Is Profit Maximization the only thing that a company looks in for ?

PRODUCT MIX OPTIMISATION

Definition:-

Product Mix Optimization means selecting such a combination of the products for production which will give maximum profit to the organization.

Determinants Of Product Mix Optimization

Utilizing resources in their most efficient and productive manner.
Providing favorable cash flows.
Satisfying “attractiveness” constraints of buyers.
Maximizing profits in the short and long run.
Satisfying current demand trends and preventing oversupply situation.

Objective Of Product Mix Optimization

To Maximize Contribution.
To cope up with Demand, Material and Capacity constraints.
To know whether the product is competitive in terms of price and quality.
Which combination of products will give company highest profits.

Steps for determining Optimal Product Mix

Analyzing Demand Trends.
Cost of Production Analysis.
Developing a linear programming analysis.