If a Company Produces Its Products in a Constrained Resource

question 112

Multiple Choice

If a company produces its products in a constrained resource environment,the company should

• A)Always produce the product with the lowest contribution margin per constrained resource.
• B)Always produce the product with the highest contribution margin per constrained resource.
• C)Produce a mix of products such that opportunity cost is minimized.
• D)Produce a mix of products so that customer service needs and customer preferences are met.

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Definitions:

Optimal Plan

An optimal plan refers to a strategy or decision that is the most efficient, effective, and beneficial among all possible options under given conditions.

Planning Periods

Defined durations for which strategic or operational planning activities are undertaken to achieve specific objectives.

Pure Level Strategy

A production strategy where output levels are kept constant despite fluctuating demand, leading to inventory buildup or shortages.

Demand Requirements

The quantity of products or services that the market requires at any given time.