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CRP System

What Is Capacity Requirements Planning (CRP)?

Capacity requirements planning (CRP) is the process of discerning a firm's available production capacity and whether it can meet its production goals. The CRP method first assesses the company's planned manufacturing schedule. Then, capacity requirements planning weighs this schedule against the company's actual production capabilities to see if the current capacity can successfully meet the existing production schedule.

Understanding Capacity Requirements Planning

Capacity requirements planning is the process through which a company—primarily in manufacturing—figures out how much product it needs to make, and determines if it has the ability to meet its production goals.

You can also understand CRP as a management tool that's based on using a company's resources efficiently by projecting its production expectations accurately. If a company finds that its production capacity is inadequate, it may alter its production goals, or take other steps to bring expectations in line with capacity—which could include contracting with another firm that has excess capacity to handle its production.

KEY TAKEAWAYS

  • Capacity requirements planning (CRP) is the process of discerning a firm's production capacity and whether it can meet its production goals.
  • Conducting a CRP analysis is a critical management tool, as it helps a company to know if it can meet the demand for its product.
  • Capacity requirements planning is also the name of an enterprise application—software that manages the CRP process for a company.