Basics of Master Planning in Microsoft Dynamics 365 for Operations

By:  Scott Hamilton

Editor’s Note: This article is drawn from the recently published book by Dr. Hamilton about master planning in manufacturing. It represents the first of a 3-part series about the basics of master planning for managing day-to-day operations. The contents apply to those firms using Microsoft Dynamics 365 for Operations or Dynamics AX 2012 R3.

Master planning represents one of the more complex and misunderstood aspects of system usage in manufacturing businesses. It involves many aspects of modeling the business and supply chain, which becomes a little overwhelming when trying to initially learn the master planning capabilities, or trying to teach others. Common questions are often “Where do you start?” and “What are the most critical things to know?”

A very basic starting point involves the setup information about master plan policies for managing day-to-day operations, and the companywide parameters for master planning. These topics are covered within this first article of a 3-part series, and subsequent articles cover additional basics about the options for performing master planning calculations, and the types of demands and supplies considered by the master planning calculations. This first article consists of the following sections.

  1. Master Plan Policies for Managing Day-to-Day Operations
  2. Scenarios Requiring a Static and Dynamic Master Plan
  3. Master Planning Parameters
  4. Rationale for using different Master Plans
  5. Case Studies

There are other starting points to learn master planning. For example, a previous series covered the basics of master planning related to the models of SCM decision making.  Another series covered common S&OP scenarios and the definition of S&OP game plans that drive master planning calculations.

There are also other topics which represent “critical things to know” for master planning. Examples of these topics include the significance of calendars, scheduling methods, inventory blocking, and approved planned orders.

The contents of this article apply to Microsoft Dynamics 365 for Operations or Dynamics AX 2012 R3 because the functionality related to master planning has essentially stayed the same. Screenshots within the article reflect the user interface in Dynamics 365 for Operations.


Check out our current Dynamics 365 for Operations Jobs

1. Master Plan Policies for Managing Day-to-Day Operations

Most manufacturing scenarios can employ a single set of master plan data to support a company’s daily working operations. A typical user-assigned identifier for this master plan could be DailyPlan, CurrentPlan or WorkingPlan. Some scenarios require two sets of data — termed the static and dynamic master plans — to support a company’s daily working operations, as described in the next section.

This single set of master plan data is generated by the Master Planning task, which uses information about demands and supplies and several master plan policies. This section introduces some of the key master plan policies. It does not attempt to cover all policies because they apply to specific scenarios. Some of these scenarios (and related master plan policies) are covered in subsequent articles within this series.

Key Master Plan Policies

Several master plan policies are critical, as illustrated by the example data shown in Figure 1 where the identifier of the master plan is “WorkngPlan”.

Figure 1. Example Screen of Key Master Plan Policies
Figure 1. Example Screen of Key Master Plan Policies

Based on the example data in the figure, the master planning calculations will include on-hand inventory and expected inventory transactions about receipts and issues. They will not include logic about shelf life dates, which typically applies to manufacturers of food products and some industrial products. Case 1 provides an illustration about a food products manufacturer, and a previous article explained the considerations about shelf life items.

The calculations will also include the current demand forecasts associated with the forecast identifier of “Curr-Fcst”, and forecast consumption logic will reflect time buckets defined by a reduction key. A previous article explained demand forecasts and forecast consumption logic.

Several policies apply to the planned production orders generated by master planning calculations, including the scheduling method and consideration of finite capacity. A previous article explained the use of scheduling methods for production.

Additional Master Plan Policies

The additional policies apply to different contexts, and are best described in separate explanations about each context. Previous articles have covered some of these additional policies, such as the policies related to action messages and calculated delay messages, and production sequencing for planned batch orders. The second article within this series covers the master plan policies about optional types of demands and supplies.

2. Scenarios Requiring a Static and Dynamic Master Plan

Some scenarios require two sets of master plan data — termed the static and dynamic master plans — to support a company’s daily working operations. Typical user-assigned identifiers include StaticPlan and DynamicPlan. The previous explanation of master plan policies also applies when using two sets of master plan data. The same policies would be assigned to both master plans.

When using this approach, the Master Planning task is performed for the static master plan, and the set of data is automatically copied to the dynamic master plan. The static plan remains unchanged until the next time that you run the master planning task, and provides a stable basis for analysis and actions. The dynamic plan will be updated by subsequent transactions, which can result in constant changes to planned orders.

The constant changes often stem from performing an explosion for a selected sales order line to calculate delivery promises about make-to-order products. They can also stem from CTP logic for the sales line, which results in similar calculations. These calculations generate planned orders when there are insufficient supplies for the salable item or its components. The planned orders immediately communicate the need for replenishment. However, some scenarios perform multiple explosions when checking delivery promises for an order, or a sales order may be deleted (after performing an explosion) because the customer is only asking about delivery promises or finds them unacceptable. The situation results in constant changes to planned orders, and possible confusion for buyers and planners.

The arguments about using one versus two sets of master plan data have been covered in the literature.[1]  It is my experience that very few situations require two master plans for managing day-to-day operations, and the exception often represents make-to-order scenarios using explosions or CTP logic to calculate sales order delivery dates.

3. Master Planning Parameters

Several parameters represent companywide policies governing the use of master plans and the master planning calculations. These are defined on the Master Planning Parameters page.

Key Master Planning Parameters

Several key parameters determine whether master planning logic employs one versus two master plans. Other key parameters determine the basis for the rescheduling assumption, the assumed date when running the master planning task on weekends, and the assumed start time when performing an explosion. These parameters are illustrated in the example screen shown in Figure 2 and described below. They represent a subset of all master planning parameters.

Figure 2. Example Screen of Master Planning Parameters
Figure 2. Example Screen of Master Planning Parameters

  • Use of one versus two master plans. Most scenarios can employ a single set of master plan data, as illustrated in Figure 2 by the same identifier of WorkngPlan for both the current static master plan and the current dynamic master plan. Some scenarios employ two sets of data (as described in the previous section), and use the related policy “Copy the complete and updated static master plan to the dynamic master plan.”
  • Use dynamic negative days. This parameter reflects a key aspect of the rescheduling assumption in master planning logic, which determines when to use a scheduled receipt to fulfill a requirement rather than generating a new planned order. A previous article covered the use of negative days and the rescheduling assumption.
  • General coverage group. This coverage group will act as the default value when it has not been specified for an item. A previous article described the significance of coverage groups.
  • Basis of the run date when performing the master planning task on weekends. The applicable run date should reflect the start of the next working day defined by the specified calendar for “Today’s date calendar”. If this field is blank, the run date will reflect the current system date. This particular calendar is mentioned in a previous article about the significance of SCM-related calendars.
  • Assumption about the scheduling start time for Explosions. In most scenarios for performing an explosion, the calculations should assume a start time of the current system time. An alternative assumption consists of the beginning of the work day for today’s date – as defined by the “Today’s date calendar” mentioned in the previous point.

Additional Master Planning Parameters

The additional parameters apply to different contexts, and are best described in separate explanations about each context. This includes the start time for calculating delays, the expected receipt time for planned orders, and default dialogue values when firming planned orders. These topics are not included within this series of articles.

4. Rationale for using Additional Master Plans

The explanation so far has focused on the set of master plan data for managing day-to-day operations. Other purposes can be served by additional sets of master plan data, where each one often reflects different master plan policies and a different set of demand forecasts (aka forecast models). The additional master plans may support one or more of the following purposes. You can copy one master plan to another when applicable.

  • Long-range planning for material or capacity
  • Simulations for best-case and worst-case scenarios
  • Comparison of plans based on master planning calculations with finite versus infinite capacity of production resources
  • Master planning calculations based on just sales order demand (without demand forecasts)

An alternative approach to different sets of master plan data employs different sets of forecast plan data generated by the Forecast Scheduling task.

5. Case Studies

Case 1: Master Planning with Shelf Life Items

A food products company produced end-items from raw materials, and both involved batch tracking and expiration dates. Master planning logic assumes that a batch’s inventory will no longer be available after its expiration date. This logic also applies to expected receipts, where an expiration date is assigned based on the item’s normal expiry period and the expected receipt date. Master planning considers the expiration dates in suggesting planned orders to satisfy demands such as sales orders, demand forecasts, or dependent demands.

In addition, when entering or picking sales orders for a product, the batches of available material can be automatically reserved based on first-expired-first-out (FEFO) logic and the customer’s requirements about sellable days after they receive the product.

Case 2: Make-to-Order Products and the use of Two Master Plans

A manufacturer produced make-to-order products from stocked components. They used two sets of master plan data and performed the master planning task daily. When entering a sales order line for a make-to-order product, the customer service reps performed an explosion to calculate the earliest possible ship date, and typically transferred the calculated date to the sales line. The explosion created planned orders for the end-item and its components in the set of data representing the dynamic master plan. This provided immediate visibility of the planned orders for buyers and production planners, so they could take appropriate actions such as firming the planned orders. Information within the static master plan helped coordinate replenishment of the stocked components.

6. Summary

This 3-part series summarizes some of the basics of master planning for managing the day-to-day operations in a manufacturing business. As described in this first article, one starting point involves the setup information about master plan policies and the companywide parameters for master planning. Subsequent articles within the series cover several other basics, including the options for performing master planning calculations and the different types of demands and supplies.


[1] An excellent analysis about using one versus two master plans was provided in a previous article by Evert Bos.

About Scott Hamilton

Scott Hamilton has consulted globally with several hundred manufacturing/distribution companies on SCM and ERP issues. His publications include multiple books about SCM using Dynamics AX as well as two textbooks about SCM/ERP, and his books have been translated into Portuguese, Russian, Chinese and Japanese. For more than 10 years, Scott has been a frequent speaker at Microsoft and AXUG conferences around the world, and a multi-year winner of the rarely given Microsoft MVP award for Dynamics AX. His regular column “The AX Solution Architect” is published in