Module 5 - Limiting Factors

Question 1

Limiting factor

Answer 1

A resource in short supply that limits the organisation’s activities

Question 2

When is there no available subcontractor when will contribution be maximised?

Answer 2

Prioritising products which generate the highest level of contribution from each unit of limiting factor

Question 3

Production plan steps (no subcontractor)

Answer 3

1. Identify limiting factor
2. Calculate the contribution per limiting factor
3. Identify the order to manufacture products
4. Calculate the profit to be made/number of each product to be manufactured

Question 4

How are products prioritised when a sub-contractor is used

Answer 4

Maximise saving per unit of the limiting factor

Question 5

What is the process for deciding the production plan when a subcontractor is used

Answer 5

1. identify limiting factor
2. calculate the saving from in-house manufacture per unit of limiting factor
3. identify the order to manufacture products in-house and the number to be manufactured by the sub-contractor
4. calculate the profit to be made/number of each product to be manufactured in house/by sub contractor

Question 6

Contribution for the products bought in externally

Answer 6

Sales price less the sub-contractor’s quote