Cola Lemonade Punch Natural orange juice Contribution margin per case €27.00 €24.00 €37.80 €49.20 Sales (number of cases) per metre of shelf space per day 25 24 4 5 Daily contribution per metre of front shelf space €675.00 €576.00 €151.20 €246.00 3 The allocation that maximises the daily contribution from soft drink sales is
Daily contribution Metres of per metre of Total contribution shelf space front shelf space margin per day
Cola 6 €675.00 €4,050.00 Lemonade 4 576.00 2,304.00 Natural orange juice 1 151.20 151.20 Punch 1 246.00 246.00
€6,751.20 The maximum of 6 metres of front shelf space will be devoted to Cola because it has the highest contribution margin per unit of the constraining factor. Four metres of front shelf space will be devoted to Lemonade, which has the second highest contribution margin per unit of the constraining factor. No more shelf space can be devoted to Lemonade, since each of the remaining two products, Natural orange juice and Punch (that have the second lowest and lowest contribution margins per unit of the constraining factor, must be given at least one metre of front shelf space.
