Final answer:
Long-term strategies for managing constrained resources include increasing capacity, and prioritizing products based on contribution margin. It's important to consider the principle of diminishing marginal productivity, which suggests additional workers may contribute less over time.
Step-by-step explanation:
In the long term, companies have several strategies to manage constrained resources effectively. One approach is increasing capacity, which involves expanding production capabilities, possibly by opening new factories or upgrading existing facilities. Another tactic could be prioritizing products based on contribution margin, which helps in maximizing profits by focusing on the most lucrative items. While eliminating non-value-added activities can streamline operations, hiring more workers might not always be viable in the long term due to the principle of diminishing marginal productivity.
Diminishing marginal productivity occurs when adding more workers leads to a decrease in the marginal output of each additional worker. This typically happens after a certain number of employees are reached, where the total product grows at a decreasing rate. For instance, while the second worker could answer phones and the third could bring coffee, contributing to productivity initially, eventually adding more workers will contribute less incrementally to production due to factors such as limited equipment or space.