demand bill

Rough Cut Capacity Planning

Rough Cut Capacity Planning (RCCP) is a term used in relationship with production planning and controlling an environment. (RCCP) is also an important part of the manufacturing process within a companies Supply Chain by evaluating capacity with availability within a companies manufacturing environment.

Here is an example of how Supply Chain related activities relate to one another.

Forecasting of demand, Bill of Materials, along with Customer Orders are tied into a Master Production Schedule. A Master Production Schedule (MPS) is what a company uses to determine how many products to make for a given period of time. From the master production schedule is where the Rough Cut Capacity Planning (RCCP) comes into play. Following this is the Material requirements planning, ending with the Capacity Requirements Planning (CRP)

Now a company using this system could be a make to stock (MTS) or a make to order (MTO) company depending on the needs of a customer. There are also many factors that need to be included in an MPS known as Lead time, Safety Stock, Inventory levels, order policies such as lot for lot (LFL) or certain quantified amounts, as well as Carrying charge.

A repeating occurrence of an abundance amount of inventory being created or pulled through a supply chain application has become a problem. This abundance of inventory creates more finished goods, which in turn add higher carrying costs applied to the goods, as opposed to their raw state. To solve this problem, RCCP has been implemented in an MRP system to prevent an over production of materials and determining the appropriate amount of capacity that should be used in the system.

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