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TL;DR: Aggregate planning sets the medium-term production strategy, while a master production schedule translates that strategy into product-level execution. Indian SME manufacturers need both to balance demand, capacity, and costs.
Indian SMEs constantly balance sales commitments with production capacity. Underproduction risks missed deliveries, while overproduction ties up cash in inventory. Understanding aggregate planning vs master production schedule helps manufacturers plan realistically and execute reliably.
What Is Aggregate Planning?
Aggregate planning is a medium-term production planning approach that aligns daily operations with long-term business goals. It typically covers a 3 to 18 month horizon and looks at overall production volume, workforce levels, inventory, and capacity.
The focus is not on individual products, but on product families and total output.
Purpose of Aggregate Planning
The purpose of aggregate planning is to balance market demand with production capacity at the lowest possible cost. Because it works over a medium time frame, businesses can adjust manpower, shifts, inventory, and outsourcing as demand changes.
In short, aggregate planning helps you decide how much to produce and with what resources.
Types of Aggregate Planning Strategies
There are three commonly used aggregate planning strategies.
Level strategy: Production remains constant over time. This provides stability in operations but can increase inventory holding costs during low demand periods.
Chase strategy: Production closely follows demand. Inventory costs are lower, but frequent changes in workforce and schedules can disrupt operations.
Mixed strategy: A combination of level and chase strategies. This approach balances stability with flexibility but requires careful planning and coordination.
Aggregate Planning in Manufacturing
In manufacturing, aggregate planning uses demand forecasts, available capacity, and inventory levels to define an overall production approach.
Key outcomes include better coordination between departments, lower operational costs through controlled inventory, and improved customer satisfaction through timely availability of products.
What Is a Master Production Schedule?
A master production schedule (MPS) is a detailed breakdown of the aggregate plan. It usually covers a shorter horizon of 3 to 12 months and specifies exactly what products need to be produced, in what quantities, and when.
MPS converts strategy into execution by giving production teams clear, actionable instructions.
Purpose of Master Production Schedule
The purpose of a master production schedule is to translate aggregate planning into day-to-day manufacturing actions. It aligns production, procurement, and inventory teams around specific product requirements.
This clarity helps identify bottlenecks, manage cash flow, and improve delivery reliability.
Functions of Master Production Schedule
A master production schedule performs several critical functions.
Cross-department communication: It keeps sales, production, procurement, and inventory aligned on priorities.
Resource allocation: It ensures raw materials, labor, and machines are planned according to actual product demand.
Inventory control: It helps avoid stockouts and excess inventory by defining precise production timelines.
Master Production Schedule Process
The typical master production schedule process involves several steps.
Start with an aggregate production plan.
Identify products and planning horizons for detailed scheduling.
Analyze demand using current and historical data.
Build a detailed production plan considering capacity and constraints.
Review and update the schedule regularly to stay aligned with reality.
Master Production Schedule Example
Consider an electronics manufacturer producing two products over two months.
The aggregate plan defines overall demand and capacity needs. The master production schedule then specifies quantities, lead times, and procurement schedules for each product. This creates a clear roadmap for inventory control and on-time production.
Key Differences Between Aggregate Planning and Master Production Schedule
The two concepts serve different but complementary roles.
Aggregate planning focuses on overall production strategy.
Master production scheduling focuses on product-level execution.
Aggregate planning is flexible and strategic.
Master production scheduling is detailed and operational.
Together, they ensure that production plans are both realistic and executable.
Integrating Aggregate Planning and Master Production Schedule
Aggregate planning defines the direction for production, considering capacity, labor, and demand. Master production scheduling builds on this foundation to create a detailed execution plan.
When integrated properly, teams know exactly what to produce, when to produce it, and how to support it with materials and resources.
FAQs
What is aggregate production planning?
Aggregate production planning is a high-level approach to planning total production over a medium-term horizon, typically 3 to 18 months, to balance demand, capacity, and cost.
What is a master production schedule?
A master production schedule is a detailed plan that specifies what products to produce, in what quantities, and when, usually over a 3 to 12 month period.
What are the types of aggregate planning strategies?
The main strategies are level strategy, chase strategy, and mixed strategy, each offering a different balance between stability and flexibility.
How do aggregate planning and MPS work together?
Aggregate planning sets the overall production strategy, while the master production schedule converts that strategy into detailed, actionable production plans.
Which is more detailed, aggregate planning or MPS?
Master production scheduling is more detailed, as it focuses on specific products, quantities, and timelines.
