May 28, 2020 is a daily online magazine covering small business news. We help entrepreneurs transform ideas and innovations into greatness.

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Capacity Planning


Rough-Cut Capacity Planning

Is your Master Production Schedule viable from a capacity perspective? Maybe it is and maybe it isn't. For a definitive answer, you'll need to turn to a tried and true capacity planning tool, Rough-Cut Capacity Planning.

In the world of manufacturing, sales and production go hand in hand.
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If you're not careful, you can easily create a scenario in which your ability to sell your products exceeds your ability to manufacture them, or in which you're stuck with a large amount of excess inventory. Since neither of those scenarios is appealing, you need a way to effectively index your production levels to market demand.

Capacity planning enables business owners to accurately yoke production to demand. It's an intentional strategy that gives your company the ability to navigate the fine line between efficiency and shortages while minimizing the risk of overproduction.

As a production planning device, capacity planning is not a one-size-fits-all approach. It consists of several individual planning tools designed to address various aspects and stages of the manufacturing process.

Rough-Cut Capacity Planning (RCCP) is an important, intermediate stage tool in capacity planning. While Resource Requirements Planning (RRP) approaches manufacturing capacity from a long-range perspective, RCCP narrows the focus and delivers a more realistic analysis of the business' ability to keep up with demand.

  • Rough-Cut Capacity Planning is a medium-range planning tool. Rough-Cut Capacity Planning is situated at approximately the halfway point of the capacity planning process and is designed to assess the ability of specific, key resources to keep up with production. Its placement midway through the process is late enough to provide more details about specific manufacturing resources, but early enough to make necessary changes.
  • RRCP interacts with the Master Production Schedule. The Master Production Schedule is based on the Sales & Operating Plan. It describes the weekly, planned production of individual products or production modules. Rough-Cut Capacity Planning interacts with the Master Production Schedule by identifying the capacity of individual machines and/or work centers.
  • Possible responses to RRCPs. The Rough-Cut Capacity Planning process can result in a variety of responses. The most common responses involve modifying work assignments, scheduling overtime units, or otherwise increasing machine/work center hours to boost capacity. If that isn't possible, the only other alternative may be to modify the Master Production Schedule until the company is able to modify resource requirements.

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Want to learn more about this topic? If so, you will enjoy these articles:

When to Increase Capacity
Detail Capacity Planning
Capacity Planning for Business Services

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