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Contribution an hour of the scarce resource for two products, which one to push when that resource is full, what an hour moved between them is worth, and the average contribution a mix earns.
Paper packet. Every task here also exists on screen, where it is checked automatically; answers written on paper are not assessed by Nydus. When you are back at a device, enter your answers there.
You will turn each product's contribution a unit into contribution for an hour of a scarce resource, choose which product to push while that resource is full, and say when the ranking stops mattering because the resource has time to spare. You will also work the average contribution a sale for a mix of products.
You can work out what one unit contributes. When two products share nothing but the register, the one that contributes more a sale is the better sale. This lesson is about what changes when they share something scarce — the barista's minutes in the rush, the bench on a busy week — and about how the mix of what customers buy moves the average contribution a sale, and with it how much must be sold to break even, even when no price has changed.
| Term | What it means |
|---|---|
| Scarce resource | A resource that is full: every minute of it is already used. |
| Contribution an hour | What a product earns for sixty minutes of the scarce resource. |
| Sales mix | How much of each product the business sells. |
| Average contribution a sale | Each product's contribution weighted by its share of the sales. |
| Rush menu | A shorter menu used while a resource is full, built from the best earners an hour. |
In Corner Bean's lunchtime rush the barista never stops. A toasted sandwich contributes 3.20 dollars and a flat white 2, so the toastie looks like the better sale. But the toastie takes 6 minutes of the barista and the flat white 2.
$$\text{contribution an hour} = \text{contribution a unit} \times \frac{60}{\text{minutes a unit}}$$
An hour of barista time makes 10 toasties, earning 32, or 30 flat whites, earning 60. While the barista is full, every toastie made is three flat whites not made, and the swap costs 2.80 each time. The ranking has flipped.
That is the whole idea of the sales mix: when something is full, the question is not which sale earns more? but which use of the full thing earns more? Contribution a unit answers the first; contribution an hour of the scarce resource answers the second.
Steering the mix is ordinary work: which item sits at the top of the board, which is offered first, which is dropped from the rush menu and kept for the afternoon.
Another way: steps
Another way: table
Five products at the three businesses, each against its own scarce resource.
| Product | Contribution a unit | Minutes | Contribution an hour |
|---|---|---|---|
| Flat white, barista | 2.00 | 2 | 60 |
| Toasted sandwich, barista | 3.20 | 6 | 32 |
| Screen replacement, bench | 32 | 40 | 48 |
| Board repair, bench | 60 | 90 | 40 |
| Bunch of herbs, picking | 1.50 | 1.5 | 60 |
The board repair earns almost twice as much a job as a screen and less an hour of the bench.
Find out whether anything is full. Watch the business at its busiest and ask what customers wait for: the barista, the oven, the bench, the picker's morning. If customers are being turned away or kept waiting because of one resource, that resource is full.
Time each product on it. Minutes of the full resource per unit, measured at a normal pace, not the best one.
Work contribution an hour. Contribution a unit times sixty over the minutes.
Rank, and steer. Put the best earners an hour first on the board, offer them first, and keep the slow, low earners for the times the resource has room.
Check the ranking by working a real hour both ways: fill an hour with the top product and add up its contribution, then fill it with the one below and add that up. The first total must be the larger. Then check that the resource really is full at the times the ranking is used: a rush menu applied all day turns away afternoon sales that would have cost the business nothing to make.
The per-hour ranking is a rule for a full resource, and only for that. In the quiet afternoon the barista has twenty idle minutes an hour; a toastie made then displaces nothing, and its 3.20 is pure gain. Refusing it because the flat white earns more an hour would throw away money.
So the first question is always is anything actually full? If not, every sale that contributes is worth making, and the product that contributes more a sale is the better one. If something is full, find what earns most for each minute of it. Most businesses live in both states in one day, which is why a rush menu and an afternoon menu can both be right.
Even with nothing full, the mix matters for a different reason. Break-even divides the fixed costs by what an average sale contributes, and the average depends on what customers buy.
$$\text{average contribution} = \sum \text{share of sales} \times \text{contribution a unit}$$
A juice bar whose smoothies contribute 3 and juices 7, selling six smoothies in every ten drinks, averages (6 × 3 + 4 × 7) ÷ 10 = 4.60 a drink. If the mix shifts to eight smoothies in ten, the average falls to 3.80, and a month with the same number of customers and the same prices earns 17 percent less contribution. Break-even in drinks rises by the same proportion.
So a month's figures can worsen without any price or cost changing: customers simply bought more of the lower earners. Watching the mix each month — what share of sales each product makes — catches this early, and steering the mix gently toward the higher earners is often a cheaper improvement than any change of price.
Knowing which product earns most an hour is only useful if customers can be steered toward it, and customers do not like being told what to buy. The tools that work are gentle ones.
Where things sit. The item at the top of a board, at eye level on a shelf or first on a website is bought more often. Putting the best earner an hour there during the rush costs nothing.
What is offered first. A barista who says a flat white? to a customer who hesitates, rather than a toastie?, steers the mix at the moment it matters.
When things are available. A slow item that is only on the menu outside the rush keeps its fans without taking the scarce minutes when they are full. Customers accept toasties from two o'clock far more readily than no toasties.
What things cost the customer. A small price difference between two similar products nudges customers toward the one priced lower. Setting it so that the lower-priced one is also the better earner an hour steers the mix and keeps the customer happy at once.
Making the slow product quicker. Sometimes the best answer is not to push a product away but to change how it is made: toasties assembled in advance, boards prepared before the rush, bags of salad picked the evening before. Shortening a product's minutes on the scarce resource raises its contribution an hour without any change of price.
Whichever tool is used, measure the result the same way: contribution an hour of the scarce resource, and the mix of sales, before and after.
A pizza van works a three-day music festival. Its one oven cooks a pizza in three minutes, and at peak times there is a line the whole evening: the oven is full. The menu has a margherita contributing 6 dollars, a loaded special contributing 9 and taking four minutes because of the extra toppings, and garlic bread contributing 3 in two minutes.
Per hour of oven: margherita 6 × 60 ÷ 3 = 120, special 9 × 60 ÷ 4 = 135, garlic bread 3 × 60 ÷ 2 = 90. The special, which the owner had worried was too slow for the rush, earns the most for each oven hour; garlic bread, which looked quick and easy, earns the least.
So for the evening peak she puts the special at the top of the board, keeps the margherita for customers who want something plain, and takes garlic bread off the menu between six and ten. On the first evening that change is worth about 15 dollars an oven hour over her old mix, roughly 60 dollars across the four peak hours.
In the afternoons, when there is no line, she brings the garlic bread back: the oven has room, and each one's 3 dollars costs nothing in lost pizzas. She also watches the mix. If specials become most of what she sells, her average contribution a sale rises, and she can afford to buy less stock for the last day.
An aircraft cabin is a scarce resource measured in floor space. Airlines decide how many business seats, which take far more space but contribute much more each, to fit against economy seats, by working out the contribution per square meter of cabin on each route — the same calculation as contribution an hour, with space in place of minutes.
The bigger contribution a sale is always the better product. Not when the two compete for a resource that is full.
The higher price is the better product. Price says nothing about what is left after costs, or about the minutes it takes.
Drop the product that earns less an hour. Only its use of the scarce resource should shrink. With time to spare it is still worth selling.
Minutes are free because staff are paid anyway. Their pay may be fixed; their minutes, when full, are not free, because each one can go to only one product.
The average contribution is the middle of the two. It is weighted by what customers actually buy, and moves when the mix does.
A slow product must be dropped. It can often be made quicker, or moved to the hours when the resource has room, and keep its customers.
Steering the mix means refusing customers. Where things sit, what is offered first and when an item is on the menu steer it without refusing anyone, and customers who are served quickly in the rush come back, which a longer line for slower items would not encourage.
Note the two jobs: screens 32 in 40 minutes, boards 60 in 90.
$32, \ 40; \quad 60, \ 90$
Contribution a unit and minutes a unit.
Work the screens' hour.
$32 \times 60 \div 40 = 48$
One and a half screens an hour.
Work the boards' hour.
$60 \times 60 \div 90 = 40$
Two thirds of a board an hour.
Find what each hour moved to screens adds.
$48 - 40 = 8$
While the bench is full, screens first.
Say what a quiet week changes.
$\text{bench not full} \Rightarrow \text{take every board}$
With time to spare, each board's 60 is pure gain.
Work the flat white's hour: 2 in 2 minutes.
$2 \times 60 \div 2 = 60$
Thirty an hour.
Work the toastie's hour: 3.20 in 6 minutes.
$3.20 \times 60 \div 6 = 32$
Ten an hour.
Work the smoothie's hour: 2.70 in 3 minutes.
$2.70 \times 60 \div 3 = 54$
Twenty an hour.
Rank the three for the rush.
$60 > 54 > 32$
Flat white, smoothie, toastie.
Find what one toastie swapped for three flat whites adds.
$3 \times 2 - 3.20 = 2.80$
Each swap in the rush.
Build the rush menu.
$\text{toasties from 2 pm}$
Offered again when the barista has time to spare.
Work the salad bag's picking hour: 2.50 in 3 minutes.
$2.50 \times 60 \div 3 = 50$
Twenty bags an hour.
Work the herbs' hour: 1.50 in 1.5 minutes.
$1.50 \times 60 \div 1.5 = 60$
Forty bunches an hour.
Rank them for the morning before market.
$60 > 50$
Herbs first when picking time is full.
Find the average contribution at 7 bags in every 10 items.
$(7 \times 2.50 + 3 \times 1.50) \div 10 = 2.20$
The mix Tomasz sells now.
Find the average at 5 bags in 10.
$(5 \times 2.50 + 5 \times 1.50) \div 10 = 2.00$
More herbs, a lower average a sale.
Read the two answers together.
$\text{per hour: herbs}; \quad \text{per sale: bags}$
Herbs earn more for a picking hour; bags earn more for each sale at the stall.
Decide which question applies.
$\text{picking is full on market mornings}$
So herbs first in the morning, and a mix at the stall that keeps both on offer.
Count the slices that fit in an hour.
$60 \div 1 = 60$
Sixty over the minutes a slice takes.
Find what an hour of kitchen time earns.
$60 \times 2.40 = 144$
Units an hour times contribution.
Compare with a breakfast plate: 6 in 5 minutes.
At Long Row Gardens, a salad bag contributes $2.50$ dollars and takes $3$ picking minutes. Complete the sentence about one hour of picking minutes.
In one hour, n of them fit, and together they contribute h dollars.
Complete the worked solution: a workshop's bench is full. One product contributes $4$ dollars and takes $3$ bench minutes; another contributes $13$ dollars and takes $10$ minutes. Which earns more for an hour of the bench, and by how much?
Count the first product's units in an hour.
$60 \div 3 =$ m
Sixty minutes over the minutes one takes.
Find what an hour of the first earns.
$(\text{units an hour}) \times 4 =$ h
Units an hour times the contribution a unit.
Find what an hour of the second earns.
$60 \div 10 \times 13 =$ k
The same for the other product.
Subtract the smaller hourly figure.
$(\text{first}) - (\text{second}) =$ g
What each bench hour moved to the first product adds.
Read the ranking.
$\text{the first product, though it earns less a sale}$
While the bench is full, the hour decides, not the sale.
At Long Row Gardens, picking minutes are full every day and customers would buy more of both products. a salad bag contributes $2.50$ and takes $3$ minutes; a bunch of herbs contributes $1.50$ and takes $1.5$. Which should the owner steer customers toward?
Two products at Corner Bean compete for kitchen minutes. Fill in what each earns for an hour of kitchen minutes, in dollars.
| Contribution a unit, dollars | Minutes a unit | Contribution an hour, dollars | |
|---|---|---|---|
| a slice of cake | 2.4 | 1 | |
| a breakfast plate | 6 | 5 |
At Corner Bean's staff meeting, the talk is about the lunchtime rush, when the barista is busy every minute. A toastie contributes $3$ dollars and takes $6$ barista minutes; a flat white contributes $2$ dollars and takes $2$. Mark every statement that compares the products soundly.
This task has no paper form; do it on a device.
A juice bar sells smoothies contributing $5$ dollars each and cold-pressed juices contributing $7$ each. Out of every $10$ drinks it sells, $2$ are smoothies and the rest juices. What does an average drink contribute, in dollars?
Answer:
A bakery's single oven is full every morning. A tray of sourdough contributes $4$ dollars and takes $40$ minutes; a tray of croissants $18$ dollars and $30$ minutes; a whole cake $12$ dollars and $60$ minutes; a tray of cookies $9$ dollars and $20$ minutes. Fill in what each earns for an hour of oven time, and what three more oven hours would earn put to the best use.
| Amount | |
|---|---|
| Croissants, dollars an oven hour | |
| Cookies | |
| Cake | |
| Sourdough | |
| Three spare oven hours at the best use |
Lesson test: one question per skill, one attempt each, no hints. Your answers are checked when you submit.
Long Row Gardens finds $10$ more hours of picking minutes next week, and customers would buy as many of either product as it can make. a salad bag contributes $2.50$ and takes $3$ minutes; a bunch of herbs contributes $1.50$ and takes $1.5$. What is the most contribution, in dollars, the $10$ hours can earn?
Answer:
You can rank products by what they earn for an hour of a full resource and work the average contribution of a mix. Tell someone why a sale that earns more can be the worse use of a busy afternoon. Next: finding which resource is the one that is full.
15. Your turn: a cake slice contributes 2.40 and takes 1 kitchen minute, step 3
$6 \times 60 \div 5 = 72$
Cake earns twice as much for a full kitchen hour.