AN ANALYSIS OF CAPACITY PLANNING PROCEDURES FOR A MATERIAL REQUIREMENTS PLANNING SYSTEM*

ABSTRACT This paper is concerned with planning work‐center capacity levels in manufacturing firms that employ a material requirements planning (MRP) system. It presents four procedures for developing work‐center capacity plans designed to insure the production of components and assemblies as specified by the MRP plan and the master production schedule (MPS). These procedures (capacity planning using overall factors, capacity bills, resource profiles, and capacity requirements planning) are compared using simulation analysis. The results indicate that the performance of a procedure when measured against the MPS depends on the operating conditions of the manufacturing system. The results also indicate that the choice of a particular procedure often represents a compromise among the benefits of improved MPS performance, the costs of preparing and processing data, and the premium expenses required for more frequent adjustments in work‐center capacity levels.