What is optimizing product mix?
People set up businesses to make profits. Often, profits are outcomes of judicious allocations of scarce resources to competing products and services. It’s not always easy to make profits when a business has competing products, screaming for scarce resources. A business in such a situation has to use a reliable formula to ensure survival, continuity and growth. The most reliable formula is the one that helps the business to take appropriate optimal product mix decision. What is optimal product mix decision? Optimal product mix decision is following the process that helps a business to identify the appropriate product mix that maximizes total contributions to the business by the available limited resources. The application of optimal product mix approach is determined by the nature of the constraints (scarce resources). What are the basic constraints? They are basically two: 1. Single constraint and, 2. Multiple constraints. (A) A single constraint or a key limiti...