A business owner has ₦2 million to restock.

What should they buy?

It sounds like a simple question.

If one product makes ₦5,000 per unit while another makes only ₦2,000, the obvious answer seems to be:

Buy more of the product that makes ₦5,000.

But that ignores an important fact.

The products don't require the same amount of capital to buy.

And the business doesn't have unlimited demand for any of them.

So I wanted to see what happens when we consider the whole decision at once.

The business has ₦2 million available for inventory.

The objective is straightforward:

Allocate the ₦2 million in the way that produces the highest expected gross profit, without buying more than the business expects to sell.

The obvious answer isn't necessarily the best answer

Product D makes the most profit per unit:

₦5,000

So it would be easy to conclude that D deserves most of the inventory budget.

But a unit of D also requires ₦20,000 of capital.

Product C, on the other hand, produces ₦2,000 profit from only ₦5,000 of capital.

So let's look at the profit generated relative to the capital required:

The business

Suppose a distributor sells four products.

Now the picture changes.

C is the most capital-efficient product.

B comes next.

A and D are tied at the bottom.

But even this ranking isn't enough to determine the answer.

Why?

Because demand is limited.

What happens when we account for everything?

I analysed the allocation of the ₦2 million while considering:

• the available capital

• the cost of each product

• the profit generated by each product

• the maximum expected demand for each product

• and the fact that products must be purchased in whole units

The recommended allocation was:

The result is an expected gross profit of:

₦692,000

from the ₦2 million inventory budget.

But there's a curious detail.

Why buy Product A?

A has one of the lowest returns on capital.

Yet the recommendation includes one unit of A.

That looks strange until we examine what happens to the remaining capital.

Why the one unit of A?

Start with Product C.

It has the highest return on capital, so we can take it all the way to its demand limit:

150 × ₦5,000 = ₦750,000

That leaves:

₦1,250,000

Then Product B.

Its demand limit is 80 units:

80 × ₦12,000 = ₦960,000

Now we've spent:

₦1,710,000

That leaves:

₦290,000

Next comes Product D.

Fourteen units cost:

14 × ₦20,000 = ₦280,000

Now only:

₦10,000

remains.

Another D would require ₦20,000.

B and C have already reached their demand limits.

But Product A costs only:

₦8,000

So one unit fits.

And that unit generates another:

₦2,000

of profit.

The alternative is simply leaving that ₦8,000 unused.

So the analysis recommends buying one unit of a product that has the same lowest return on capital as D, not because A suddenly became more attractive, but because the remaining capital changes the decision.

The interesting part isn't the one unit of A

It's what it tells us about business decisions.

If we had simply ranked the products by profit per unit, we might have started with D.

If we had ranked them by return on capital, we would have started with C, then B, and eventually D/A.

Those are useful heuristics.

But neither one completely solves the problem.

Once you introduce:

limited capital

limited demand

whole-unit purchasing

the products begin competing with one another for the same scarce resource.

And that interaction is where the interesting part happens.

A product can be attractive in isolation and unattractive in context.

D produces more profit per unit than C.

But C generates much more profit for every naira of capital tied up in inventory.

A has a lower return on capital than C and B.

Yet the final recommendation still includes A.

Why?

Because the decision isn't being made one product at a time.

Every naira allocated to one product is a naira that cannot be allocated somewhere else.

And once some products have reached their demand limits, the remaining capital has fewer places to go.

That's why the final ₦10,000 matters.

The first ₦1.7 million of the decision is very different from the final ₦10,000.

What this means for a business owner

A common inventory question is:

“Which of my products makes the most profit?”

That's useful to know.

But it's not necessarily the question you need to answer when deciding how to spend limited capital.

A better question is:

“Given the capital I have, the demand I expect, and the constraints I'm operating under, what combination of products gives me the best result?”

Those are different questions.

And sometimes the answer will surprise you.

The most profitable product per unit may not deserve the most capital.

The product with the highest return on capital may hit its demand ceiling quickly.

And a product that looks unattractive on its own may still make sense at the margin because of what capital remains available.

The broader lesson

This is one of the things I enjoy about quantitative business analysis.

The interesting part isn't always what the numbers recommend.

Sometimes it's why they recommend it.

In this case, the recommendation isn't simply:

“Buy C because C has the highest return.”

It's:

Buy the combination of products that makes the best use of the limited capital, while respecting what the business can actually sell.

That's a much harder question.

And it's also much closer to the questions businesses actually have to answer.

Sometimes, you don't need a better intuition.

You need to examine the decision as a whole.