Capacity Planning:

Another significant issue that is not treated explicitly by MRP is the capacity of the production facility. The type of capacitated lot-sizing method deals with production capacities at one level of the system, but shall not solve the overall capacity problem. The problem is that even if lot sizes at some level do not exceed the production capacities, there is no guarantee that whereas these lot sizes are translated to gross requirements at a lower level, these requirements can also be satisfied with the existing capacity. Hence, a feasible production schedule at one level can result in an infeasible requirements schedule at a lower level.

Capacity Requirements Planning (CRP) is the procedure by which the capacity requirements placed on a work centre or group of work centres is computed by using the output of the MRP planned order releases. If the planned order releases result in an infeasible requirements schedule, there are several possible corrective actions. One is to schedule overtime at the bottleneck locations. Another is to revise the MPS so that the planned order releases at lower levels can be achieved with the current system capacity. it is clearly a cumbersome way to solve the problem, requiring an iterative trial and error process among the CRP and the MRP.