Question

Suppose you are doing a burger producing business. Now develop an MPS and MRP for next one months. (use example appropriately, no "in general" thinking will be accepted)

Answer 1

In short, an MRP, or Materials Requirements Planning, is used to determine how many materials to order for a particular item, while an MPS, or Master Production Schedule, is used to determine when the materials will be used to produce an item.

MRP plans items that have “dependent” demand. Dependent demand is passed along due to the need to produce a particular item. It is used to decide how much material is required to have the appropriate inventory on hand to keep the production schedule operating at maximum efficiency. It uses the bill of material required, along with knowledge of existing inventory and the master production schedule, to determine what materials to order.

MPS plans items that have “direct” demand, or “independent demand.” With independent demand, the demand comes from sales orders, service orders, or forecasts, and the demand comes directly from customer—or forecasted—requirements. It is the list that provides the timing of the production schedule and shows how much each machine can produce, how many shifts are used, etc. If the MPS is based on the MRP lists, you will avoid having excess inventory or insufficient materials.

The most important difference between MRP and MPS is this: An MPS operates through only one layer of the BOM (bill of materials), so it doesn’t account for all of the BOMs required to produce a product. MRP does. So, most companies use the two together to run more efficiently.

So, why would you run MPS separate from your MRP items? Some companies have a need to minimize change over time from one item to another and need to set a schedule and produce to that schedule. By running MPS separately, the schedule can be run once a week, and MRP can be run more frequently to get action messages required to produce and maintain the production schedule.

Master Production Schedule (MPS)
In simple words, MPS helps you plan the manufacturing process of Independent Demand Items. It will help you plan your purchases depending on the customer demands or forecasts. Here the system plans the production of individual commodities considering a range of elements such as inventory costs, production costs, lead time, capacity, working hours, inventory levels, available storage...etc.

Although it won’t be considering every aspect of the production, the system can help achieve improved factory activity, accuracy, and viability leading you to a higher profitability. MPS run on a weekly bases depending on the orders and forecast period.

Material Requirements Planning (MRP)
MRP is quite similar to MPS in terms of the algorithm. The difference of MRP is that it plans for items needed to be produced. Or in other words for Dependent Demand Items. MRP will give you answers to,

• How much more do we need based on what we have?
• How much we need to purchase?
• How much we expect to consume?

Here the system will consider reordering levels, minimum quantities, order up to levels, and order multiples during the planning to fine-tune the orders to address the variation in demands while improving order economics and balancing order costs.

Plus, the system will help you to manage order due dates ensuring that the products arrive on time to meet the demand and order placement date to ensure lead time to give the supplier enough time to fulfil the order. Other main difference of MRP is that it runs daily to fulfil the material or parts needed to produce the plan.

MPS Vs MRP

MPS	MRP
Plans Independent Demand Items	Plans Dependent Demand Items
Demand passed down directly from the customer	Demand passed down due an item needed to be produced
Runs on weekly depending on the forecasts or the demand	Runs daily

MPS and MRP are two completely different systems that have some similarities. Although at this point you might feel like all you need is an MRP and there is no big deal in not having a MPS.

in many cases, you can use an MRP to plan for you Independent Demand Items. However, you won’t be able to include forecasts in the algorithm for your planning without a MPS. Another benefit of having separate MPS and MRP is that it will help you cope with the change requests come with new orders well with efficiency. Because your MRP will run frequently managing the products required while MSP will make sure you are on the production schedule.