Dealing with single constraints

In this lesson

1. 0:00 Single constraints in production planning
2. 0:32 Identifying the limiting factor
3. 2:24 Calculating contribution per limiting factor
4. 4:03 Contribution per labour hour worked example
5. 7:06 Multi-product constraint with contractual obligations
6. 14:27 Make or buy decisions under resource constraints
7. 17:02 Ranking products by savings when subcontracting

About this lesson

You'll discover how to spot constraints like labour, materials, or machine hours, then use contribution per limiting factor analysis to determine which products to prioritise and maximise profit within those constraints. The video walks you through worked examples including make-or-buy scenarios, showing you how to rank products by their efficiency relative to the scarce resource and build an optimal production plan that respects contractual obligations while protecting your bottom line. Identifying the limiting factor is your first step. Whether it's customer demand, material availability, labour hours, or machine capacity, you need to calculate total resource requirements against what's actually available. Once you've spotted the shortage, the strategy shifts: instead of looking at contribution per unit alone, you calculate contribution per unit of the limiting factor. This reveals which products make the best use of your constrained resource, even if they don't generate the highest profit individually. The lesson demonstrates this with realistic scenarios—from energy drink production with ingredient constraints to component manufacturing with machine hour limits—so you can apply the same logic to your exam questions and real business decisions.

Duration: 19m