As Products Are Made,capacity Is Used Up

question 37

Essay

As products are made,capacity is used up.Managers must allocate the constrained resource to products so as to maximize the company's contribution margin.
a.List three limited resources that can constrain business operations.
b.How should managers determine the best way to allocate constrained resources among products or operations?

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Definitions:

Plant Managers

Individuals responsible for overseeing the daily operations of a manufacturing facility or plant.

Multi-Plant Firms

Companies or enterprises that operate and manage more than one production or manufacturing facility.

Capacity

The maximum amount of something that a facility or system can contain or produce.

Principal-Agent Problems

A situation in economics where one party (the agent) is expected to act in the best interest of another party (the principal) but may have the incentive to act in their own interest instead.