Question

In: Operations Management

Describe the relationship among the production plan, the master production schedule, and the materials requirements plan....

Describe the relationship among the production plan, the master production schedule, and the materials requirements plan. What are the benefits of using these types of plans? How do these plans fit into the strategic business plan? What is a major difference of the plans and how can that difference create potential challenges?

Solutions

Expert Solution

Production plan is the generic schedule of the activities that the business will undertake, to ensure the production rate meets the customer requirements timely. MRP and MPS are subsets of production plan. Material Resource Planning (MRP) and Master Production Schedule (MPS) almost mean the same thing. The major difference is that the MRP plans items that have dependent demand while MPS is focused on the items, which have independent or direct demand. MRP is run daily while MPS is run weekly to keep a check on the raw materials required for production.

Benefits of using above-mentioned plans:

  • Helps in keeping the production rate on schedule
  • Raw Materials are procured in a timely manner
  • Inventory holding cost is reduced
  • Resources are optimally utilized
  • Facilitates the communication lines across system
  • Protects the lead time of the manufacturing process
  • Helps in anticipating future demand

The major differences between MRP and MPS are:

  • MRP plans items that have dependent demand while MPS is focused on the items, which have independent or direct demand.
  • MRP is run daily while MPS is run weekly to keep a check on the raw materials required for production.
  • In MRP, demand trickles down the system while in MPS, demand directly from customer is considered

The potential challenge while dealing with MRP and MPS just lies in the fact that they need to be monitored and updated regularly to maintain real-time tracking of the raw materials and demand fulfillment status.


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