Question

A plant has one binding bottleneck: a heat-treating oven (hours limited). Product P and Q both consume oven time; material is the only truly variable cost in the short run. P has higher gross margin per unit, but lower throughput per bottleneck hour than Q. Demand for both exceeds capacity; fixed costs are committed. Which production plan maximizes short-run profit?

Q: Answer-A plant has one binding bottleneck: a heat-treating oven (hours limited). Product P and Q both consu...

In throughput accounting with a single binding bottleneck, rank products by throughput per bottleneck hour sales truly variable costs per hour. With excess demand and fixed costs committed, prioritize Q if it yields higher throughput per constrained hour.