Tip & Tricks

## Basics of Demand, Forecast, MPS & MRP

What is MPS?

MPS term is used for Master Production Schedule. It is used to plan items which have direct demand. Like Sales Order, Service Orders and Forecasts. It is run Weekly based on Orders and forecasts for that period.

What is MRP?

MRP term is used for Material Requirements Planning. It is used to plan items which have dependent demand. Like sub items used to produce FG or are defined in BOM. It is run Daily to expedit parts required to produce the plan.

What is Forecast?

Forecasting allows your company to create “what if” scenarios and efficiently and cost-effectively plan for and meet demand. Accurate forecasting can make a critical difference in customer satisfaction levels with regard to order promising dates and on-time delivery.

The forecasting functionality in the program can be used to create sales or production forecasts, in combination or independently.

What is Demand?

Calculation is done order-by-order, meaning that the order that includes the demand line with the earliest due date or shipment date is considered first, and all other demand lines in that production order, irrespective of their individual due dates or shipment dates, are also calculated for that order. When the calculation is completed, all unfulfilled demand is displayed as planning lines, sorted by the earliest demand date, with the various quantity fields filled in.

Actual demand is calculated from Sales Order, Service Orders, Components Needed, Job Planning Lines.

This demand is compared with the Forcasted demands like defined in Production Forecast.

Regenerative Plan is calculated as per Period, MPS, MRP and other provided parameters.

Lets understand this via a simple Example:

Step-1

Define Forecast for Item A as requirement of 1000 Qty for Jan Month.

Step -2

Run the Regenerative Plan, you will get the Planning for Item A with due date as 1st Jan of 1000 Qty.

Let us see what happens under different demand levels.

Scenario-1

When demand is less than Forecast for the month.

Let us Make a Sales Order for 200 Qty of Item A.

Lets see the impact of this on our Plan.

Sales demand is for 200 Qty

Forecast demand will be for 800 Qty (1000 – 200)

Actual demand in this case is of 200 Qty

If we run our Plan 2 lines will be created as below

a) 200 Qty with due date equivalent to Sales Order date

b) 800 Qty with due date as 1st Jan from Forecast

If we see our Total demand is still 1000 Qty

Scenario-2

When demand is equal to Forecast for the month.

Let us Make a Sales Order for 1000 Qty of Item A.

Lets see the impact of this on our Plan.

Sales demand is for 1000 Qty

Forecast demand will be for 0 Qty (1000 – 1000)

Actual demand in this case is of 1000 Qty

If we run our Plan 1 line will be created as below

a) 1000 Qty with due date equivalent to Sales Order date

If we see our Total demand is still 1000 Qty

Scenario-3

When demand is greater than Forecast for the month.

Let us Make a Sales Order for 1500 Qty of Item A.

Lets see the impact of this on our Plan.

Sales demand is for 1500 Qty

Forecast demand will be for 0 Qty

Actual demand in this case is of 1500 Qty

If we run our Plan 1 line will be created as below

a) 1500 Qty with due date equivalent to Sales Order date

If we see our Total demand is now 1500 Qty

Will comeup with more details in my upcomming posts.