Production Why did we not get all the capacity and/or automation we ordered?


The simulation imposed a Capital Budget Limit.

The dollar value of capacity and automation purchases is determined by the maximum amount that can be raised through stock and bond issues plus excess working capital minus the total amount of stock dividends to be paid in the current year. Excess working capital is calculated as follows:

Working Capital = Current Assets - Current Liabilities
90 Days of Sales = 90/365 Sales
Excess Working Capital = Working Capital - 90 Days of Sales

Note: For most companies, Excess Working Capital will be zero.

If you enter capacity and/or automation purchases that exceed this amount, the simulation will scale back your purchases.