A forecast is believable only if the business can deliver it. Work out the most the business can make in a week, then compare it with the forecast.
This lesson is part of student-owned business plan reasoning. It connects to checking numerical consistency for the wider plan.
How do I check a forecast against capacity?
Write the capacity as a chain of multiplications, then compare the total with the forecast.
- Output per batch.
- Batches per day the business can run.
- Days per week it operates.
- Weekly capacity = batch size × batches × days.
If the forecast is higher than the weekly capacity, the plan disagrees with itself.
Worked example: Aiman’s kuih stall, month 3
Aiman forecasts 90 boxes per week by month 3. One batch makes 20 boxes. His oven time allows 1 batch per day, on 4 school days each week.
Capacity. Weekly capacity = 20 × 1 × 4 = 80 boxes.
Gap. The forecast of 90 boxes is 10 above the capacity of 80. The plan cannot deliver as written.
Adjustment 1, lower the forecast. Plan for 80 boxes per week. This assumes no extra baking time.
Adjustment 2, raise capacity. Add one more baking day, making 5 days: 20 × 1 × 5 = 100 boxes. This assumes Aiman can bake on a fifth day, such as a Saturday.
Adjustment 3, add a helper. Two people bake 2 batches per day on 4 days: 20 × 2 × 4 = 160 boxes. This assumes a helper is available, a second batch can fit in the oven time, and ingredient costs rise.
Each adjustment works, and each has a different assumption. The plan should choose one and say why.
The mistake that costs marks
The common slip is writing a forecast from hope and never calculating capacity. The numbers look neat, and they disagree.
| Step | Wrong | Right |
|---|---|---|
| Forecast | 90 boxes per week | 90 boxes per week |
| Capacity | not calculated | 20 × 1 × 4 = 80 boxes |
| Comparison | not made | forecast is 10 above capacity |
| Action | none | add a fifth baking day, with the assumption stated |
A single line of capacity working turns a hopeful plan into a checkable one.
Check yourself
A juice stall has one machine that makes 15 cups each hour. The stall is open 5 hours a day. The owner forecasts 100 cups per day. Find the capacity and give two adjustments.
Answer
Capacity = 15 × 5 = 75 cups per day. The forecast of 100 is 25 above the capacity.
Adjustment 1: lower the forecast to 75 cups, assuming no extra hours.
Adjustment 2: open for 7 hours, giving 15 × 7 = 105 cups, assuming the owner can stay longer and the fruit supply lasts.
What to study next
Move on to explaining a risk response without promising success. The business case answer planner can help you lay out forecast, capacity and assumptions side by side.
For a teacher to check your numbers with you, see online one-to-one Business tuition.