Master production scheduling and a comparison of material requirements planning and cover-time planning

For a company's long-term profitability, the most important processes are the way it starts parts of the manufacturing process before the customer order arrives and the way it determines and promises delivery quantities and times for customer orders. In practical computer applications Material Requirement Planning (MRP) and/or Reorder point systems are the base techniques mostly used. This paper presents Cover-Time Planning (CTP), a variant of a reorder point system, which is developed with a forward-looking forecasted demand rate and the decision variable is ‘time’, instead of ‘quantity’ for an ordinary reorder-point system. MRP and CTP are introduced and compared through a numerical example. MRP and CTP must treat a practical ‘make-to-order’; therefore, this paper discusses available-to-promise, planning bills and other help systems for practical applications of Master Production Scheduling. The paper presents how and why, in practice, a Master Production Scheduling system with an available-to-promise function should be used and how this system should be designed. It is also argued that a fully Enterprise Resource Planning (ERP) system cannot only be created by MRP, but also by CTP.