Which one of the following shows the correct order of developing an optimum production plan?

1. Calculate the total contribution

2. Product ranking based on the level of contribution per limiting factor

3. Determine the limiting factor

4. Prepare optimum production plan

Question

Which one of the following shows the correct order of developing an optimum production plan?

1. Calculate the total contribution

2. Product ranking based on the level of contribution per limiting factor

3. Determine the limiting factor

4. Prepare optimum production plan

BlackTom AI · Accepted Answer

To approach this question, we must evaluate the plausibility of each proposed sequence for developing an optimum production plan, step by step.
Option A: 1,3,4,2. Starting with calculating the total contribution before identifying the limiting factor or ranking products by contribution per limiting factor is illogical, because you need to know what constrains production (the limiting factor) to meaningfully assess contributions and make a plan. This order mismatches the natural workflow, as you would typically first identify constraints, then assess how much each option contributes given those constraints, and finally finalize the plan.
Option B: 3,4,2,1. Beginning with determining the limiting factor is sensible, but proceeding to prepare the optimum plan before ranking products by contribution per limiting factor can be problematic. Ranking by contribution per limiting factor helps prioritize which products to allocate the scarce resource to; skipping that step before planning could lead to suboptimal allocation in the plan itself. So this sequence skips an important prioritization step before planning.
Option C: 2,1,4,3. Starting with product ranking based on contribution per limiting factor, without first determining the actual limiting factor, is circular or misguided, because ranking requires knowledge of the limiting constraint to compute contribution per limiting factor correctly. Then calculating total contribution after preparing the plan and before confirming the constraint would be out of order. Overall, this sequence relies on an input (the limiting factor) that hasn't been established yet and disrupts the logical flow.
Option D: 3,2,4,1. This path begins by determining the limiting factor, which identifies the scarce resource or constraint driving the production scenario. Next, ranking products based on the level of contribution per limiting factor makes sense: you prioritize outputs that give the most bang for the constrained resource. Then preparing the optimum production plan uses that prioritized information to allocate the scarce resource efficiently. Finally, calculating the total contribution checks the overall profitability or effectiveness of the plan. This sequence follows a coherent, constraint-driven workflow commonly taught in operations management and production planning.
Option E: 1,2,3,4. This option starts with calculating total contribution without having established the limiting factor or performed any prioritization by constraint, and then proceeds through ranking and planning. It conflates overall contribution assessment with the constraint-aware prioritization, which can lead to misallocation of resources and an ineffective plan. The order is inconsistent with a structured, constraint-first planning approach.
In summary, each option’s merit hinges on whether it respects the logical order of identifying constraints, prioritizing by constrained-contribution, and then building the plan, followed by verification of total contribution. Options A, B, C, and E each break this logical sequence in one way or another, while Option D mirrors the standard constraint-driven sequence described above.

LC Decision Making & Control 32181 Week 4 Quiz: Relevant Costing

Which one of the following shows the correct order of developing an optimum production plan? 1. Calculate the total contribution 2. Product ranking based on the level of contribution per limiting factor 3. Determine the limiting factor 4. Prepare optimum production plan

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