A constraining factor, also known as a limiting factor, is an element that restricts or limits the production or sale of a given product. Nearly all firms encounter one or more constraining factors, which could involve limited machine-hours and labor-hours, shortages of materials and skilled labor, or restrictions related to display space, warehouse space, and working capital.
A constraint is a circumstance that prevents an organization from achieving higher levels of performance. Constraints typically result from limiting factors such as a shortage of skilled labor, materials, production capacity, or sales volume, and must be eliminated or reduced to improve performance. Constraints are also integral in linear programming problem statements.
A constraint in budgetary control and decision making that prevents an organization from achieving higher levels of performance and profitability.
The principal budget factor, also known as the limiting factor or constraint, refers to the element or resource that imposes a limitation on the organization’s budgeting process and overall production capabilities.
