Demand Growth Capacity Stress Test
Compound a demand growth rate against current capacity to find the period, if any, where a gap opens.
Demand trajectory
| Period | Demand | Capacity | Gap |
|---|---|---|---|
| 1 | 1,080 | 1,300 | 220 |
| 2 | 1,166 | 1,300 | 134 |
| 3 | 1,260 | 1,300 | 40 |
| 4 | 1,360 | 1,300 | -60 |
| 5 | 1,469 | 1,300 | -169 |
Sensitivity to growth rate
| Scenario | Breach period | Final gap |
|---|---|---|
| 3.0% growth | None | 141 |
| 5.5% growth | 5 | -7 |
| Entered (8.0%) | 4 | -169 |
| 10.5% growth | 3 | -347 |
| 13.0% growth | 3 | -542 |
Continue Analysis
Based on your results, these related decisions are available.
How this works
Capacity that covers demand today can fail quietly a few periods out once growth compounds, especially when planned capacity additions are linear while demand growth is not. This engine compounds demand at the entered growth rate every period, compares it against capacity plus any planned additions, and reports the first period the gap turns negative, so the compounding effect is visible instead of assumed away.
Key terms
- Compound growth: demand grows by the entered rate each period, on top of the already-grown prior period, not a flat amount added every period.
- Breach period: the first period where projected capacity falls below projected demand.
- Planned capacity addition: a constant amount of extra capacity added every period, if any is planned.
Assumptions
- Growth rate and any planned capacity addition are constant across the horizon
- Single demand stream and single capacity pool
Limitations
- Does not model lumpy or step-function capacity additions, only a constant per-period amount
- Does not size the investment needed to close a gap, that belongs to Production Capacity Planner and Bottleneck Capacity Analyzer
- Single demand stream, not a multi-product stress test
Sources
Standard capacity-requirements-planning compounding-growth treatment (Vollmann, Berry, Whybark, and Jacobs, Manufacturing Planning and Control Systems).
Worked example
At 1,000 units/period of demand, 1,300 units/period of capacity, and 8% growth per period, the gap starts at +220 units in period 1 and shrinks each period as demand compounds. By period 4, projected demand reaches about 1,360 units against a fixed capacity of 1,300, a gap of about -60 units, the breach period. A linear growth estimate on the same inputs would not show a breach until period 5, a full period later than the true compounding result.
Common use cases
- Testing how many periods of runway current capacity really has against a growth forecast
- Checking whether a planned capacity addition schedule keeps pace with compounding demand
- Catching the gap between a linear growth assumption and true compounding demand
- Feeding a projected demand figure into Production Capacity Planner