The Opportunity Cost of Using a Unit of the Constrained

question 50

True/False

The opportunity cost of using a unit of the constrained resource in a volume trade-off decision is determined by the profitability index of the company's least profitable product--even if none of that product is currently being made.

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Definitions:

Shipped on Time

Shipped on time refers to the process of sending goods to the intended recipient within the promised or scheduled delivery timeframe.

Dollar Fill Rate

A metric used to measure the value of product shipped or delivered as a percentage of the total value of product ordered.

Total Value

The complete worth of a product or service, including both tangible and intangible factors, that contribute to its perceived value by the consumer.

Performance Measurement Metrics

Quantitative indicators used to assess and monitor the performance of processes, employees, departments, or organizations against key objectives.