Constrained resource

Constrained resource: a scarce input that limits total output. Products must be ranked by the contribution earned per unit of that constraint, not per unit sold.

Also known asbottleneck

ByHoang TruongUpdated June 30, 2026

FrameworkRelevant costing

See it move

Loading infographic...

A two-column comparison ranks two products by contribution per unit of constrained resource. Product A yields €30 per unit but requires 3 machine hours, producing only €10 per machine hour and ranking second in the production mix. Product B yields €20 per unit but uses just 1 machine hour, delivering €20 per machine hour and ranking first; despite its lower per-unit contribution, Product B should be maximised before any capacity is given to Product A.

Where it fits

SubjectCost AccountingAdvancedTopicRelevant Costs & Decision-MakingAdvanced

The formula

LaTeX

\text{Ranking metric} = \frac{CM_{\text{unit}}}{\text{constraint units per product unit}}

Variables

$C M_{u} ni t$: contribution margin per unit of product (selling price minus variable cost per unit) (€ per unit)
$co n s t r ain t u ni t s p er p r o d u c t u ni t$: quantity of the scarce resource required to produce one unit of the product (e.g. machine hours per unit)

Products are ranked from highest to lowest by this ratio. The scarce resource is allocated in that order until exhausted to maximise total contribution.