Separate observed contribution movement across installed capacity, utilization, revenue rate, variable cost, and fixed capacity cost, then test whether additional capacity earns its commitment once demand timing, a practical utilization ceiling, activation timing, and ramp are included.
About this interactive
The observed bridge compares the same capacity unit across two periods. Installed capacity, utilization, revenue per utilized unit, and variable cost are evaluated in every possible ordering so interaction effects are shared rather than assigned by a fixed calculation sequence; fixed capacity cost remains a separate additive effect. The forward case converts Period B into a monthly run rate, grows demand toward the entered horizon requirement, constrains serviceable volume at the entered practical utilization ceiling, and compares existing capacity with a planned addition that activates and ramps over time. Incremental recovered demand is valued at Period B unit contribution, while fixed cost is charged on all active added capacity whether or not demand uses it. For more information, visit our Corporate Finance & Strategy practice.
Observed periods
Forward capacity decision
Observed operating economics
Utilization and unit economics are derived directly from the entered operating values. Contribution equals utilized capacity multiplied by unit contribution less fixed capacity cost.
Sequence-neutral attribution
Installed capacity, utilization, revenue rate, and variable cost are moved from Period A to Period B in every possible ordering. Fixed capacity cost is additive and remains separate.
Forward capacity decision
The white line is modeled demand. The dark-blue line is serviceable volume from the Period B capacity base at the entered practical ceiling. The lighter line includes the planned capacity addition and ramp.
Capacity economics
Incremental contribution uses the Period B unit contribution. Fixed cost is charged on all active added capacity, including added capacity not required to serve incremental demand during the entered horizon.
Monthly capacity path
The monthly view separates demand recovered from capacity activated and shows the contribution after incremental fixed cost and any activation commitment.
Operating thresholds
The thresholds hold the other forward assumptions constant and solve the single demand, cost, size, or timing condition that changes the capacity result.
What changed
CAPACITY UTILIZATION BRIDGE: ILLUSTRATIVE DEFAULT RECORD OBSERVED PERIOD INPUTS Period A available capacity: 100,000 Period B available capacity: 112,000 Period A utilized capacity: 72,000 Period B utilized capacity: 88,000 Period A revenue per utilized unit: $180.00 Period B revenue per utilized unit: $176.00 Period A variable cost per utilized unit: $68.00 Period B variable cost per utilized unit: $74.00 Period A fixed capacity cost: $5,200,000 Period B fixed capacity cost: $5,800,000 OBSERVED ECONOMICS Period A utilization: 72.0% Period B utilization: 78.6% Period A unit contribution: $112.00 Period B unit contribution: $102.00 Period A total contribution: $2,864,000 Period B total contribution: $3,176,000 Net contribution movement: +$312,000 SEQUENCE-NEUTRAL OBSERVED ATTRIBUTION Installed capacity effect: +$966,011 Utilization effect: +$744,674 Revenue-rate effect: −$319,474 Variable-cost effect: −$479,211 Fixed-capacity cost effect: −$600,000 Reconciled contribution movement: +$312,000 FORWARD CAPACITY ASSUMPTIONS Period B length: 12 months Practical utilization ceiling: 85.0% End-of-horizon demand growth vs Period B monthly run rate: 18.0% Planned added monthly capacity: 1,500 units Capacity activation month: M3 Added-capacity ramp: 2 months Incremental fixed cost per added capacity unit per month: $15.00 One-time activation cost: $50,000 Forward horizon: 6 months FORWARD CAPACITY RESULT Existing monthly available capacity: 9,333 Period B monthly utilized run rate: 7,333 Existing-capacity constrained demand across horizon: 1,560 units Expanded-capacity constrained demand across horizon: 0 units Demand recovered by planned capacity: 1,560 units Gross contribution from recovered demand: $159,120 Incremental fixed capacity cost: $78,750 Fixed cost carried on unused added capacity: $51,221 One-time activation cost: $50,000 Net in-horizon contribution: +$30,370 Payback month: M6 First constrained month without expansion: M3 First constrained month with expansion: None inside horizon OPERATING THRESHOLDS Minimum end-of-horizon demand growth required for non-negative expansion value: 16.6% Maximum incremental fixed cost per added capacity unit per month: $20.78 Minimum planned added monthly capacity required to eliminate modeled constrained demand: 847 units Latest activation month that avoids any modeled constrained demand: M3 MONTHLY CAPACITY PATH M1: demand 7,553 | existing served 7,553 | expanded served 7,553 | recovered 0 | active added capacity 0 | gross contribution $0 | incremental fixed cost $0 | activation cost $0 | net $0 | cumulative $0 M2: demand 7,773 | existing served 7,773 | expanded served 7,773 | recovered 0 | active added capacity 0 | gross contribution $0 | incremental fixed cost $0 | activation cost $0 | net $0 | cumulative $0 M3: demand 7,993 | existing served 7,933 | expanded served 7,993 | recovered 60 | active added capacity 750 | gross contribution $6,120 | incremental fixed cost $11,250 | activation cost $50,000 | net −$55,130 | cumulative −$55,130 M4: demand 8,213 | existing served 7,933 | expanded served 8,213 | recovered 280 | active added capacity 1,500 | gross contribution $28,560 | incremental fixed cost $22,500 | activation cost $0 | net +$6,060 | cumulative −$49,070 M5: demand 8,433 | existing served 7,933 | expanded served 8,433 | recovered 500 | active added capacity 1,500 | gross contribution $51,000 | incremental fixed cost $22,500 | activation cost $0 | net +$28,500 | cumulative −$20,570 M6: demand 8,653 | existing served 7,933 | expanded served 8,653 | recovered 720 | active added capacity 1,500 | gross contribution $73,440 | incremental fixed cost $22,500 | activation cost $0 | net +$50,940 | cumulative +$30,370 FINDING Observed contribution increased by $312,000. Sequence-neutral attribution assigns +$966,011 to installed capacity, +$744,674 to utilization, −$319,474 to revenue per utilized unit, −$479,211 to variable cost, and −$600,000 to fixed capacity cost. In the forward case, the existing capacity base would leave 1,560 units of demand constrained across the six-month horizon, beginning in M3. The planned addition recovers all 1,560 constrained units and produces $159,120 of gross contribution. After $78,750 of incremental fixed capacity cost and the $50,000 activation commitment, net in-horizon contribution is +$30,370 and payback occurs in M6. $51,221 of incremental fixed cost is carried on added capacity not required to serve incremental demand during the horizon. The entered capacity addition requires at least 16.6% end-of-horizon demand growth to break even, and its incremental fixed cost can rise to $20.78 per added capacity unit per month before the six-month value reaches zero. METHOD STATUS Management-entered assumptions. Observed contribution equals utilized capacity multiplied by revenue per utilized unit less variable cost per utilized unit, less fixed capacity cost. The variable contribution pool is represented as available capacity multiplied by utilization multiplied by revenue per utilized unit less variable cost per utilized unit. Installed capacity, utilization, revenue rate, and variable cost are moved from Period A to Period B in every possible ordering and each mechanism receives its average marginal contribution effect. Fixed capacity cost is additive and is therefore applied separately as the negative change in fixed cost. The five effects reconcile exactly to Period B less Period A contribution. The forward analysis converts Period B available and utilized capacity to monthly run rates using the entered Period B length. Demand grows linearly from the Period B monthly utilized run rate to the entered end-of-horizon growth rate. Existing serviceable capacity equals Period B monthly available capacity multiplied by the entered practical utilization ceiling. Planned added capacity begins in the entered activation month and phases in linearly across the entered ramp period; expanded serviceable capacity equals existing plus active added capacity, multiplied by the same ceiling. Recovered demand is the incremental amount served by expanded capacity relative to the existing-capacity case. Recovered demand is valued at the Period B unit contribution. Incremental fixed capacity cost is charged on all active added capacity whether or not that capacity is used, and the one-time activation cost is charged in the activation month. Fixed cost carried on unused added capacity values the active added capacity not required to support incremental recovered demand at the entered utilization ceiling. No external utilization, demand-growth, capacity-cost, or service-level benchmark is used.
Continue your analyses, email calculation records, and return to your work from one account.
By creating an account, you agree to the Terms of Use and acknowledge the Privacy Policy.
Enter the 6-digit code sent to .
