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 limiting factor situation arises when, a resource is limited is the midst of other factors are adequately available and, are maximally contributing to the profitability of the product mix.

When this happens, the contribution margin per key limiting factor approach is used.

And the following steps are taken to reach the optimal product mix decision;

1. The appropriate identification of the key limiting factor among other factors by comparing the budgeted resources and units to available resources and units,

2. The calculation of cost per unit, contribution per unit and savings made by producing each product,

3. The division of the contribution or savings per unit by the key limiting factor per unit,

4. Ranking the results of the division in (3) above in descending order,

5. Diving the budgeted sales by corresponding selling prices to identify the maximum units required by each product line,

6. Identification of management priorities before,

7. Preparing an allocation template, allocating identified key factor among competing product lines and identifying the optimal product mix.  

(B) Multiple constraints situation arises where the supply of two or more resources of a business is limited. The linear programming technique is often applied to remedy this situation.

 The appropriate approach to use in a multiple constraints situation is to find out the factors that make it difficult to meet maximum demand.

After the identification of maximum sales demand for a business’s products, earning abilities of all limiting factors should be ranked (based on their contributions- the excess of selling price per unit over variable cost per unit) and the contribution that meets the sales demand unit is the maximizing.

In a situation where a business’s limiting factor on sales or production is not a scarce resource, the business would have to make available more than the level determined by contribution per unit of limiting factor ranking. 

The optimal product mix must however, recognize minimum production requirements.

A business may have a situation of non- scarce resource limiting factor when it has to do all it could to maintain goodwill (incidentally a crucial intangible asset), maintain market share of some of its products and meet contractual agreements.

If you carry joy in your heart, you can heal any moment. - Carlos Santana.

 

Life happens to everyone

and sometimes bring along

good things and make us glad

at other times, it gifts us bad things and make us sad.

We really have control over few things in this world,

the control over one is really enough,

and it's the choice

we have to make at every moment between sadness and joy.

"Use the pain we’re feeling and...

“...turn it into power.” - Rico (Blue Beetle).

The reality is, we are in tough times,

we’re drowning in our tears and having pains for breakfast,

But the truth is, this is the right time for you and I,

to wipe our tears and turn the pain into power;

this we can achieve by realizing that we’re the only heroes we have,

and if we can’t find the power to save ourselves, no one can.

***

“USE THE PAIN WE’RE FEELING AND TURN IT INTO POWER.” – ROCIO (Blue Beetle).

“You drown not by falling into the river, ...

...but by staying submerged in it.”

So it’s not not fatal when you fall, 

But when you stay down you’re crushed;

We’re crushed by self defeats,

not by unfavorable conditions 

which are normal and systemic,

But by refusing to look up when we fall;

The sun, the moon and the stars are still up in the sky,

They need no one’s permission to shine the light

On the path of the one that has chosen to see what lies in the morning after,

 the coldest night is over.

***

"You drown not by falling into the river, but by staying submerged in it." - Ovi  Mahajan (Extraction).

5 things government should subsidize.

People submit themselves to government becàuse they believe that government has the resources to make life comfortable in ways most individuals can’t. 

Government everywhere knows this or should know this fact. 

In places, where the legitimacy and acceptability are obtained by popular means, people who seek public offices promise to make life easier for the masses by lowering costs of essential goods and services.

One of the popular ways people-centric government keeps this promise is by subsidizing the costs of  filling basic needs. 

The costs of filling the following basic needs are often subsidized by governments that empathize with the sufferings of their people are:

1. Education,

2. Food,

3. Quality health care,

4. Decent housing and,

5. Energy.

People friendly governments subsidize costs of satisfying these needs because they understand that;

1. When the most people have access to quality education, they would in return use their acquired skills to support governments efforts to strengthen the economy and develop the society for everyone.

2. Without food, people will starve. A society populated by hungry people breeds violent crimes. The costs of, in the least, controlling violent crimes are more than the costs of preventing them.

3. Health is wealth. A healthy person is a happy person. A responsible government would always prioritize the enlargement of accessibility to quality health care for its people.

4. People need decent places to call homes. 

5. Easy accessibility to quality and cheap sources of energy would boost industrialization efforts by both public and private sectors. 

Such efforts would produce more jobs for the people,  increase the availability of quality products at cheap prices, increase the gross domestic  product, increase the per capita income of the people and produce a robust economy. 

At least, the cost of food and energy should be subsidized by governments. 

Kristalina Georgieva, IMF boss agrees;

"Governments need to subsidise the cost of food and energy for the poorest members of society."

3 Big Questions To Ask About Life.

 

Life presents to us all, numerous questions. 

But it reveals its meaning to only those  who seek answers to only few questions.

The meaning of life is found in the answers to:

1. Who am I,

2. Why am I here and ,

3. How do I fulfil the reason I am here.

Searching for answers to more, would easily make  you unhappy and unfulfilled in life.

Your success is all that matters.

 

When you make attempts to take a big leap,

You should expect to be pushed and kicked

by those who seem to love and support you,

and give you hope with their nice words 

but their actions give you every reason,

to seek to be isolated from humanity.

No. Rather choose the isolation

that protects your exclusive position,

to love who you are 

and also, all those that come into your life,

it doesn't matter, 

that many among those who smile back when say hi,

are those who don't want you to win,

what matters is, you succeed 

and when you do, you become the star

that no darkness can stand on its path.