Concept of Limiting Factor

Concept of Limiting Factor

Limiting factor is factor which put a limit to production activity. Organization would love to produce to meet it customer demand for profit maximization. However, due to limiting factor it would not be possible.

Example of Limiting Factor

Examples of limiting factor are shortage of labour, shortage of material, shortage of machine hours.

Limiting Factor Types

Limiting factor can be categories into single limiting Factor & multiple limiting factors. In case of single limiting factor, there is only one constraint, while in case of multiple limiting factor, there are number of limiting factor which exist at same time.

Limiting Factor identification

Limiting factor situation can easily be identified with simple budget techniques i.e. how much resources are available against how much resources are required. The next step is to identify the number of limiting factor i.e. whether a single limiting factor or multiple limiting factor.