Simplify Purchase and Production Planning in Business Central with MRP/MPS

A Guide to Mastering Material and Production Scheduling in Business Central

Manufacturing and distribution businesses are always under pressure to meet customer demand quickly while keeping inventory costs low and avoiding production bottlenecks. In this fast-paced environment, Material Requirements Planning (MRP) and Master Production Scheduling (MPS) are essential for efficient supply chain management. With Microsoft Dynamics 365 Business Central, you get powerful MRP/MPS features that streamline Business Central production planning – helping planners coordinate purchasing, manage resources, and improve overall planning accuracy.

In this post, I’ll walk you through the details of MRP and MPS in Business Central. We’ll explore how these modules work, how to set up item planning parameters, run MRP/MPS, validate outcomes, and troubleshoot common challenges.

How MRP and MPS Work in Dynamics Business Central

MRP and MPS are algorithms in Business Central that help determine what materials and products need to be purchased or manufactured, and when. MPS focuses on end-item demand (finished goods), while MRP handles the requirements for raw materials and components.

MPS (Master Production Schedule): MPS calculates the gross requirements for items designated as ‘MPS items’—typically, finished goods or major subassemblies. It considers sales forecasts and confirmed sales orders to propose supply orders, ensuring customer demand is met without overstocking.
MRP (Material Requirements Planning): MRP expands on the MPS output, evaluating the dependent demand across all levels of the bill of materials (BOM). It generates action messages and planning suggestions for purchase, transfer, and production orders for raw and semi-finished items.

In Production Planning in Business Central, these engines interact with your inventory, sales, and production data to automatically generate detailed planning worksheets – eliminating manual calculations and reducing human error.

Setting Up Item Planning Parameters for Accurate Results

Getting meaningful and reliable suggestions from MRP and MPS depends heavily on how you configure each item’s planning setup. Here are the most important settings to review:

Replenishment System: Decide whether each item should be produced, purchased, or transferred from another location. For example, finished goods are often produced, while raw materials may be purchased.
Reordering Policy: Options like Fixed Reorder Quantity, Maximum Quantity, Lot-for-Lot, or Order control how and when supply orders are suggested. Here’s where each policy fits best:
- Fixed Reorder Quantity: Use this for high-turnover items that are sold or used at a relatively stable rate, such as packaging materials (e.g., cardboard boxes) or office supplies (e.g., printer paper). The system will suggest ordering the same quantity each time stock drops below a certain threshold.
- Maximum Quantity: This is ideal for items where you want to keep inventory below a certain cap, such as perishable goods like food ingredients, or high-value items that are costly to store. The system will suggest replenishing stock only up to the maximum limit, avoiding overstock.
- Lot-for-Lot: Best for custom or project-based production, such as made-to-order machinery parts or tailored components. The system matches each supply order exactly to the demand, ensuring you don’t produce or purchase more than necessary.
- Order: Suitable for irregularly needed items, such as spare parts for equipment maintenance or products with unpredictable demand. The system will suggest a new order for each demand occurrence, which avoids stockpiling but ensures you have what you need when the occasion arises.
Lead Time: The time it takes to either buy or make the item.
Order Modifiers: Minimum, maximum, and multiple quantities help you optimize batch sizes and purchasing amounts.
Safety Stock Quantity: A buffer to protect against demand spikes or supply delays.
Planning Time Fence: A window during which existing orders are protected from automatic changes, keeping your short-term plans stable.

These parameters are the foundation of Business Central production planning, ensuring that MRP and MPS suggestions align with real-world operations.

For example, imagine you have a planning time fence set for 30 days. This means that any orders scheduled to be fulfilled within the next 30 days are protected from changes. If new demand or supply information comes in, the system will not automatically adjust these existing orders within the 30-day window. This helps ensure that your short-term plans remain stable and predictable.

For instance, if you have an order to receive 100 units of a product on August 20th, and today is August 15th, this order falls within the 30-day planning time fence. Even if new demand data suggests you need 150 units, the system will not change the existing order of 100 units. Instead, it will suggest additional orders outside of the 30-day window to meet the new demand.

Rescheduling Period: Controls when the system suggests adjusting current orders rather than making new ones.

You’ll find all these fields on the Planning tab of the item card in Business Central. It’s a best practice to regularly review these parameters, especially when you add new items or when your business processes evolve.

Running MRP/MPS in Dynamics Business Central

MRP/MPS runs in Business Central are performed using the Planning Worksheet or Requisition Worksheet pages. Here’s a step-by-step guide:

Accessing the Planning Worksheet: From the main menu, search for “Planning Worksheet.” This is your workspace for running simulations (regenerative or net change), reviewing suggestions, and creating supply orders.
Configuring the Calculate Plan Process: Once in the worksheet, select Process > Calculate Plan. A dialog box prompts you to select:
1. Include MPS/MRP: Choose to run MPS, MRP, or both. Most often, you’ll do both together for holistic results.
2. Starting/Ending Dates: Set your planning horizon—typically aligned with your production and procurement cycle (e.g., 3 months).
3. Include Forecast Demand: Optionally incorporate sales forecasts in addition to actual orders.
Reviewing Planning Suggestions: After the calculation completes, the worksheet populates with suggested actions – new production orders, purchase orders, transfers, rescheduling, or cancellation proposals. Each line shows:
1. The item and quantity required
2. Suggested supply type (purchase/production/transfer)
3. Required and due dates
4. Linked demand (sales, forecast, dependent demand)
5. Action messages (e.g., expedite, postpone, cancel, or new order)

A planner can manually adjust quantities, dates, or suggested vendors if necessary.

4. Carrying Out Action Messages: Once suggestions are reviewed, use the Carry Out Action Message function to automatically create production orders, purchase orders, or transfers. This step converts planning proposals into actionable documents, ready for execution by procurement or production teams.

Validating the Results: Ensuring Planning Accuracy

Efficient planning is more than just running MRP/MPS—it’s about validating outcomes before acting. Here’s how to do it in Business Central:

Check for Unusual Quantity or Date Suggestions: Outliers often indicate incorrect setup, outdated forecasts, or unexpected demand spikes.
Review Action Messages: Frequent expedites or cancellations can signal issues with your lead times, demand plan, or supplier performance.
Audit the Demand and Supply Links: Use the “Order Tracking” and “Item Availability by Event” features to drill into what’s driving the requirement or suggested order.
Simulate Changes: Use a test company or run the worksheet in simulation mode before posting changes to live production or purchasing.

Frequent validation cycles and reviews help catch planning errors early, minimizing costly production stoppages or excess inventory issues.

Common Issues and How to Avoid Them

Even seasoned planners and consultants encounter challenges in MRP/MPS execution. Here are the most common pitfalls and remedies:

Incorrect Item Parameter Setup: The majority of MRP/MPS issues trace back to inconsistent item planning setups. Standardize parameter reviews and enforce governance on item master data.
Forecast Quality: Low-quality forecasts lead to overproduction or stockouts. Regularly reconcile forecasts with actual sales, and adjust your planning accordingly.
Ignoring Action Messages: Planners sometimes skip reviewing or acting on messages, leading to outdated proposals or missed demand. Make it a routine to review the worksheet daily or weekly.
Lead Time Inaccuracies: Over- or underestimating lead times causes supply chain disruptions. Collaborate with vendors and production to update actual lead times regularly in Business Central.
Data Integrity Issues: Incomplete BOMs, incorrect inventory, or outdated supplier information can all adversely affect planning accuracy. Institute regular master data reviews and cleanups.
Planning Time Fence Not Used: Without time fences, planners may inadvertently overwrite imminent production or purchase orders. Utilize this feature to safeguard near-term plans.

Conclusion

Leveraging the full power of MRP and MPS in Dynamics Business Central is transformative for manufacturing and distribution organizations. By understanding how the engines work, carefully setting up item planning parameters, running planning calculations effectively, validating the results, and proactively addressing common issues, you lay the foundation for accurate, efficient, and responsive supply chain operations.

While the core concepts remain timeless, ongoing data management, forecast refinement, and user training are essential for ongoing success. Integrating relevant screenshots from your Business Central environment as shown above will further elevate your team’s adoption and understanding. With these best practices, your organization can shift from reactive to proactive planning; boosting both performance and profitability.

If you have specific questions, scenarios, or wish to see more visual tutorials, feel free to reach out to your Customer Success Manager to coordinate time with an experienced Business Central consultant. The journey to world-class planning starts with a single, well-informed step.