Team Member Guide

  Capstone Spreadsheet Production
Capacity and Automation

1st Shift Capacity The number of units, in thousands, that can be produced each year running a single eight hour shift.

Buy/Sell Capacity The number of units of capacity to buy or sell, in thousands of units. There is a one-year lag before new capacity becomes available. That is, it is not available for this year’s production, but will be available next year. Capacity purchase price depends on the current automation level. Capacity must be purchased for new products. If it is not the products cannot be built. Capacity can be sold by entering a negative number to indicate the amount you wish to eliminate. Capacity is sold on January 1 for 65% of the purchase price. When capacity is sold, the sale completes immediately and the money is available in the current round.Selling off all capacity will terminate a product.

New Automation Rating The automation level wanted for the following round. This is the total level, not incremental. For example, to raise a level from 5.0 to 6.0, enter 6.0. There is a one-year lag before the new automation becomes available. A rating of 1.0 equals little automation and significant labor costs. A rating of 10.0 equals heavy automation with few workers. For every point of change (up or down) companies are charged $4 per unit of capacity; changing an assembly line with 1 million units of capacity from an automation of 5.0 to an automation of 6.0 would cost $4 million. An automation level of at least 1.0 must be assigned to new production lines.

Investment The cost in thousands of dollars to add new capacity and/or change automation levels. Investments are limited to the capital budget limit defined below.

The dollar value of capacity and automation purchases is determined by the maximum amount that can be raised through 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.