Question 1

Is a demand forecast the same as a sales target?

Accepted Answer

No. A demand forecast is a prediction of what a business *expects* to sell based on data and trends. A sales target is a motivational goal set for the sales team, representing what the business *wants* to sell. The forecast informs the production plan (MPS), while the target drives sales activity.

Question 2

Can a small business use Materials Requirement Planning (MRP)?

Accepted Answer

Yes, although the complexity and cost of large-scale systems can be a barrier. MRP principles can be applied on a smaller scale using spreadsheets or more affordable, specialised software. The core logic of using a production schedule, bill of materials, and inventory data to plan purchasing is scalable and beneficial for any business managing assembly.

Question 3

Does the Master Production Schedule (MPS) ever change?

Accepted Answer

Yes, the MPS is a dynamic, rolling plan, often reviewed weekly or monthly. It must be updated to reflect changes in customer orders, revised demand forecasts, supplier issues, or production capacity problems. This flexibility is crucial for a business to remain responsive. A 'frozen' period may exist where changes are not permitted close to the production date to ensure stability.

Operations planning

What you need to know

Operations planning