MPO : Master Planning Optimizer

Master Planning Optimizer (MPO) Two versions: MPO for Production and MPO for Distribution

MPO for Production

In production planning and scheduling, we often face many challenges, including
demand variability,supply uncertainty, and an increasing variety of products that a manufacturing company has to produce.  The standard tool for managing this difficult task is ERP.  And we all know that ERP has limited planning capability because almost all ERP’s are still relying on MRP/CRP logicMost companies in Thailand don’t know how to use MRP for planning.  They use MRP most often for material purchase. 

In order to extend the capability of ERP system, some ERP packages offer finite loading to overcome the obsolete notion of “Infinite Loading” assumption.   In order to cope with planning difficulty, most factory planners use Excel to do planning.  Even some very large MNC corporations still rely solely on spreadsheet to do planning.  As we all know, spreadsheet has become more powerful and it does have optimization capabilities.  At M-Focus we have done several planning projects using spreadsheet technology.  However, we have found many weaknesses when using spreadsheet.  We found that

  1. Most spreadsheets have bugs due to human errors and sometimes it is very difficult to locate the bug(s) when the spreadsheet is large.
  2. Spreadsheet solutions suffer from poor display of solutions and lack good reporting that allow planners to understand the solutions, e.g., drill down capability.  This makes planners unable to answer questions quickly.
  3. It is quite difficult to do what-if analyses and scenario management.


  • Traditional MRP logic does not consider capacity constraints

  • Purchase plan of raw materials does not match production plan

  • Planner wants to find feasible Detailed Plan/Schedule

  • Too many demands over existing production capacity

  • Too many demands over supply of raw materials.

  • How to decide on the best production and purchase plan of actions? 

  • … Find the best Master Production Schedule 

  • … Run MRP

  • … Perform Detailed Scheduling

Why do we need Planning Optimization? 
To complete production to meet demand, we need:
  • Material Availability
  • Machine Capacity
In typical MRP/ERP planning engine, MRP uses a MPS (Master Production Schedule) as the plan driver to buy raw materials.  Planner uses Excel and experience to check capacity.  This may not be very effective due to the complexity of the bills of materials and production facilities.
MRP is a Material-First, Schedule-Second approach because it gives higher priority to planning for material requirements before scheduling manufacturing capacity to fulfill customer demands.
In some industries such as printing, it may be preferable to schedule the facilities first and order the required materials afterward (the so-called Schedule-First, Material-Second  approach).
Optimization, on the other hand, allows consideration of material requirements and capacity requirements simultaneously, resulting in more synchronized plans.

How MPO obtains optimized production plan?

LP Objective: Minimize production and inventory carrying cost over the planning horizon

Subject to: 1) Production capacity used <= Capacity at each machine

                 2) Demand must be met  

Output: Production Plan, i.e. Optimal Quantities to be produced on each machine in each time bucket.  Bucket size can be fixed or variable.

  • Integrated data from general ERP package by excel template
  • Solver engine by What'sBest
  • Interested in By-Product or Co-Product
  • Vary time bucket in planning horizon
  • Generated master production schedule in a very short period of time, often minutes.
  • Scenario Management for What-If analysis
  • Integrated with Tableau for show results
  • Developed on WPF Platform