Difference between MRP and MPS

Explain the difference between a materials requirement planning (MRP) and Master Production Schedule. Provide examples how each are applied in the supply chain.

Materials requirement planning is used much more specifically for individual items within the production process. Here, MRP is used to calculate the number of materials needed for the manufacture of a particular item (Hung, 2013). This is referred to as a “dependent demand” as the MRP is dependent on the amount of available inventory and sales figures. Here, the amount of material required to maintain adequate inventory levels is dependent are current inventory levels and sales of the product. A very common example is that of the PlayStation 5, the fastest selling console of all-time produced by Sony. Due to very high demand, the company requires materials that are very specialized and difficult to precure. The most of important of these items is computer chips which are themselves having supply chains issues. As a result, the company is looking to order chips in advance, paying premium prices for them, and using the materials to satisfy high demand.

This is in contrast to master production scheduling, which is much more associated with the timing of when materials will be used to produce an item. This is often referred to as an “independent demand.” Here independent demand is often determined by forecasts and other internally generated mechanisms to predict when items will be demanded. These forecasts are ultimately used as a means to determine how much can be produced over a given period. A common example is chocolate manufacturing. Here, peak periods are often during the Christmas and Valentines days holidays, where demand is high. As such, company’s use MPS as it means to properly forecast the heightened demand by delivery higher levels of inventory during these periods.