Production Planning and Scheduling: Complete Manufacturing Guide

Meta Description: Master production planning and scheduling in manufacturing. Learn strategies, methods, and tools for optimizing capacity and meeting customer demand.

Introduction

Production planning and scheduling (PPS) is the backbone of manufacturing operations, determining what to produce, when to produce it, and what resources are needed. Effective PPS balances customer demand with production capacity while minimizing costs and maximizing efficiency.

What Is Production Planning?

Production planning determines what, how much, and when to produce based on demand forecasts, capacity constraints, and inventory policies.

The Planning Hierarchy

┌─────────────────────────────────────────────────────────────────┐
│              Production Planning Hierarchy                       │
├─────────────────────────────────────────────────────────────────┤
│                                                                 │
│  STRATEGIC PLANNING (Long-term: 1-5 years)                     │
│  • Capacity planning                                            │
│  • Facility planning                                            │
│  • Technology investment                                        │
│  • Make vs. buy decisions                                       │
│                                                                 │
│  TACTICAL PLANNING (Medium-term: 6-18 months)                   │
│  • Aggregate planning                                          │
│  • Production budgeting                                         │
│  • Workforce planning                                           │
│  • Material planning                                            │
│                                                                 │
│  OPERATIONAL PLANNING (Short-term: days-weeks)                  │
│  • Master scheduling                                           │
│  • Material requirements planning                               │
│  • Capacity requirements planning                               │
│  • Final assembly scheduling                                    │
│                                                                 │
│  SCHEDULING (Very short-term: hours-days)                       │
│  • Shop floor control                                           │
│  • Sequencing                                                   │
│  • Dispatching                                                  │
│                                                                 │
└─────────────────────────────────────────────────────────────────┘

Production Planning Steps

Step 1: Forecast Demand

Predict future customer demand:

Forecasting Method	Best For	Time Horizon
Judgment	New products, strategic	Long-term
Market Research	New products, features	Medium-term
Time Series	Stable demand	Short-medium
Causal Models	Demand drivers	Medium-term
Collaborative	Supply chain alignment	Medium-term

Step 2: Determine Production Capacity

Assess available resources:

Capacity Elements:
• Equipment capacity (hours available)
• Labor capacity (skills, shifts)
• Material availability
• Storage capacity
• Budget constraints

Theoretical Capacity =
  Available time × Production rate

Rated Capacity =
  Theoretical capacity × Efficiency rate

Demonstrated Capacity =
  Actual production achieved

Step 3: Compare Capacity with Demand

Identify gaps and develop strategies:

Situation	Strategy
Demand < Capacity	Reduce shifts, build inventory, develop new markets
Demand ≈ Capacity	Maintain, focus on efficiency
Demand > Capacity	Overtime, subcontract, add capacity, backorder

Step 4: Develop Production Plan

Create the plan:

Production Plan Elements:
• What products to produce
• How much to produce
• When to produce
• Where to produce (which facility)
• Resources required
• Target costs

Step 5: Monitor and Adjust

Track performance and adjust:

Compare actual vs. plan
Identify variances
Adjust plan as needed
Communicate changes

Master Production Schedule (MPS)

The MPS is the build plan for end items:

┌─────────────────────────────────────────────────────────────────┐
│                    Master Production Schedule                    │
├─────────────────────────────────────────────────────────────────┤
│                                                                 │
│  Product: Widget A                                             │
│  Lot Size: 100                                                 │
│  Lead Time: 2 weeks                                            │
│                                                                 │
│  Week:        1    2    3    4    5    6    7    8             │
│  ────────────────────────────────────────────────────────────  │
│  Forecast    50   50   60   60   70   70   80   80             │
│  Orders      45   55   40   65   50   60   --   --             │
│  PAB         80   30   70   10   40   70   90   10             │
│  MPS        --    --   100   --   100  100  100   --           │
│  ATP         35   --    50   --    50   40   100   --           │
│                                                                 │
│  PAB = Projected Available Balance                              │
│  ATP = Available to Promise                                     │
│                                                                 │
└─────────────────────────────────────────────────────────────────┘

Material Requirements Planning (MRP)

MRP calculates materials needed based on MPS and bill of materials:

MRP Inputs

Master Production Schedule - What to make
Bill of Materials - What's in each product
Inventory Records - What's on hand
Lead Times - How long items take to arrive

MRP Logic

For each component:
  Gross Requirements = MPS quantity × BOM quantity
  Net Requirements = Gross Requirements - On Hand - On Order
  Planned Orders = Net Requirements (adjusted for lot size)
  Planned Order Release = Planned Orders - Lead Time

Scheduling Methods

1. Forward Scheduling

Schedule from start date:

Used for make-to-order
Calculates earliest completion
Considers capacity immediately

2. Backward Scheduling

Schedule from required due date:

Used for make-to-stock
Calculates latest start time
Ensures on-time delivery

3. Finite Scheduling

Considers capacity constraints:

More accurate but complex
Requires good data
Software often needed

4. Infinite Scheduling

Assumes unlimited capacity:

Simpler calculation
Capacity issues identified later
Requires manual leveling

5. Optimized Production Technology (OPT)

Focus on bottlenecks:

Identify constraint
Subordinate everything to constraint
Elevate constraint performance
Repeat as constraint moves

Sequencing Rules

Job Shop Sequencing

When multiple jobs compete for same resources:

Rule	Description	Best For
FCFS	First Come, First Served	Simple, fair
SPT	Shortest Processing Time	Minimizing average completion
EDD	Earliest Due Date	Meeting due dates
CR	Critical Ratio (Time left/Work left)	Managing lateness
Johnson's Rule	Two-machine optimization	Flow shops

Scheduling Challenges

Common Challenges

Challenge	Cause	Solution
Bottlenecks	Unbalanced capacity	Identify and optimize constraint
Setup Times	Changeovers reduce capacity	SMED, family grouping
Rush Orders	Disrupt schedule	Reserve capacity, premium pricing
Machine Breakdowns	Unplanned downtime	Preventive maintenance, buffer
Material Shortages	Supply issues	Safety stock, reliable suppliers
Employee Absences	Labor availability	Cross-training, flexible staffing

Advanced Scheduling Techniques

1. Theory of Constraints (TOC)

Five focusing steps:

Identify the constraint
Exploit the constraint
Subordinate everything else
Elevate the constraint
Repeat if constraint moves

2. Drum-Buffer-Rope (DBR)

TOC scheduling method:

Drum: The constraint sets the pace
Buffer: Protection before the constraint
Rope: Communication/tie to constraint

3. Lean Scheduling

Heijunka (leveling):

Mixed model production
leveled production volume
Standardized work
Pull system (Kanban)

4. Advanced Planning and Scheduling (APS)

Software-based optimization:

Constraint-based scheduling
Real-time updates
What-if analysis
Multi-objective optimization

Production Planning KPIs

Key Metrics

KPI	Formula	Target
Schedule Attainment	Orders completed on schedule / Total orders	>95%
Schedule Adherence	Planned vs. actual sequence	>90%
Capacity Utilization	Actual output / Rated capacity	80-85%
Make-to-Order Cycle Time	Order receipt to shipment	Minimize
Throughput	Units produced per time period	Maximize
WIP Inventory	Value of work in process	Minimize
On-Time Delivery	On-time orders / Total orders	>95%

Digital Transformation in PPS

Industry 4.0 Technologies

┌─────────────────────────────────────────────────────────────────┐
│                    Modern PPS Capabilities                      │
├─────────────────────────────────────────────────────────────────┤
│                                                                 │
│  REAL-TIME DATA                                                │
│  • Machine status                                              │
│  • Production progress                                         │
│  • Material availability                                        │
│  • Labor presence                                              │
│                                                                 │
│  AUTOMATIC RESCHEDULING                                        │
│  • Event-driven updates                                        │
│  • Real-time constraint checking                               │
│  • Automatic notifications                                     │
│                                                                 │
│  AI AND OPTIMIZATION                                           │
│  • Machine learning for better scheduling                       │
│  • Predictive disruption detection                             │
│  • Automated decision making                                   │
│                                                                 │
│  INTEGRATION                                                   │
│  • Connected to MES, ERP, SCM                                  │
│  • Single source of truth                                      │
│  • End-to-end visibility                                       │
│                                                                 │
└─────────────────────────────────────────────────────────────────┘

Best Practices

1. Sales and Operations Planning (S&OP)

Align supply and demand:

Monthly cross-functional meeting
Review demand and supply
Make trade-off decisions
Update financial plans
One set of numbers

2. Frozen vs. Flexible Planning

Time fence approach:

Frozen zone: Immediate future, no changes
Slushy zone: Trade-offs allowed
Liquid zone: Flexible planning

3. Capacity Buffers

Plan for uncertainty:

Safety capacity (similar to safety stock)
Overtime availability
Subcontractor relationships
Flexible workforce

4. Continuous Improvement

Regularly improve planning:

Track forecast accuracy
Measure schedule adherence
Analyze variances
Update planning parameters
Refine planning logic

Conclusion

Effective production planning and scheduling balances customer demand with production capacity while minimizing costs. Success requires accurate data, reliable processes, continuous improvement, and integration across the organization.

Need to improve your planning and scheduling? Contact us for an assessment and optimization roadmap.