What does "Optimum factor allocation" mean?

Question

What does "Optimum factor allocation" mean?

Answer 1

In managerial economics, optimum factor allocation is a part of production analysis where factors of production are allocated in such a way to maximize efficient use of scarce resources and minimize costs.

Answer 2

It's the position of allocation of factors of production (ie, inputs) where you maximize the "utility" or value derived from their output. At the optimum, you cannot shift inputs without losing value, and there's no way to gain additional value. Such a point exists whether referring to the mix of inputs to a single producer, or to the allocation of resources among multiple producers in a market economy.

This also directly translates to mathematical econ - the optimum is the peak value of the production function, taken as the maximum or minimum value of the first total derivative (maximum when talking utility, minimum when talking cost).