Abstract
Abstract This paper takes a look at product mix profitability and compares several alternative methodologies for selecting the optimal product mix. It is argued that the optimal product mix is not determined using traditional accounting methodologies and that dropping marginally profitable products based on the accounting rules will give you less than optimal profitability. This paper looks at two different ways for coming up with the optimal product mix: one using theory of constraints (TOC) and another using linear programming.
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