Operations planning — common mistakes

In an exam, clearly distinguish between a demand forecast and an MPS. A forecast is a prediction of what might be sold, whereas the MPS is a concrete plan of what will be produced, taking capacity and inventory into account.

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.

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.

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.