What Is Capacity Planning?

Capacity Planning Explained

Capacity planning operates at multiple horizons. Resource requirements planning works at the sales and operations planning level, testing whether a volume plan is feasible against major resources over months. Rough cut capacity planning validates the master production schedule against a handful of critical work centers using a bill of resources. Capacity requirements planning runs after MRP and computes detailed load by work center and period from every planned and released order, using routing hours. Each level trades precision for speed and horizon.

The load calculation itself is straightforward: for each operation on each order in a period, add setup hours plus quantity times run hours, and accumulate by work center. Available hours come from the work center definition: number of machines or operators, shift hours per day, working days from the calendar, and an efficiency or utilization factor. Load divided by available capacity gives a percentage, and anything consistently over 100 means the plan is not executable as stated.

Infinite versus finite is the key distinction. Capacity requirements planning is infinite: it reports the overload but does not move anything. Finite capacity scheduling and advanced planning tools resolve overload by sequencing work within available capacity, which changes dates but produces an executable schedule. Many mid-market plants run infinite capacity requirements planning and resolve conflicts manually at a weekly scheduling meeting, which is workable when the number of constrained resources is small.

A persistent misconception is that capacity means machine hours. In plants where a specific skill, a fixture, a clean room, or a qualified inspector is the true limit, modeling only machines produces a load report that shows plenty of room while the plant misses dates. Capacity should be modeled around the actual constraint, and it is worth periodically re-identifying that constraint because it moves as product mix changes.