I tested two scenarios Single Huge collection vs Multiple Small Collections and found huge difference in performance while querying. Here is what I did.
Case 1: I created a product collection containing 10 million records for 10 different types of product, and in this exactly 1 million records for each product type, and I created index on ProductType. When I ran a sample query with condition ProductType=1 and ProductPrice>100 and limit(10) to return 10 records of ProductType=1 and whose price is greater than 100, it took about 35 milliseconds when the collection has lot of products whose price is more than 100, and the same query took about 8000 millisecond (8 second) when we have very less number of products in ProductType=1 whose price is greater than 100.
Case 2: I created 10 different Product table for each ProductType each containing 1 million records. In collection 1 which contains records for productType 1, when I ran the same sample query with condition ProductPrice>100 and limit(10) to return 10 records of products whose price is greater than 100, it took about 2.5 milliseconds when the collection has lot of products whose price is more than 100, and the same query took about 1500 millisecond (1.5 second) when we have very less number of products whose price is greater than 100.
So why there is so much difference? The only difference between the case one and case two is one huge collection vs multiple smaller collection, but I have created index of ProductType in the first case one single huge collection. I guess the performance difference is caused by the Index in the first case, and I need that index in the first case otherwise it will be more worst in performance. I expected some performance slow in the first case due to the Index but I didn't expect the huge difference about 10 times slow in the first case.
So 8000 milliseconds vs 1500 milliseconds on one huge collection vs multiple small collection. Why?
Separating the collections gives you a free index without any real overhead. There is overhead for an index scan, especially if the index is not really helping you cut down on the number of results it has to scan (if you have a million results in the index, but you have to scan them all and inspect them, it's not going to help you much).
In short, separating them out is a valid optimization, but you should make your indexes better for your queries before you actually decide to take that route, which I consider a drastic measure (an index on product price might help you more in this case).
Using explain() can help you understand how queries work. Some basics are: You want a low nscanned to n ratio, ideally. You don't want scanAndOrder = true, and you don't want BasicCursor, usually (this means you're not using an index at all).
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