Understanding the differences between MRP and MPS

Understanding the differences between MRP and MPS

What’s the difference between MRP and MPS? This is a question we often get, and it’s a good one, because there are several key differences that are important to know.

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.

The calculations are exactly the same for each—with one distinction:

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.

If you have any questions about MRP, MPS, or other manufacturing topics, 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.

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