BAR Decision Analysis · Updated November 2026
Which Product Should You Make First When Capacity Is Limited?
When one resource limits production, total contribution margin per unit is not enough.
Identify the constraint
Find the resource that limits total production, such as machine hours, labor hours, or a scarce material.
Contribution per constraint
Divide unit contribution margin by the amount of constrained resource required per unit.
Rank products
Prioritize the product with the highest contribution margin per unit of constrained resource, subject to demand and other limits.
Common trap
A product with the highest contribution margin per unit can still be the wrong priority if it consumes far more of the bottleneck resource.
The takeaway
Rank products by contribution margin per unit of the scarce resource, not contribution margin per finished unit.
Related Summit guides
FAQ
Should you always rank products by contribution margin per unit?
No.
What matters when machine hours are scarce?
Contribution margin per machine hour.
Do demand limits still matter?
Yes.