Production Constraints (limiting factors)
Up to this point we have looked at changes in the
volume of production and have implicitly assumed that the number of
units that can be sold will constrain the amount of units we wish to
produce. This constraint frequently applies in practice. However, where
a company is in the happy position to be able to sell as much as it
can produce, or where it is faced with an unexpected shortage of a vital
productive resource that restricts its output, production may not be
able to meet the potential sales demand.
Going back to our three product example above, we
shall show how it is possible to provide advice on how to minimise the
adverse effect of such productive constraints by adopting an optimum
production schedule.
