Capacity Planning in Production: Foreseeing the Bottleneck

Material ready but machine busy. No material but machine idle. Production requires two different limits (material and capacity) to be met at the same time and in the right order. Capacity planning is the second half that completes MRP's material side.

01. How Is Capacity Defined?

In modern MRP, capacity is defined at two layers:

• Machine capacity (hours / shift / unit production rate)
• Human capacity (number of shifts, operator qualification)

If the same machine can produce two different products, a product-machine matrix is built. A cycle time is defined for each machine.

02. Identifying the Bottleneck Operation

In a production line, the bottleneck is the slowest operation. All other operations must plan around this bottleneck.

Bottleneck detection is automatic in MRP: the work center with the highest monthly capacity utilization is the bottleneck. Unless its capacity is expanded, total output won't increase.

03. Forward and Backward Loading

There are two different loading logics in MRP:

• Forward loading: calculates when the order will finish
• Backward loading: calculates when production must start, working back from the promised deadline

A proper MRP supports both; which one is used can vary by order.

04. Finite vs Infinite Capacity

Classic MRP assumes "infinite capacity": if capacity is insufficient, it piles more on top. Modern MRP works with finite-capacity logic: if capacity fills up, new work is scheduled into the next available slot.

Finite-capacity mode enables realistic deadlines but makes planning harder. Finding the right balance is one of the hardest decisions in an MRP setup.