Capacity & Production Planning

You will:

• Define capacity by plant, line or work centre.

• Model production volumes, changeovers and utilisation.

• Identify bottlenecks and under utilised assets.

• Connect production plans to revenue, COGS and working capital.

Model Reef provides a planning-level view of capacity and production (not detailed shift/machine scheduling) and integrates with financial forecasts.

When to use this pattern

Use this pattern when:

• You manufacture products in plants, factories or workshops with identifiable capacity constraints.

• You want to understand how planned volumes interact with capacity.

• You need to connect capacity decisions to revenue, cost and cashflow.

It is often paired with:

• BOM and Unit Cost Modelling for unit economics.

• Inventory Turnover and Working Capital for stock and cash planning.

• Multi Plant Consolidated Forecasting for group views.

Architecture overview

Capacity and production planning uses:

• Branch structure

  • Branches for plants, factories or production sites.

  • Optional branches for individual lines or work centres where needed.

• Capacity drivers

  • Available hours per plant, line or machine.

  • Throughput or units per hour.

  • Planned downtime and efficiency assumptions.

• Production plan drivers

  • Units to produce per product and period.

  • Changeovers and product mix.

• Outputs

  • Utilisation, bottlenecks and headroom.

  • Links to revenue, COGS and working capital.

1

Define plant and line branches

In the model’s branch tree, create structure such as:

• Group

  • Plant - North

  • Plant - South

  • Plant - Contract Manufacturer

If you need more detail, add children branches per line:

• Plant - North

  • Line - A

  • Line - B

Keep the structure aligned with how the business thinks about capacity and performance.

2

Create capacity drivers per plant or line

In the Data Library, define capacity drivers such as:

• Hours Available per Period - Plant North

• Hours Available per Period - Plant South

Or, if using lines:

• Hours Available per Period - Line A

• Hours Available per Period - Line B

Set these drivers based on shifts per day, days per week, planned shutdowns or holidays.

Then define throughput drivers:

• Units per Hour - Product A - Line A

• Units per Hour - Product B - Line A

Throughput can vary by product and line (changeovers and complexity). Optionally add efficiency/OEE modifiers:

• Effective Capacity Modifier - Line A

Example capacity calculation:

Capacity Units = Hours Available × Units per Hour × Effective Capacity Modifier

3

Define production volumes and mix

Use drivers to specify planned production volumes by product, plant and period, for example:

• Units Produced - Product A - Plant North

• Units Produced - Product B - Plant North

Sources for these drivers:

• Sales forecasts and inventory strategies

• Commercial or demand planning teams

• Templates based on past production patterns

Alternatively, derive required production volumes from sales units plus target inventory change (see Inventory Turnover and Working Capital).

Assign production volumes to the correct plant or line so capacity checks are meaningful.

4

Check utilisation and bottlenecks

Compute for each plant or line:

• Required Hours per period:

  • Required Hours - Line A = Sum over products of (Units Produced ÷ Units per Hour)

• Utilisation percentage:

  • Utilisation Percentage = Required Hours ÷ Hours Available

Use dashboards to show:

• Utilisation by plant, line and period

• Periods where utilisation exceeds 100% (over capacity)

• Periods where utilisation is far below capacity (under utilised)

Use these views to decide on production plan adjustments, shift pattern changes, outsourcing or capital investment.

5

Connect capacity and production to financials

Ensure production volumes align with revenue and COGS in the model.

Approaches:

• If production and sales are treated the same for planning, use units produced as the basis for both revenue and COGS variables.

• If production and sales are separate:

  • Use production units for factory cost and capacity.

  • Use sales units for revenue.

  • Model inventory change for the difference (Inventory Turnover and Working Capital).

If capacity constraints prevent the desired production plan, options include:

• Manually adjusting sales forecasts downward.

• Modeling external sourcing by creating COGS variables for outsourced production.

6

Use scenarios for capacity expansion or contraction

Clone the base model into scenarios to represent capacity strategies such as:

• Adding a new line or plant

• Extending shifts or increasing automation

• Moving production between plants

• Outsourcing or insourcing

Adjust per scenario:

• Hours available

• Throughput drivers

• Production volumes and mix

Compare scenarios using utilisation/bottleneck views and impact on revenue, margin, cash, capex and payback (if capex/depreciation included).

7

Integrate with inventory and working capital planning

Once capacity and production are connected to unit cost and revenue, you can:

• Use production and sales volumes to approximate inventory levels

• Derive stock-related working capital needs (Inventory Turnover and Working Capital)

• Feed resulting cashflows into the group Cashflow Statement and Cash Waterfall

This creates a coherent flow from machines and lines through to cash and valuation.

Check your work

• Capacity assumptions reflect actual plant configurations, shift patterns and realistic efficiency.

• Production plans are deliverable within capacity limits, or bottlenecks are explicitly visible and addressed.

• The link between units, revenue and COGS is consistent across the model.

• Scenario outputs are believable to operations and finance stakeholders.

Troubleshooting

Utilisation exceeds 100 percent for long periods

Review production plans, throughput assumptions and capacity assumptions to ensure they are realistic. Consider whether some production is assumed in the wrong plant or line.

Capacity appears under utilised everywhere

Check that sales forecasts and production volumes are not understated, and that you have not double counted capacity from lines that will not actually run.

Difficult to maintain at very fine detail

Aggregate similar lines or product families and use average throughput and capacity values for planning, reserving detailed scheduling for other tools.

Related guides

• Valuation

• Build a Cost of Goods Model

• Unit Detection

• Frequency Inputs