Capacity Planning Overview

As defined by the APICS Dictionary, “Capacity planning or capacity requirements planning is the function of establishing, measuring and adjusting limits or levels of capacity. The term “capacity requirements planning” in this context is the process of determining how much labor and machine resource is required to accomplish the tasks of production”.

The Capacity Planning Decision Hierarchy

Finite capacity scheduling uses basically the same data as capacity requirements planning but adjusts the schedule to ensure that the capacity required never exceeds a work center’s defined capacity limits in a given time period. 

The above figure depicts the hierarchy of capacity planning decisions that can be made within a planning and control environment. These range from long-term capacity decisions down to short-term shop floor monitoring and control tasks:

• Planning resource capacities over long time horizons.
• The rough-cut evaluation of capacity required by the master production schedule.
• Detailed capacity requirements of a particular production schedule.
• The use of finite loading procedures.
• The simulation of the use of alternate capacity plans.
• Monitoring actual outputs versus plan.

The source of the loading data changes as you move down this hierarchy. While resource planning takes its capacity requirements from the business plan, rough-cut capacity planning uses the master production schedule as the source of its information. Capacity requirements planning and the remainder of these shorter-term planning modules take their loading data from the Material Requirements Planning output.