Tutorial 2 Flashcards by James lane | Brainscape

Q

What are the steps to find the ‘optimal production plan’?

A

Identify the binding constraint (or the most severe binding constraint)
Calculate the SP- VC
Calculate the contribution per unit of the binding constraint.

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Q

How is net benefit calculated?

A

Contribution x unit demand

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Q

How is the revised contribution calculated?

A

Unit contribution - additional cost per unit

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