Objective function
An objective function expresses the result to maximise or minimise in an optimisation model, using the decision variables. A contribution-maximisation function includes the relevant contribution for each product; constant fixed costs do not change which feasible mix maximises it. A different decision may require minimising relevant cost instead. The function must match the question’s purpose and not double count costs already deducted in unit contribution.
Worked example
For products with unit contribution $6 and $9, maximise Z = 6x + 9y, where x and y are their output quantities.
Common mistake
Do not use selling prices as coefficients when the objective is contribution, or omit variable costs that change with output.
Where it appears in your exams
| Qualification | Exam | Relationship | Period |
|---|---|---|---|
| ACCA | PM | Direct | September 2026–June 2027 |