What is a Production Order? Definition & Manufacturing Examples

What is a Production Order?

A production order — also called a work order or manufacturing order — is a formal instruction to manufacture a specific quantity of a product by a required completion date. It is the fundamental unit of work on the manufacturing shop floor. A production order specifies what to make (the finished product), how many to make (the order quantity), what materials to consume (the bill of materials), what operations to perform (the routing), and when to start and finish (the scheduled dates).

How Production Orders Work

Production orders originate from several sources. In make-to-stock environments, MRP generates planned orders based on demand forecasts and inventory replenishment needs. When the planned start date falls within the planning time fence, the planner converts the planned order into a firm production order. In make-to-order environments, a customer order directly triggers a production order.

Once created, the production order goes through a defined lifecycle:

Created — The order exists in the system with planned quantities and dates but has not been released to the shop floor. Materials are reserved but not yet issued.

Released — The order is authorized for production. Shop floor paperwork (travelers, pick lists, operation cards) is printed or made available electronically. Materials can be issued from the stockroom.

In Process — Operations are being performed. Operators report labor hours, quantities completed, and quantities scrapped at each operation. The system tracks progress against the schedule.

Completed — All operations are finished and the finished goods are received into inventory or shipped to the customer. Actual material consumption and labor hours are recorded.

Closed — Variance analysis is complete. The system calculates the difference between planned costs (material, labor, overhead) and actual costs. The order is archived.

Production orders carry critical scheduling information: the planned start date for each operation, the work center assignment, the planned setup and run times, and the required completion date. The scheduling system uses this information to load work centers and identify capacity conflicts.

Production Order Example

A valve manufacturer receives a customer order for 200 units of a 2-inch ball valve, due in three weeks. The planner creates a production order specifying:

Item: BV-200-SS (2-inch stainless steel ball valve). Quantity: 210 (200 required plus 10 units for expected scrap). BOM: 14 components including body castings, balls, seats, stems, and packing. Routing: 8 operations — receiving inspection, CNC turning, CNC milling, deburring, lapping, assembly, pressure test, packaging. Scheduled start: Monday of week 1. Scheduled completion: Wednesday of week 3.

The scheduling system loads each operation onto specific machines: turning on CNC Lathe #3, milling on VMC #7, assembly on Station A. It identifies that CNC Lathe #3 is heavily loaded in week 1, so it schedules the turning operation for Tuesday through Thursday and shifts milling to start Friday. The schedule accounts for 45-minute setups on each CNC operation and includes 2 hours for pressure testing 210 valves.

Materials are issued from the stockroom on Monday morning. The traveler accompanies the parts through the shop. Operators scan barcodes at each operation to report progress. The production order is completed on Wednesday of week 3 with 203 good units — 3 units scrapped at assembly due to seat damage.

Why Production Orders Matter for Scheduling

Production orders are what the scheduling system actually schedules. Every Gantt chart bar, every capacity load calculation, and every delivery date promise traces back to a production order and its operations. Without accurate production orders, the scheduling system has nothing to work with.

Scheduling software like Resource Manager DB (RMDB) loads production order operations onto machines, sequences them according to priority rules and due dates, and identifies overloads and conflicts. When a new rush order arrives, the scheduler can see exactly which existing production orders will be impacted by inserting the new work.

The quality of scheduling output depends directly on the quality of production order data — accurate routings, realistic setup and run times, correct material lead times, and up-to-date operation statuses.

Related Terms

• Planned Order — An MRP recommendation that becomes a production order when firmed by the planner
• Routing — The sequence of operations that the production order follows through the shop
• Shop Floor Control — The system that tracks production order progress on the factory floor

Frequently Asked Questions

Learn more in our complete manufacturing glossary or production scheduling guide.