 Companies don't have unlimited resources nor unlimited demand for their products. Because of this, they have constraints which might limit production or demand. When companies are faced with constraints, they need to focus on the items with the highest contribution margin per constraint. For example, a company can produce three products, product A, product B, product C. The production constraints are 5,000 machine hours. They can't produce any products beyond the maximum usage of 5,000 machine hours. So how do they decide which products to produce? We might focus on producing the products with the highest contribution margin. Based on what we've learned so far, that seems logical. Here we see the contribution margin for all three products. Based on this data, product C has the highest contribution margin of $25 per unit. If we were not constrained by machine hours, that logic makes sense. But since we are constrained, we really need to look at the highest contribution margin per constraint. So with the additional data of machine hours needed to produce a unit, let's figure out the contribution margin per constraint. So product A requires two machine hours to make one unit, product B four machine hours to make one unit, and product C five machine hours to make one unit. So we could produce 2,500 units of A, 1,250 units of B, or 1,000 units of C. Once we factor in the constraints of machine hours, we see that product A gives us the highest total contribution margin. And is the product that the company should emphasize or prioritize. In summary, when faced with constraints that limit production or demand, make the products with the highest contribution margin per constraint.