DEFINITION of 'Capacity Requirements Planning - CRP'

An accounting method used to determine the available production capacity of a company. Capacity requirement planning first assesses the schedule of production that has been planned upon by the company. Then it analyzes the company's actual production capacity and weighs the two against each other to see if the schedule can be completed with the current production capacity.

BREAKING DOWN 'Capacity Requirements Planning - CRP'

Capacity requirements planning is an important part of ensuring that a company can meet production expectations. If a firm fails to take this step before production, it may find itself unexpectedly unable to produce the amount of goods that it has agreed to make with its current facilities. This can obviously be disastrous for the firm if it is unable to meet the requirements of a contract or other formal production agreement.

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