Capacity Requirements Planning - CRP


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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  1. Do dividends affect working capital?

    Regardless of whether cash dividends are paid or accrued, a company's working capital is reduced. When cash dividends are ... Read Full Answer >>
  2. Do prepayments provide working capital?

    Prepayments, or prepaid expenses, are typically included in the current assets on a company's balance sheet, as they represent ... Read Full Answer >>
  3. Does working capital include inventory?

    A company's working capital includes inventory, and increases in inventory make working capital increase. Working capital ... Read Full Answer >>
  4. Does working capital include salaries?

    A company accrues unpaid salaries on its balance sheet as part of accounts payable, which is a current liability account, ... Read Full Answer >>
  5. What is a profit and loss (P&L) statement and why do companies publish them?

    A profit and loss (P&L) statement, or balance sheet, is essentially a snapshot of a company's financial activity for ... Read Full Answer >>
  6. How do dividends affect the balance sheet?

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