Page 36 - Manac Costing Test 2 class slides - 2. Decision Making
P. 36

DECISION MAKING



            Decision Making Where Constraints Exist












            • Where there are limited resources available (material,

                labour hours, machine hours, etc) a constraint could exist

                which prevents a company from manufacturing their full

                market demand.







            • The primary objective, obviously, is to maximise profits.


                Profits are maximised by maximising contribution or

                marginal income. The question is , how one maximises

                contribution when faced with limited resources???








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