Managerial Test 3 Review

# Managerial Test 3 Review - Managerial Accounting Chapter 12...

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Managerial Accounting Chapter 12 Appendices and Chapter 13 Review A bottleneck is the constraint or constraining factor limiting production or sales. A constraint is a process or resource in a systme that limits the capacity or throughput of the system. With a single bottleneck the most value can be generated by producing the product or service that creates the most value per unit of constrained capacity. Multiple contraints may require more complex tools such as linear programming. In the long run the organization can add capacity, but in the short run, outsourcing can be more profitable than forgone sales. Linear programming is a quantitative tool designed to help find the product mix that maximizes profits when multiple constraints exists. o Shows how to best allocate scarce resources among alternative courses of action in the short run when capacity cannot be increased. o Finds the combination of products or services that maximizes throughput or contribution margin or minimizes costs within the limits of constrained resources. The objective function is the mathematical relationship of inputs and outputs to be either maximized or minimized. Constraints represent capacity limits of the various processes and resources. Linear programming constraints state algebraically that resources used must not exceed the resources available. Feasible solution space is the combination of input and output values that satisfy the

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## This note was uploaded on 08/08/2011 for the course ACCT 3613 taught by Professor Cooper during the Spring '11 term at Arkansas.

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Managerial Test 3 Review - Managerial Accounting Chapter 12...

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