An article by Miller and Morris (1985) deals with the conditions of a multi-product break-even analysis with uncertain contribution margins. The analysis takes place in two steps. In the first step, the ‘optimal’ production programme is determined on the basis of the maximisation of the expected profit. Then, in the second step, probability information is calculated for the ‘optimal’ production amounts now known for different profit levels. How do you assess such a procedure?

AppendixLO1