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Theory of Constraints

How Your “Most Profitable” Product Might Be Killing Your Business

How Your “Most Profitable” Product Might Be Killing Your Business

Why choosing the product with the highest contribution margin can actually lower your total profit. A guide to optimizing product mix using the Theory of Constraints.
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01.11.2025Tags: Absorption Costing, Bottleneck Management, Contribution Margin, Critical Thinking, Eliyahu Goldratt, Financial Planning, Managerial Accounting, Manufacturing Efficiency, Product Mix Optimization, Strategic Thinking, Theory of Constraints, Throughput Accounting, TOC, Variable Costing
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Contents

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  • Why Contribution Margin Is More Important Than Gross Profit
  • The Contribution Margin Trap: A Steel Mill Case Study
  • A Paradigm Shift: Introducing the Theory of Constraints
  • A 2.2 Million Hryvnia Turnaround
  • Find Your Constraint
  • Conclusion
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