Question

ABC Company is evaluating the possibility of adding a new computer monitor to it’s line of computer components. They have limited space for this addition. What is the most important factor in making this decision?

A) Is this the best use of a constrained resource or are there existing product that could fill in that use at a higher contribution margin?

B) Would the selling price of the monitor be high enough to use the constrained resource for the new line?

C) Is there a market for the monitors?

Answer 1

C) Is there a market for the monitors?

The most important factor in making the decision of adding a new product to the product line would be the presence of a market for the new products. So, if there is no market for the monitors, they should not be added to the product line. Selling price or resource optimization would be of no use in such a case. Even if the selling price is low, no one would buy the monitors as there is no market for the monitors.. Margins and use of resources also would also not come into consideration, as the monitors don't have a market in the first place.