Q: How do you work out the best option with a limiting factor?
13 September 2012
You need to calculate the ‘contribution per limiting factor’.
You need to calculate the ‘contribution per limiting factor’. If, for example, there is a shortage of a particular material, and several products require it, it makes sense to allocate it to the most profitable products. The contribution technique allows you to identify these, rank them in order of profitability, and allocate the material to maximise the profits.
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