Planned Order — Manufacturing Glossary

A planned order is an order recommendation generated by MRP when net requirements indicate that material or production capacity is needed. Planned orders specify a quantity, a start date, and a due date but remain uncommitted — they exist as suggestions until a planner reviews and releases them as work orders or purchase orders.

At User Solutions we emphasize that planned orders are the language MRP uses to communicate with planners. Understanding how to read, evaluate, and act on planned orders is essential for effective production planning.

---

How Planned Orders Work

MRP follows a systematic process to generate planned orders:

1. Calculate gross requirements by exploding the BOM.
2. Calculate net requirements by subtracting on-hand inventory and scheduled receipts.
3. Apply lot sizing to group net requirements into order quantities.
4. Offset for lead time to determine the planned order release date.
5. Output the planned order with quantity, planned start, and planned due date.

The Planned Order Lifecycle

Generated → MRP creates the planned order based on calculations.

Reviewed → The planner evaluates the order. Is the quantity reasonable? Is the date achievable? Are there capacity conflicts?

Firmed (optional) → The planner converts it to a firm planned order to lock it against MRP changes.

Released → The planner converts it to a live work order or purchase order. Materials are allocated, capacity is committed, and execution begins.

Completed → The order is manufactured or received, and inventory is updated.

---

Planned Order Example

A manufacturer runs MRP on Monday. For component SHAFT-200 (machined steel shaft):

• Net requirement: 80 units needed by Week 12
• Lot sizing: Lot-for-lot
• Manufacturing lead time: 2 weeks

MRP generates a planned order:

This planned order also generates dependent demand for raw material: 80 shafts × 2.5 lb steel each = 200 lb of 4140 steel rod needed by Week 10.

The planner reviews the order and checks:

• Does the CNC lathe have capacity in Weeks 10-11? (Yes — 65% loaded)
• Is 4140 steel available? (120 lb on hand + 100 lb arriving Week 9 = 220 lb — sufficient)
• Any quality concerns with this supplier of steel? (No — last 5 lots passed inspection)

The planner releases the order as Work Order WO-7201. It is no longer a planned order — it is now a committed production order with materials allocated and the shop floor notified.

---

Why Planned Orders Matter for Scheduling

They are the scheduling input. Every job on the production schedule started as a planned order. The quality of the planned orders — accurate quantities, realistic dates, proper lead times — directly determines the quality of the schedule.

They provide forward visibility. Planned orders across the full planning horizon show what is coming. This allows scheduling tools like Resource Manager DB to anticipate capacity needs and identify bottlenecks weeks before they occur.

They enable proactive management. Reviewing planned orders before release gives planners the opportunity to adjust quantities, shift dates, or combine orders — preventing problems that would be costly to fix after release.

They generate lower-level demand. Planned orders at one BOM level become the gross requirements for the next level down. Delayed review or release of planned orders delays the entire chain.

---

Related Terms

• Firm Planned Order — A planned order manually locked by the planner so MRP will not modify it automatically.
• Net Requirements — The calculated shortage that triggers MRP to create a planned order.
• Work Order — The released production order that a planned order becomes after planner approval.

---

FAQ

---

This term is part of the Manufacturing Glossary. For a deep dive into material planning, see our MRP Guide.