ACCA Performance Management (F5) Certification Practice Exam

What is the first step in problem-solving when there is a limiting factor?

1. Calculate the contribution per unit of each product

2. Identify the scarce resource

3. Allocate resources based on contribution

4. Rank products in order of resource use

The correct answer is: Identify the scarce resource

Identifying the scarce resource is crucial when addressing a limiting factor in problem-solving. A limiting factor is a resource that is in short supply relative to the demand for it, which ultimately constrains production or sales. By pinpointing this scarce resource, one can make informed decisions about how to allocate it efficiently across various products or operations. Once the scarce resource is identified, it sets the stage for further analysis, such as calculating the contribution per unit of each product or ranking products based on how much of the limiting resource they consume. These subsequent steps are designed to maximize profitability or efficiency. However, the process begins with having a clear understanding of which resource is limiting, allowing businesses to prioritize their efforts effectively.