistent practice with calculations and scenario-based questions will build the confidence needed to answer MPS questions accurately and efficiently.