What does MRP stand for? What is MPS? When Do You Use Them?
I was recently asked to discuss the difference between MRP and MPS. After providing the explanation, I thought it would be helpful information to share in a blog:
MPS stands for Master Production Schedule. A Master Production Schedule is the virtually exact same thing as MRP (Material Requirements Planning)—the calculations are exactly the same. But there is one distinction.
MPS plans items that have “direct” demand—called independent demand. Independent Demand means that its demand comes from Sales Orders, Service Orders, or forecasts. The demand is directly from the customer requirements (or forecasted requirements).
MRP plans items that have “dependent” demand—demand that is passed down because of the need to produce an item.
So, if I make a pen, it has a cap, a barrel, a spring. and a refill. Based on the definition above, the PEN is an MPS item. The cap, barrel, spring and refill are MRP items.
I will use my previous life in planning as the example:
When producing pens, we would lay out an MPS production plan on a weekly basis. That finished good production plan would be based on the orders and forecast for that period. That would create a “Finished Good” plan which would not be changed (well, we tried not to change it). This plan was important because we needed to manage the production plan to group items together by color to minimize molding change over time. This level loaded our production plan for the week and created the demand required for the components to produce that finished good plan. MRP would be run daily to expedite any parts required to produce the plan.
So, why would a company run MPS separate from their MRP items? Many times the finished good plan is going to be laid out and not changed. So rather than run MPS items daily and deal with the change requests (every day, new orders come in and change the requirements; therefore, you get messages that need to be dealt with). This is particularly true of companies that need to plan like items together.
I can think of two companies I have worked with in my consulting time that I suggested MPS planning. Both had finished good planning requirements similar to what I described above. They had a need to minimize change over time from one item to another. They also needed to set a schedule and produce to it. By running MPS separately, the schedule could be run once a week, and then MRP could be run more frequently to get action messages required to produce and maintain the production schedule.
If you have any further questions about MRP, MPS, or other manufacturing topics, please contact the manufacturing experts at ArcherPoint.
To find out more, read How to Cycle Count in Microsoft Dynamics NAV, Part 1. In this 2-part blog series, Rick Dill explains cycle counting and how to use Microsoft Dynamics NAV to perform cycle counts using two methods.