Why is calculating total capacity so important

Calculating Total Capacity

Why is calculating your Total Capacity important?

While the simulation shows you your firm’s current total capacity, you can use this calculations to predict the amount of bikes your firm can produce in upcoming years; work out if you need to reduce or increase your capacity or; question whether there is an imbalance between your factory and workers.

In MikesBikes your factory is most effective when the capacity of your workers is well matched to the capacity of your plant. If your Factory Workforce and your Plant Capacity get out of balance then it is likely they will not be working to their full potential (possibly costing your firm more than is necessary).

Total Capacity SCU = Squareroot (Factory Workforce Capacity SCU * Plant
Capacity SCU)

This equation allows you to emphasize one form of capacity over another depending on how each approach fits with your strategic plan. For instance, you can employ more workers immediately whereas you have to wait 12 months for new Plant to become available.

Just be aware that if your Factory Workforce Capacity and Plant Capacity favor one over the other too much then you might find this is inefficient. So check your Manufacturing Responsiveness report when deciding whether to employ more workers or to purchase more Plant.

How do I calculate my Total Capacity?

Example 1
Factory Workforce Capacity = 25,000 SCU and Plant Capacity = 25,000 SCU
Total Capacity = sqrt (25,000 * 25,000) = 25,000 SCU

Example 2
Factory Workforce Capacity = 35,000 SCU and Plant Capacity = 15,000 SCU
Total Capacity = sqrt (35,000 * 15,000) = 22,912 SCU

Example 3
Factory Workforce Capacity = 40,000 SCU and Plant Capacity = 10,000 SCU
Total Capacity = sqrt (40,000 * 10,000) = 20,000 SCU
Be sure to note that this total capacity won’t be completely what is available to you. Your factory faces inefficiencies (if you’re using MikesBikes-Advanced then this will be things like breakdowns, reworking, setup, raw materials stockout and training) which will mean you don’t get to use the full 100%. Check out the manufacturing guide for more information on how this will affect your decisions.