N-02 · Note
4 min read
What a capacity number should be able to survive
A capacity figure that cannot be traced to an observation is a negotiating position, not an input to a capital decision.
Written by
Cadence Industrial
A written position, not research. No survey, benchmark or client data is used.
Capital cases are frequently built on a utilisation percentage nobody can source. It appears in a board pack, is repeated, and acquires authority through repetition. By the time the decision arrives, its origin has been forgotten.
A capacity number worth relying on can answer four questions: what period it covers, what availability assumption sits behind it, which product mix it presumes, and who observed the underlying rate.
Mix is not a detail
Capacity stated without a mix assumption is close to meaningless in a high-variety plant. The same equipment set has materially different output depending on run length and changeover pattern, and mix shifts long before equipment does.
Where mix is volatile, the useful output of the analysis is not a single number but a stated range with the conditions under which each end holds.
Say what is unknown
It is more useful to record that a figure is unmeasured than to fill the gap with a plausible estimate. An explicit unknown can be resolved with a short, cheap measurement. An unmarked estimate propagates into every downstream calculation and cannot later be distinguished from evidence.