Question

Consider a capacity constrained process producing a high profit margin product. What will the impacts on revenue and profits be if processing time for the bottleneck resource is reduced by 10% while everything else remains the same?

A)No impact on revenue or profits

B)Higher revenue and profits

C)Lower revenue and profits

D)Higher profits with no change in revenue

Answer 1

Higher revenue and profits Because here we are reducing bottleneck activity time by 10% so the activity which was taking much time that we reduce. It will directly create an impact on revenue and profit. Efficiency will increase so more revenue will generate.