The production plan maximizing contribution from the limited factor is called?

The production plan maximizing contribution from the limited factor is called?

• A. Budgeted production plan
• B. Optimal production plan
• C. Standard hour plan
• D. Flexible plan

Answer: (B)

When a single factor is limited, the aim is to allocate that scarce resource to the mix of products that gives the highest total contribution. This is the optimal production plan. You evaluate how much contribution each unit of the limited factor yields for each product (for example, contribution per machine hour) and allocate the scarce resource to the product with the highest value until the constraint is used up. If several products share the same marginal contribution per unit of the constrained factor, any combination of those that uses the resource fully is optimal. This focuses on maximizing profit under the constraint, unlike budgeted, standard hour, or flexible plans which address budgets, standard time, or responsiveness rather than constrained optimization.

When a single factor is limited, the aim is to allocate that scarce resource to the mix of products that gives the highest total contribution. This is the optimal production plan. You evaluate how much contribution each unit of the limited factor yields for each product (for example, contribution per machine hour) and allocate the scarce resource to the product with the highest value until the constraint is used up. If several products share the same marginal contribution per unit of the constrained factor, any combination of those that uses the resource fully is optimal. This focuses on maximizing profit under the constraint, unlike budgeted, standard hour, or flexible plans which address budgets, standard time, or responsiveness rather than constrained optimization.