A constrained resource is something that you have a limited amount of. In a manufacturing business it may be machine time, labor hours or raw materials.

Why are constrained resources important?

Resource constraints can cause an organization to operate more efficiently, according to the MIT Sloan Management Review. For example, a small company faced with financial restrictions may, instead of hiring four contractors for technical support, hire two who can accomplish the work for the same amount of money.

What is limited resources in accounting?

Companies usually have limited resources, such as limits on space, on the number of workers, or even on the machine capacity needed to produce goods. This reality means that in order to best use limited production capabilities, managers must choose which products to make and sell.