Understanding Master Planning

Understanding Master Planning and Master Scheduling in Microsoft Dynamics AX

What is Master Planning?

Master planning allows manufacturers to determine the future need for raw materials to meet company goals.  Master planning accesses the following information:

  • What is required to complete production(s)?
  • What is currently available?
  • What is needed? How much inventory must be manufactured, purchased, transferred or set aside as safety stock?

Master planning is a component of overall financial planning. Forecast methods in the Master Planning module enable the transfer of relevant information to the general ledger.

The most common formula for materials determination is:

EOQ (Economic Order Quantity) = On Hand – Allocations + Receipts

Understanding Master SchedulingUnderstanding-Master-Planning_image2

Once you know the Master Plan (what you need), the next step is to figure out how you will meet your inventory requirement needs (when you need it, and how you will get it).

Master scheduling calculates how the company can best achieve their goal of having the correct material, at the correct time, using the correct resources, in the correct place. You do this by exploding the demand and calculating the net requirements of products and resources. We have to look at anticipated sales, cash flow, and other areas of the business in order to gather an accurate picture.  Information is collected from multiple modules in Microsoft Dynamics AX 2012.

Master Planning Workflow Example

Understanding-Master-Planning_image1This Master Planning Workflow example shows a hypothetical and simplified view of how master planning fits into the business flow of a company running in-house production.

The Master Planning Module is highly interactive with other modules in Microsoft Dynamics AX 2012. In this example, we’ve combined the work model (Sales, Planning and Operations) with the roles (Order processor, Planner, Purchasing, Warehouse worker, Shop supervisor, and Operator) to show the work process. You can also see which Microsoft Dynamics AX modules are affected.

This example must be read from left to right. It is intended to introduce the primary relationship between the master planning process and the other activities in Microsoft Dynamics AX.

The process starts with the entry of a sales order and follows it through a company that has an in-house production facility. The main roles affected are shown in blue, the production processes are shaded, and the abbreviated modules in Microsoft Dynamics AX 2012 that are affected at each point are encased in the text boxes at the bottom of the graphic.

Regenerative vs. Net Change Master Scheduling

Master Scheduling can be run two ways: Regenerative or Net Change


  • Creates or adjusts the plan
  • Considers or reconsiders each dependency between resources
  • Includes the bills of materials (BOMs)
  • Reviews and calculates items on all levels

Net Change

  • Obtains a picture of the effect of current changes
  • Only immediate changes are considered
  • Less time to process than running a regenerative plan

Results from running Master Planning will be Planned Orders:

Preliminary Planning Considerations

There are three areas in particular where you should focus your attention:

  1. Should we use forecast scheduling? When will we run it?
  2. What are appropriate inventory levels? What settings are important?
  3. Do we need one or two master plan strategies?

Use of forecast scheduling

One of the first considerations a company should take is to assess whether forecast scheduling must be used, because the forecast scheduling is generally run before you run master scheduling.

Inventory levels

Another thing to consider for the setup of master planning is how the business handles the level of inventory it maintains. How the inventory is handled influences choices about coverage planning parameters for the master scheduling process.

One or two master plan strategies

Companies have the option of setting up master planning to operate with either a one or two master plan strategy. The two master plan strategy uses two independent plans: the static master plan and the dynamic master plan.

Discuss these topics in advance

Discussion around these topics should occur before setting up Master Scheduling.

Other factors will also influence your success in using Master Scheduling.  Further considerations should be given to data accuracy, testing and sign-off of testing.  Master Scheduling is a powerful tool and will only be successful when good data is being used.  It is only calculating, based on the information it knows, and only suggesting what should be done.  It is up to you, as a knowledgeable business leader, to determine if the data is accurate and should be acted upon.  “Data tweaking” is an ongoing duty when using Master Scheduling.

To find out more about the capabilities of a Dynamics 365 Implementation for your business, contact us today.

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Author: Genie Engels