Capacity Requirement Planning

Chapter 3
Production Planning Architecture and CRP Inputs

Post Graduate Program in Production Management
Capacity Requirement Planning   •   Post Graduate

Production Planning Architecture and CRP Inputs

Introduction

Capacity Requirement Planning (CRP) is not an isolated calculation. It is a capacity-feasibility process embedded in the broader production-planning architecture of an enterprise. CRP translates planned orders and manufacturing requirements into expected loads on machines, labour groups, tools, and other constrained resources. Its value depends on the quality and consistency of the information supplied by upstream planning systems and on the realism of shop-floor feedback.

The planning hierarchy normally moves from strategic business planning to tactical and operational control. Business planning establishes the overall direction and financial intent of the organisation. Sales and Operations Planning (S&OP) balances demand and supply at an aggregate level. The Master Production Schedule (MPS) converts aggregate plans into time-phased end-item commitments. Material Requirements Planning (MRP) determines component and purchasing requirements. CRP evaluates whether the available manufacturing capacity can execute the resulting planned orders. Shop-floor control then releases, sequences, monitors, and adjusts work.

This chapter examines that architecture and the data foundations of CRP. Particular attention is given to bills of material, routings, work-centre calendars, lead times, lot-sizing rules, yields, and inventory records. These elements are often treated as clerical master data, yet they are operational models of how production actually occurs. Errors in them can produce apparently precise but fundamentally misleading capacity plans.

Learning Objectives

After completing this chapter, the reader should be able to:

  1. Explain the relationship among business planning, S&OP, aggregate planning, MPS, MRP, CRP, and shop-floor control.
  2. Distinguish material feasibility from capacity feasibility.
  3. Evaluate the structure and quality of bills of material and routings.
  4. Calculate work-centre load from planned orders using operation times, quantities, yields, and lot sizes.
  5. Assess the influence of calendars, lead times, inventory records, and data accuracy on CRP results.
  6. Diagnose overloads and recommend appropriate managerial responses.
  7. Recognise governance, technology, and implementation issues in integrated planning systems.

1. The Production Planning Architecture

1.1 Planning horizons and levels

Production planning is commonly organised into three horizons:

  • Long range: capacity strategy, facilities, technology, workforce capability, and supplier structure.
  • Medium range: aggregate production rates, inventory, workforce levels, subcontracting, and overtime.
  • Short range: specific orders, operations, dispatching, sequencing, and corrective action.

The levels are connected, but they do not have identical purposes or data granularity. A strategic plan may use product families and annual volumes; an MPS may use individual end items and weekly buckets; CRP may use individual work centres and daily or hourly buckets.

1.2 Business planning

Business planning expresses corporate objectives in terms such as revenue, profitability, market growth, service, investment, and risk. It answers questions such as:

  • Which markets and product families should be served?
  • What growth or cost position is expected?
  • What levels of capital and operating expenditure are acceptable?
  • What supply-network risks must be managed?

Business planning does not normally specify individual production orders. Instead, it constrains and guides the plans below it. For example, a strategic decision to compete through short delivery times may justify additional flexible capacity even when a purely cost-based plan would not.

1.3 Sales and Operations Planning and aggregate planning

S&OP is a cross-functional process in which sales, marketing, operations, finance, procurement, and senior management reconcile demand and supply. Its central unit is often a product family rather than a stock-keeping unit (SKU). The process usually includes demand review, supply review, pre-S&OP analysis, and executive approval.

Aggregate planning determines medium-term production, inventory, workforce, overtime, subcontracting, and backlog decisions. A simplified inventory balance is:

It = It-1 + Pt - Dt

where It is ending inventory in period t (units), Pt is production during period t (units), and Dt is demand during period t (units). The relationship assumes that units are measured consistently and that losses, returns, and transfers are either negligible or incorporated into the terms.

A more realistic balance including yield loss and planned backlog may be written as:

It - Bt = It-1 - Bt-1 + YtPt - Dt

Here Bt is ending backlog and Yt is the usable yield expressed as a fraction between 0 and 1. This identity is useful for planning, but it does not determine whether sufficient machine or labour capacity exists.

1.4 Master Production Scheduling

The MPS disaggregates the approved aggregate plan into time-phased quantities of specific end items. It is a statement of what the organisation intends to complete, when it intends to complete it, and often which customer or forecast demand it supports.

The MPS must be:

  • consistent with the aggregate plan;
  • supported by available or planned materials;
  • evaluated against critical capacity;
  • stable enough to guide procurement and production;
  • responsive enough to reflect valid changes in demand and supply.

The MPS is not simply a sales forecast. It is a controlled production commitment. In make-to-stock environments it may be forecast-driven; in make-to-order environments it may be closely related to customer orders; in mixed environments it may combine both.

1.5 Material Requirements Planning

MRP explodes the MPS through bills of material, offsets requirements by lead times, and applies inventory and lot-sizing rules. Its basic logic is:

  1. identify gross requirements for an item;
  2. subtract projected available inventory and scheduled receipts;
  3. calculate net requirements;
  4. create planned receipts according to lot-sizing rules;
  5. offset receipts by lead time to obtain planned order releases;
  6. explode those releases to lower-level components.

For a simple item, net requirement can be represented as:

NRt = max(0, GRt - PABt-1 - SRt + SSt)

where NRt is net requirement, GRt is gross requirement, PABt-1 is projected available balance from the previous period, SRt is scheduled receipt, and SSt is required safety stock. The formula is a simplified representation. Actual systems may include allocations, reservations, rejected quantities, firm planned orders, and time-phased safety stock.

MRP answers primarily: “What materials or components are needed, in what quantity, and when?” It does not automatically prove that the required operations can be performed in the available time.

1.6 Capacity Requirements Planning

CRP takes planned manufacturing orders—usually MRP planned orders, released orders, or MPS orders—and converts them into operation-level capacity requirements. It compares load with available capacity by work centre and time period.

For work centre w in period t, a basic load equation is:

Lw,t = ∑o=1n Qo \left( \frac{so,w}{Bo} + ro,w \right)

where:

  • Lw,t = required capacity at work centre w in period t;
  • Qo = order quantity processed in operation o;
  • so,w = setup time for the order at work centre w, in hours;
  • Bo = number of batches or lots into which the order is divided;
  • ro,w = run time per unit, in hours per unit;
  • n = number of relevant operations or orders.

The setup term is divided by the number of batches only when the stated setup time is a total setup time for the entire order and setups are performed once per batch. If setup time is already stated per batch, the formula must be adapted. This distinction is essential.

If yield is less than 100 percent and the order requires a specified good quantity, the quantity started may be:

Qstart = \frac{Qgood}{Y}

where Qgood is required good output and Y is the fractional yield. This formula assumes a stable average yield and no rework recovery. If scrap occurs at a particular operation, the quantity must be adjusted at that operation rather than only at the final product level.

Capacity utilisation for a work centre may be expressed as:

Uw,t = \frac{Lw,t}{Cw,t} × 100\%

where Cw,t is available effective capacity in hours. Utilisation above 100% indicates a nominal overload, not necessarily an unavoidable failure; the result must be interpreted with queueing, priorities, variability, and alternative resources in mind.

1.7 Shop-floor control

Shop-floor control converts plans into executable work. It includes order release, dispatching, sequencing, progress reporting, quality confirmation, movement of materials, and closure of operations. Feedback may include actual setup times, actual run times, scrap, downtime, queue time, and completion quantities.

The architecture is therefore a feedback loop rather than a one-way chain. CRP may identify an overload, while shop-floor data may reveal that the overload arose from inaccurate standards, breakdowns, absenteeism, or an incorrect calendar. Effective planning systems revise decisions using reliable feedback rather than repeatedly regenerating plans from defective master data.

2. CRP Inputs: The Data Model of Production

CRP depends on three broad data classes:

  1. Demand and order data: MPS quantities, planned orders, released orders, due dates, priorities, and order status.
  2. Product and process data: bills of material, routings, operation standards, resources, yields, and rework logic.
  3. Resource and inventory data: work-centre calendars, available labour, tooling, machine status, inventory records, scheduled receipts, and lead times.

The following inputs are especially important.

3. Bills of Material

A bill of material (BOM) is a structured representation of the components required to make, assemble, or package a parent item. It may be single-level or multi-level. A multi-level BOM records the parent-child relationship across successive manufacturing or assembly levels.

3.1 BOM types

  • Engineering BOM: reflects design structure and functional relationships.
  • Manufacturing BOM: reflects how the product is built on the shop floor.
  • Planning BOM: groups options or families for forecasting and planning.
  • Phantom BOM: represents an intermediate grouping that is not normally stocked as a separate item.
  • Configured BOM: is generated for a specific product configuration.

CRP is most reliable when the manufacturing BOM corresponds to the actual routing and production method. An engineering BOM may identify a component but omit packaging, consumables, alternate processes, or manufacturing stages that affect capacity.

3.2 BOM attributes requiring evaluation

Important fields include item number, quantity per parent, unit of measure, effectivity date, scrap factor, issue method, phantom status, substitute components, and revision level. A quantity-per-parent of 2 means two units are required for one parent under the stated configuration; it does not automatically include expected scrap unless the system’s scrap convention explicitly does so.

BOM accuracy affects CRP indirectly. If the BOM causes MRP to generate the wrong number of subassemblies, the associated routings generate the wrong work-centre load. Common errors include obsolete revisions, missing components, incorrect units of measure, duplicate components, and failure to model co-products or by-products.

4. Routings and Operation Standards

A routing specifies the sequence of operations used to manufacture an item. Typical fields include operation number, work centre, setup time, run time, queue or move time, labour requirements, machine requirements, overlap rules, subcontracting indicators, and inspection points.

4.1 Setup and run time

For an order quantity Q, if setup occurs once for the order and the run time is r hours per unit, total operation time is:

T = s + Qr

where T is total time in hours and s is setup time in hours. If the order is divided into B batches and setup occurs once per batch, then:

T = Bs + Qr

These formulas assume that run time is linear in quantity and that no additional cleaning, inspection, or interruption time is required. In practice, batch-dependent losses and learning effects may make the relationship nonlinear.

4.2 Routing integrity

A routing should be evaluated against actual process evidence. Questions include:

  • Does every required operation appear exactly once unless repetition is intentional?
  • Is the assigned work centre capable of performing the operation?
  • Are setup and run standards based on observed or validated data?
  • Are alternative machines represented correctly?
  • Are queues, move times, and inspection delays treated consistently?
  • Are labour and machine requirements distinguished?
  • Are parallel resources modelled without double-counting capacity?

A routing that omits a bottleneck operation may make an impossible schedule appear feasible. Conversely, a routing that includes excessive standard time can create false overloads and unnecessary investment.

5. Work-Centre Calendars and Available Capacity

A work-centre calendar defines when a resource is planned to be available. It may include shifts, breaks, holidays, maintenance, planned downtime, staffing levels, and efficiency assumptions.

A simple available-capacity equation is:

Cw,t = Nw,tHw,tAw,tEw,t

where Nw,t is the number of available resource units, Hw,t is scheduled hours per resource, Aw,t is availability as a fraction, and Ew,t is performance or efficiency as a fraction. If scheduled hours already represent effective hours, availability and efficiency must not be applied again.

For example, two machines scheduled for 8 hours each, with availability of 0.90 and performance of 0.85, provide:

C = 2 × 8 × 0.90 × 0.85 = 12.24 effective hours.

This is an expected-capacity estimate, not a guarantee. It may be inappropriate for a high-variability environment where the distribution of downtime and demand matters more than the average.

Calendars should distinguish machine capacity from labour capacity. A machine may be available while a certified operator is absent. Similarly, a labour pool may support several machines, creating a shared constraint not visible in a machine-only calendar.

6. Lead Times and Time-Phasing

Lead time is the elapsed time between an order’s release and its completion or receipt. It may include setup, processing, queue, move, inspection, and administrative time. CRP requires lead times to place operation loads in the correct periods.

A planned order release is generally offset from its required receipt by the relevant lead time:

Release\ ext{ date} = Due\text{ date} - Lead\text{ time}

The expression assumes a calendar in which subtraction correctly accounts for working and non-working time. A five-day lead time does not necessarily mean five calendar days if weekends, holidays, or shift patterns intervene.

Lead times can be fixed, variable, operation-based, or queue-sensitive. Fixed lead times simplify planning but may be inaccurate when work-centre congestion changes waiting time. Excessively long lead times protect against uncertainty but enlarge inventories and reduce responsiveness. Excessively short lead times create repeated expediting and unstable schedules.

7. Lot Sizes, Yields, and Inventory Records

7.1 Lot-sizing rules

Lot sizing determines the quantity represented by a planned receipt or release. Common rules include:

  • Lot-for-lot: order exactly the net requirement.
  • Fixed order quantity: order a predetermined quantity.
  • Economic order quantity: balance ordering or setup cost against holding cost under stated assumptions.
  • Period order quantity: cover requirements for a defined number of periods.
  • Minimum or multiple quantity: order no less than, or in multiples of, a specified amount.

Lot sizing affects CRP because setup time is usually incurred per lot or batch. A lot-for-lot policy may reduce inventory but create many setups. A fixed large lot may reduce setups but create excess inventory and a concentrated capacity load.

The classical economic order quantity is:

Q^* = √\frac{2DS}{H}

where D is annual demand in units per year, S is ordering or setup cost per order, and H is annual holding cost per unit. The formula assumes relatively constant demand, constant costs, instantaneous replenishment, no quantity discounts, and negligible stockout costs. It is a reference model, not a universal prescription for CRP.

7.2 Yield and scrap

Yield is the proportion of input that becomes acceptable output. If 980 acceptable units are required and yield is 0.98, the required input is:

Qstart = 980 ÷ 0.98 = 1{,}000 units.

If scrap occurs at several sequential operations with yields Y1, Y2, and Y3, the overall yield, assuming independent multiplicative losses, is:

Yoverall = Y1Y2Y3

The assumption of multiplicative yields is appropriate when each yield is defined relative to the quantity entering that operation and losses are not recovered through rework. If rework or recovery exists, a more detailed quality-flow model is required.

7.3 Inventory records

MRP and CRP depend on accurate records of on-hand inventory, allocated inventory, scheduled receipts, open orders, safety stock, item status, and location. Inventory accuracy is not only a warehouse issue. A system may show material as available when it is quarantined, already allocated, at the wrong location, or physically missing.

Cycle counting, transaction discipline, revision control, and timely reporting of scrap are therefore prerequisites for credible planning. Inventory records should also distinguish unrestricted, inspection, blocked, consignment, and work-in-process quantities where those categories have different planning implications.

8. Worked CRP Example

Consider an illustrative product requiring 120 good units in one weekly period. A fabrication operation is performed at Work Centre A. The process yield is 96 percent. The order is divided into two batches. Each batch requires 1.5 hours of setup, and processing requires 0.08 hours per unit started. Work Centre A has 20 scheduled hours, with planned availability of 90 percent and performance of 85 percent.

First calculate the required start quantity:

Qstart = 120 ÷ 0.96 = 125 units.

Total setup time is:

Tsetup = 2 × 1.5 = 3 hours.

Run time is:

Trun = 125 × 0.08 = 10 hours.

Therefore, required load is:

L = 3 + 10 = 13 hours.

Available effective capacity is:

C = 20 × 0.90 × 0.85 = 15.3 hours.

Utilisation is:

U = (13 ÷ 15.3) × 100\% ≈ 84.97\%.

The operation appears feasible in aggregate. However, the conclusion is conditional. If both batches must be completed during separate narrow windows, if a certified operator is shared with another work centre, or if queue time has been omitted from the due-date calculation, the practical schedule may still fail. CRP is a capacity signal, not a complete finite-capacity schedule.

9. Interpreting Overloads and Taking Action

An overload occurs when required load exceeds available capacity in a work centre and period. The first managerial task is diagnosis, not immediate overtime. Causes may include:

  • excessive demand or an unrealistic MPS;
  • incorrect BOM quantity or revision;
  • inaccurate routing standards;
  • missing alternate work centre;
  • underestimated setup or scrap;
  • incorrect calendar or workforce assumption;
  • late material or prior-operation delays;
  • excessive lot sizes or poor sequencing;
  • machine breakdown or absenteeism.

Responses can be classified as demand-side, capacity-side, process-side, or priority-side actions. Demand-side actions include rescheduling, order negotiation, and substitution. Capacity-side actions include overtime, additional shifts, subcontracting, cross-training, temporary equipment, and capital expansion. Process-side actions include setup reduction, preventive maintenance, quality improvement, line balancing, and routing changes. Priority-side actions include dispatching rules and selective allocation of scarce capacity.

The best response depends on the horizon. Overtime may be suitable for a short-lived peak but harmful if used permanently. Subcontracting can relieve a bottleneck but introduces quality, confidentiality, and delivery risks. Capital investment may be justified only when the constraint is persistent and strategically important.

10. Integrated Case: Meridian Pumps Ltd.

Background

Meridian Pumps Ltd. manufactures industrial centrifugal pumps. Demand for its MP-400 model has increased, and the MPS schedules 240 finished pumps for Week 18. The production structure includes a cast housing, machined shaft, impeller, and final assembly. The machining centre is believed to be the constraint.

Problem

The initial CRP report shows 118 hours of machining load against 100 hours of available capacity. The production manager proposes 18 hours of overtime. Before approving it, the planning team audits the inputs.

Analysis

The audit finds four issues. First, the BOM includes two impeller units per pump, but the current product revision requires one. Second, the routing assigns a legacy 0.42 hours of shaft machining instead of the validated 0.30 hours. Third, the calendar assumes three machines are available, although one is scheduled for preventive maintenance for 12 hours. Fourth, the MRP record shows 20 finished shafts in stock, but 8 are reserved for a service order and cannot be used for the MPS.

The audit therefore identifies both false load and false capacity. Removing the obsolete second impeller reduces downstream demand. Correcting the shaft standard reduces machining load. Correcting the calendar reduces available capacity, while correcting inventory records increases the quantity that must be produced. The net result must be recalculated rather than inferred from any single correction.

After revision, the machining load is 103 hours and effective capacity is 104 hours because a qualified operator is temporarily transferred from another area and preventive maintenance is resequenced. The plan is feasible, but with little protection against disruption.

Approach and solution

Meridian adopts the following actions:

  1. freeze the approved BOM and routing revisions for the planning horizon;
  2. validate the machine calendar against maintenance and staffing records;
  3. reserve the service-order inventory explicitly;
  4. sequence shaft jobs by family to reduce setups;
  5. monitor actual run time and scrap daily;
  6. retain a contingency plan involving four hours of overtime if yield falls below target.

Outcome

The week is completed without the proposed 18 hours of overtime. Actual machining time is 105 hours, and two hours of contingency overtime are used after an unplanned stoppage. The organisation avoids unnecessary overtime while improving the credibility of subsequent CRP runs.

Learning points

The case illustrates that CRP accuracy is a systems property. A capacity report can be numerically correct according to its database and still be operationally wrong. Master-data governance, inventory integrity, calendar discipline, and shop-floor feedback are as important as the load equation itself.

11. Technology, Governance, and Contemporary Practice

Enterprise resource planning systems integrate MPS, MRP, CRP, inventory, purchasing, and execution data. Advanced planning and scheduling systems may add finite-capacity sequencing, alternative resources, constraint management, and scenario analysis. Manufacturing execution systems provide near-real-time feedback on labour, equipment, quality, and progress.

Artificial intelligence and machine learning can support demand sensing, predictive maintenance, estimated processing times, and anomaly detection. Their value depends on trustworthy historical data and clear decision authority. A model trained on inaccurate routings may automate error at greater speed. AI-generated recommendations should therefore be explainable enough for planners to assess assumptions, constraints, and trade-offs.

Governance should define:

  • ownership of BOMs, routings, calendars, and inventory records;
  • approval and effectivity procedures for engineering changes;
  • data-quality measures and audit frequency;
  • segregation of planning authority and production confirmation;
  • rules for overriding system recommendations;
  • traceability of changes affecting customer commitments.

Relevant ethical concerns include truthful reporting of capacity, avoidance of unsafe overtime, responsible treatment of temporary or subcontracted labour, and protection of operational data. A plan that achieves delivery through excessive fatigue or unsafe work practices is not operational excellence.

12. Limitations and Best Practices

CRP commonly uses average standards and time buckets. It may therefore fail to represent sequence-dependent setup, stochastic downtime, labour flexibility, finite buffers, rework loops, and queueing effects. Infinite-capacity CRP can identify overloads but cannot always construct a feasible sequence. Conversely, a finite schedule may be feasible only under a narrow sequence and may be sensitive to disruption.

Best practices include:

  • maintain one controlled source for item, BOM, routing, and calendar data;
  • validate standards using observed performance and periodic studies;
  • distinguish setup, run, queue, move, inspection, and waiting time;
  • model yields at the operation where losses occur;
  • reconcile inventory through cycle counting and transaction discipline;
  • review bottlenecks using both load and variability;
  • use scenario analysis for overtime, subcontracting, and alternate resources;
  • compare planned versus actual load, completion, scrap, and downtime;
  • avoid treating 100 percent average utilisation as a safe target;
  • involve engineering, operations, quality, procurement, and finance in major changes.

Chapter Summary

Production planning is a hierarchical and feedback-based system linking business planning, S&OP, aggregate planning, MPS, MRP, CRP, and shop-floor control. S&OP balances demand and supply at an aggregate level; the MPS specifies end-item production; MRP plans material requirements; CRP translates planned orders into time-phased work-centre loads; and shop-floor control executes and reports actual work.

CRP depends on accurate BOMs, routings, operation standards, calendars, lead times, lot sizes, yields, and inventory records. Load is generally composed of setup and run requirements, while available capacity depends on resources, scheduled time, availability, and performance. Yield losses and batch-dependent setups can materially change requirements. Overloads should be diagnosed before corrective action is selected, because they may arise from demand, process, capacity, or data errors.

The central managerial lesson is that CRP is not merely a mathematical report. It is an integrated decision process whose credibility depends on master-data governance, realistic assumptions, cross-functional ownership, and disciplined feedback from the shop floor.

Key Terms

Business planning: Strategic planning of markets, financial objectives, investment, and organisational direction.

Sales and Operations Planning: Cross-functional process for balancing demand and supply at an aggregate level.

Aggregate planning: Medium-term planning of product-family output, inventory, workforce, overtime, and subcontracting.

Master Production Schedule: Time-phased plan for producing specific end items.

Material Requirements Planning: Systematic calculation of component requirements and planned order releases.

Capacity Requirements Planning: Process of comparing time-phased work-centre load with available capacity.

Shop-floor control: Release, sequencing, monitoring, and adjustment of production work.

Bill of material: Structured list of components and quantities required for a parent item.

Routing: Ordered sequence of manufacturing operations for an item.

Work centre: Machine, labour group, or resource group where operations are performed.

Setup time: Time required to prepare a resource for a job or batch.

Run time: Processing time incurred as units are produced.

Lead time: Elapsed time between release and completion or receipt of an order.

Lot size: Quantity included in a planned receipt or production release.

Yield: Proportion of input that becomes acceptable output.

Projected available balance: Expected inventory position after receipts, issues, and demand.

Effective capacity: Capacity adjusted for availability, performance, staffing, or other operating factors.

Finite-capacity scheduling: Scheduling approach that does not assign more work than available resource capacity.

Master-data governance: Policies and controls ensuring the accuracy, ownership, revision, and use of planning data.

Bottleneck: Resource whose constrained capacity limits system throughput or schedule feasibility.

Review Questions

Short Answer Questions

  1. What is the principal difference between MRP and CRP?
  2. Why must an engineering BOM sometimes be transformed into a manufacturing BOM?
  3. Define setup time and explain how lot size affects setup load.
  4. What information is represented by a work-centre calendar?
  5. Why can inventory-record accuracy affect capacity planning?

Long Answer Questions

  1. Explain the relationship among S&OP, aggregate planning, MPS, MRP, CRP, and shop-floor control.
  2. Discuss the major data fields that should be evaluated when auditing a routing.
  3. Explain how yields, lot sizes, and lead times influence CRP results.
  4. Compare demand-side, capacity-side, process-side, and priority-side responses to a work-centre overload.
  5. Critically evaluate the limitations of average-time, bucketed CRP in a high-variability manufacturing environment.

Analytical / Application Questions

  1. A work centre must produce 360 good units at a yield of 90 percent. The work is divided into three batches, each requiring 2 hours of setup; run time is 0.05 hours per started unit. Calculate required load and explain what additional information is needed before declaring the plan feasible.
  2. A CRP report shows an overload, but the routing uses an obsolete revision and the calendar omits planned maintenance. Design a structured data-audit procedure before approving overtime.
  3. A plant can reduce lot size, authorise overtime, subcontract part of the work, or invest in an additional machine. Develop a decision framework that considers cost, delivery, quality, risk, and long-term strategic capacity.

Multiple Choice Questions with Answers

Question 1

Which planning level normally translates aggregate product-family plans into time-phased quantities of specific end items?

A. Master Production Scheduling

B. Shop-floor dispatching

C. Inventory cycle counting

D. Preventive maintenance planning

Correct Answer: A. Master Production Scheduling

Question 2

What is the primary purpose of CRP?

A. To calculate annual financial profit

B. To compare time-phased work-centre load with available capacity

C. To design product components

D. To replace quality inspections

Correct Answer: B. To compare time-phased work-centre load with available capacity

Question 3

An order requires 100 good units and has a yield of 0.80. Assuming no rework recovery, how many units must be started?

A. 80

B. 100

C. 120

D. 125

Correct Answer: D. 125

Question 4

Which BOM most directly represents how a product is built on the shop floor?

A. Engineering BOM

B. Manufacturing BOM

C. Sales BOM

D. Financial BOM

Correct Answer: B. Manufacturing BOM

Question 5

A job has one setup of 2 hours and a run time of 0.1 hours per unit. For 50 units, what is total operation time?

A. 5 hours

B. 5.2 hours

C. 7 hours

D. 52 hours

Correct Answer: C. 7 hours

Question 6

If a work centre has 12 hours of load and 15 hours of effective capacity, its utilisation is:

A. 20%

B. 80%

C. 125%

D. 180%

Correct Answer: B. 80%

Question 7

Which factor is most directly represented by a work-centre calendar?

A. Component quantity per parent

B. Product selling price

C. Shifts, holidays, maintenance, and planned availability

D. Customer credit limit

Correct Answer: C. Shifts, holidays, maintenance, and planned availability

Question 8

What is a principal risk of using an obsolete routing in CRP?

A. It can create inaccurate work-centre load

B. It automatically improves yield

C. It eliminates setup time

D. It guarantees finite scheduling

Correct Answer: A. It can create inaccurate work-centre load

Question 9

Which lot-sizing rule orders exactly the net requirement, subject to other system constraints?

A. Fixed order quantity

B. Lot-for-lot

C. Economic order quantity only

D. Maximum-capacity lot sizing

Correct Answer: B. Lot-for-lot

Question 10

Why should an apparent CRP overload be diagnosed before overtime is approved?

A. Every overload is caused by low demand

B. The overload may result from inaccurate master data or incorrect calendars

C. Overtime cannot affect capacity

D. CRP never uses routings

Correct Answer: B. The overload may result from inaccurate master data or incorrect calendars
Capacity Requirement Planning
Chapter 3 of 15