What's the math behind it? Is it 1:1 per cities & residents?
When you say decreases production, does that mean it just takes long to build over-capped supply units? Or do they preforming worse in the field. A negative supply penalty?
And to think, I thought it was a real-life supply system for military units... so they had t have so much supply the further they went from home This implementation is cheap and pretty sucky.
Quick version:
-Total Supply = BaseSupply + Cities*2 + Population/2
-Deficit starts when In Use # is greater than Total Supply #
-Production penalty in all cities = -10% per point of Deficit up to a cap of -70%
-Gold Purchasing is -not- affected
-Production Buildings (Forge, Workshop) and Social Policies will negate the Production penalty up to the building or SPs production bonus.
-Puppet cities will increase your Total Supply
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I did a test game on Emperor setting with Future Era start.
Your Total Supply = BaseSupply + Cities*2 + Population/2
When the In Use number is greater than your Total Supply, then you have a Supply Deficit. This deficit is indicated by a red dot with a white exclamation point in it that is to the right of your strategic resources at the top of the screen. Each point of Supply Deficit = -10% Production in each of your Cities, no matter what they're building, up to a maximum of -70% Production penalty.
Even Puppet Cities count toward your Total Supply, so a warmonger can just keep churning units out as long as they keep making puppet cities. You could spam Guided Missiles in the modern era if you wanted hehe. Also, if you do get a deficit then you can counter it by having production buildings like a Forge or Workshop, or a SP like Order which gives +25% for Buildings. A Workshop will negate up to a Deficit of 2 (-20% Production penalty) but only when producing buildings. The gold cost of purchasing units remains the same, so if you buy almost everything you won't care about deficits.
As far as the concept of supply that you thought it might be at first, I think they tried to simulate a real life supply system by having units heal more in your cities and friendly territory, and heal less away from home. This is too easy to get around with medic units (especially that dirty Khan UU) so it doesn't adequately represent logistics problems that normally come with distant wars in enemy territory. Oh well, maybe you can come up with a fun way to simulate it better. If you can, suggest it