2.4 The Planning Hierarchy

Manufacturing stability relies on converting volatile market signals into a deterministic production schedule. Confusion between "Forecast" (what might happen) and "Firm Order" (what must happen) leads to excess inventory or line stoppages. This section delineates the planning horizons and the mechanics of the Master Production Schedule (MPS).

2.4.1 Forecast vs. Firm Demand

• Soft Forecast: Uncommitted demand used for driving long-lead time (LLT) procurement. Liability is limited to the raw material authorization.
• Firm Order: Committed production slots with allocated capacity and labor. Cancellation triggers immediate financial penalties.

2.4.2 Material Requirements Planning (MRP) 

The MRP engine is the single source of truth for purchasing signals.

• Regenerative Frequency: MRP runs nightly to capture inventory changes.
• Exception Management: Planners must address MRP "Action Messages" daily:
  • Reschedule In (Pull): Demand has moved up; material will be late.
  • Reschedule Out (Push): Demand has delayed; defer delivery to prevent cash flow drain.
  • Cancel: Demand has vanished; terminate PO immediately.

Final Checklist