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Cambridge IGCSE0450

Production of goods and services

Business Studies 0450 Chapter Notes

What this chapter covers

Production of goods and services - The meaning of productionProduction of goods and services - The main methods of productionProduction of goods and services - How technology has changed and is changing production methods
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In this chapter

  1. 1Managing resources to produce goods and services
  2. 2Production and productivity
  3. 3Benefits of increasing efficiency
  4. 4How to increase efficiency
  5. 5Why businesses hold inventories
  6. 6Lean production: just-in-time and Kaizen
  7. 7Benefits and limits of lean production
  8. 8Job production
  9. 9Batch production
  10. 10Flow production
  11. 11Choosing a method
  12. 12Justifying a recommendation
  13. 13Technology in production
  14. 14Benefits of using computers
  15. 15Costs and risks of new technology
  16. 16Effects on employees
  17. 17Deciding whether to adopt it

1. Managing resources to produce goods and services

Production is the making of goods and services. To do it, a business must manage its resources effectively such as its materials and its labour.

Examiners credit the importance of minimising waste and of avoiding underproduction. If too little is ordered, production is low and customers wait for their goods. Managing inventory avoids higher storage costs and damage. Managing labour avoids inefficiency in production.

Examiner insight

“Generally, a well answered question with the most popular points including the importance of minimising waste and the need to avoid underproduction.” “Weak responses often included simple statements which did not develop the chain of reasoning linking insufficient ordering with production levels and meeting customer expectations for delivery.”

Worked example 16 marks

Marlow Bikes makes 200 bicycles a month in a small workshop with 12 workers. It orders frames and tyres from suppliers. Explain two reasons why Marlow Bikes should manage its resources effectively.

  1. 1

    Knowledge: to minimise waste. [1]

  2. 2

    Application: fewer frames and tyres are damaged or thrown away. [1]

  3. 3

    Analysis: the cost of making each bicycle falls. [1]

  4. 4

    Knowledge: to avoid underproduction. [1]

  5. 5

    Application: if too few frames are ordered, Marlow cannot make its 200 bicycles. [1]

  6. 6

    Analysis: orders are delivered late, so customers may buy from a rival. [1]

2. Production and productivity

Production is the making of goods and services: the output of the business. Productivity is the output made by each worker, or by each unit of any other resource, in a given time.

A business can raise production without raising productivity. It only has to take on more workers. Productivity rises when the same resources make more, or when fewer resources make the same.

Productivity and efficiency are classed as alternates. Giving both as two separate points earns one mark.

Examiner insight

“Incorrect answers included identifying ways to increase output.” “Some repeated a similar point for the second benefit. For example, productivity and efficiency, which are classed as alternates.”

Worked example 14 marks

Dalton Tiles made 2 000 tiles a week with 10 workers. After training, the same 10 workers make 2 400 tiles a week. Outline the difference between production and productivity, using these figures.

  1. 1

    Knowledge: production is the total output of goods made. [1]

  2. 2

    Application: Dalton's production rose from 2 000 to 2 400 tiles a week. [1]

  3. 3

    Knowledge: productivity is the output for each worker in a given time. [1]

  4. 4

    Application: it rose from 200 to 240 tiles a week for each of the 10 workers. [1]

3. Benefits of increasing efficiency

A more efficient business gets more from its resources. The benefits examiners credit are less wastage and higher output.

A benefit needs a reason. Less wastage means less money spent replacing materials, so the cost of each unit falls. Lower unit costs can make the business more competitive.

Higher output does not automatically mean higher sales. Say what the business can do with the extra goods.

Examiner insight

“Instead of development, weaker answers repeated the knowledge point rather than explain why the business could benefit from having less wastage or higher output.” “A number of candidates incorrectly assumed that higher output would automatically result in higher sales.”

Worked example 16 marks

Greenfield Joinery makes wooden doors with 15 workers. A new cutting system wastes less wood and cuts each door faster. Explain two benefits to Greenfield Joinery of increasing efficiency.

  1. 1

    Knowledge: less wastage. [1]

  2. 2

    Application: less wood is scrapped when the doors are cut. [1]

  3. 3

    Analysis: Greenfield buys less wood for each door, so the cost of each door falls. [1]

  4. 4

    Knowledge: higher output. [1]

  5. 5

    Application: the same 15 workers finish more doors each week. [1]

  6. 6

    Analysis: Greenfield can meet a larger order on time, which raises revenue if customers want the extra doors. [1]

4. How to increase efficiency

Two ways are credited: automation and technology, and improved labour skills.

Automation and technology give faster production, more output and standardised quality. They need high initial capital, regular maintenance, and may make workers redundant.

Improved labour skills give higher productivity, better quality and less wastage because of fewer errors. Trained workers may leave, so the training costs are wasted.

Examiner insight

“Weaker answers did not develop the points made but repeated that it would improve efficiency rather than offer any explanation as to how this could be achieved.” “These advantages or disadvantages of the two ways were often not developed in any detail and so limited the entry into level 2.”

Worked example 16 marks

Greenfield Joinery makes wooden doors with 15 workers. Explain two ways in which it could increase efficiency.

  1. 1

    Knowledge: introduce automation, such as computer-controlled cutting machines. [1]

  2. 2

    Application: the machines cut the doors faster than the 15 workers can by hand. [1]

  3. 3

    Analysis: every door is cut to the same size, so less wood is wasted and quality is standardised. [1]

  4. 4

    Knowledge: improve labour skills through training. [1]

  5. 5

    Application: carpenters make fewer mistakes when fitting the hinges. [1]

  6. 6

    Analysis: fewer doors are scrapped, so less wood is wasted. [1]

5. Why businesses hold inventories

A business holds inventories so that it can keep working and keep selling. The reasons examiners credit are meeting unexpected demand, maintaining or increasing output, benefiting from economies of scale and avoiding supply problems.

Meeting demand and meeting orders are the same reason in different words. Give two different reasons, each applied to the business.

A reason is not a type. Naming the inventories a business holds earns nothing. Inventory is not a source of finance either.

Examiner insight

“A common mistake was to identify types of inventories and not reasons for holding it.” “A number of candidates incorrectly assumed that a large inventory would act as a good source of finance.”

Worked example 14 marks

Pia's Pizzas makes pizzas for a busy town centre. It holds inventories of flour and cheese. Outline two reasons why Pia's Pizzas holds inventories.

  1. 1

    Knowledge: to meet unexpected demand. [1]

  2. 2

    Application: a sudden rush of orders on a Friday night can still be served. [1]

  3. 3

    Knowledge: to avoid supply problems. [1]

  4. 4

    Application: if a delivery of cheese is late, pizzas can still be made. [1]

6. Lean production: just-in-time and Kaizen

Lean production is production with less waste of time, materials and storage space. Two ways to achieve it are credited: just-in-time inventory control and Kaizen.

With just-in-time inventory control, materials arrive just before production. Less storage space is needed, so storage costs are saved. It is a way of controlling inventory, not a way of producing.

Kaizen is continuous improvement. Employees are consulted about small changes, such as how to save wasted movement, so the time to produce falls and efficiency improves.

Examiner insight

“A common misconception was to confuse just-in-time inventory control with just-in-time production.” “Others confused Kaizen with quality assurance.”

Worked example 16 marks

Bright Toys makes wooden toys from wood it buys from suppliers. Explain two ways in which Bright Toys could achieve lean production.

  1. 1

    Knowledge: just-in-time inventory control. [1]

  2. 2

    Application: wood arrives just before it is needed to make the toys. [1]

  3. 3

    Analysis: less warehouse space is needed for the wood, so storage costs are saved. [1]

  4. 4

    Knowledge: Kaizen, or continuous improvement. [1]

  5. 5

    Application: ask the toy makers how to save wasted movement between the work benches. [1]

  6. 6

    Analysis: each toy takes less time to make, so efficiency improves. [1]

7. Benefits and limits of lean production

The benefits of lean production are reduced waste and lower inventory held. Each needs a result: waste costs money, and held inventory takes space.

Lean production has limits. Just-in-time needs a reliable supplier to keep production going. It is risky for a business that relies on imported materials. With less stock held, unexpected orders are harder to meet. Kaizen brings only small changes in a small business, and reorganising can disrupt production.

Examiner insight

“Common problems were that candidates confused lean production with flow production or identified features rather than advantages of lean production.” “The strongest candidates explained how JIT could reduce the space needed to store stock of car parts, but it requires a reliable supplier to ensure production continues.”

Worked example 16 marks

Harbour Foods makes pasta sauce from imported tomatoes and has 25 workers. The owner wants to achieve lean production. Do you think just-in-time inventory control is the best way for Harbour Foods to do this? Justify your answer.

  1. 1

    Knowledge: with just-in-time inventory control, tomatoes arrive just before they are needed, so less inventory is held. [1]

  2. 2

    Analysis: less storage space is needed, so storage costs fall. [1]

  3. 3

    Knowledge: just-in-time needs a reliable supplier. [1]

  4. 4

    Analysis: the tomatoes are imported, so a late delivery stops the 25 workers making sauce. [1]

  5. 5

    Evaluation: a decision with a reason, such as: no. Harbour relies on imports, so the risk of stopped production outweighs the saving on storage. Kaizen cuts waste without that risk. [2]

Recap

  • Production is the making of goods and services. Managing resources effectively means minimising waste and avoiding underproduction.
  • Production is output. Productivity is output for each worker in a given time.
  • Productivity and efficiency are alternates: one mark between them.
  • Benefits of efficiency: less wastage and higher output. Say why each helps the business.
  • Ways to increase efficiency: automation and technology, and improved labour skills.
  • Reasons for holding inventories: meeting unexpected demand, maintaining output, economies of scale, avoiding supply problems.
  • Lean production: just-in-time inventory control and Kaizen. Benefits are reduced waste and lower inventory held.
  • Just-in-time needs a reliable supplier. In an evaluation, give a decision and a reason.

8. Job production

Job production is making a single item at a time. Each item is made to one customer's order.

Its benefit is that the item meets the exact needs of the customer. That raises customer satisfaction and lets the business charge a higher price. The tasks are varied, which can motivate workers.

Its limitations are that production is slow and it is a more expensive method. The workers need more skill, so they are paid a higher wage. Do not confuse job production with specialisation, and do not assume it gives better quality.

Examiner insight

“A common error was to refer to ‘products’ rather than a single item which meant the definition could apply to several methods of production and was therefore too vague.” “Some confused job production with specialisation or based their answers on incorrect assumptions about quality or the use of machinery.”

Worked example 14 marks

Okoye Boats has six workers. It builds wooden fishing boats, and each boat is made to a fisherman's order. Explain one advantage and one disadvantage to Okoye Boats of using job production.

  1. 1

    Knowledge: each boat is made to the exact needs of the customer. [1]

  2. 2

    Application: a fisherman can order a boat built for his own needs, so Okoye Boats can charge a higher price for it. [1]

  3. 3

    Knowledge: production is slow, because one boat is built at a time. [1]

  4. 4

    Application: with six workers, Okoye Boats finishes only a few boats a year, so fishermen who will not wait may buy elsewhere. [1]

9. Batch production

Batch production is making goods in groups or sets. The group moves together through each stage of production.

Its benefit is flexibility. The business can make a variety of products or designs, one batch after another. It gives some economies of scale, and it avoids the high cost of mechanisation, which matters to a small business.

Its limitation is that machines must be reset between each batch, which can create problems. Do not call it faster or cheaper without saying what it is faster or cheaper than.

Examiner insight

“A common mistake was to reorder the words or miss one key element of batch production, namely items are produced in groups, and that it is the group that moves together through each stage of production.” “Better answers explained how points such as flexibility could be an advantage while the need to reset machines between each batch could create problems.”

Worked example 14 marks

Mira's Candles makes scented candles in twelve scents. It makes one scent at a time, and each batch is sold to gift shops. Explain two advantages to Mira's Candles of using batch production.

  1. 1

    Knowledge: batch production is flexible, so a different product can be made in each batch. [1]

  2. 2

    Application: Mira's Candles can make a batch of one scent, then a batch of another, to match what the gift shops order across its twelve scents. [1]

  3. 3

    Knowledge: making many candles in each batch gives some economies of scale. [1]

  4. 4

    Application: Mira's Candles can buy wax in larger amounts than if it made each candle singly, so the cost of each candle falls. [1]

10. Flow production

Flow production is continuous production of a large output.

Its benefit is increased output. A business that changes from batch production to flow production can make more, because production is continuous.

Its limitations are that it is not flexible, which is a problem when a factory makes a range of products. If one machine breaks down, all production stops. It is not appropriate for a small business. High output does not automatically lead to more sales.

Examiner insight

“Others repeated the word flow or used alternative names such as mass production which did not define the term.” “A common misconception was to assume that high output will automatically lead to an increase in sales.”

Worked example 14 marks

Dalton Drinks makes one fizzy orange drink in huge amounts. It plans to add ten new flavours. Explain two disadvantages to Dalton Drinks of using flow production if it adds the new flavours.

  1. 1

    Knowledge: flow production is not flexible, because it is set up to make one product continuously. [1]

  2. 2

    Application: Dalton Drinks would have to stop making its orange drink each time it made one of the ten new flavours. [1]

  3. 3

    Knowledge: if one machine breaks down, all production stops. [1]

  4. 4

    Application: Dalton Drinks makes huge amounts, so even a short stop means a large number of drinks are not made and cannot be sold. [1]

11. Choosing a method

A business chooses a method by weighing factors such as cost, the size of the market and the availability of suitable employees.

The size of the market helps decide the level of demand. If high demand is expected, the business needs a method that can meet it, or it risks losing potential sales.

Each factor must be explained, not just named or repeated. Vague points about speed or the type of market earn nothing.

Examiner insight

“Those who gained knowledge marks understood that the size of the market could help determine the level of demand, and if high demand was expected then the business needed a method of production which could help meet this demand, otherwise it risked losing potential sales.” “Instead of analysis, weaker responses repeated their knowledge point(s) or identified another factor.”

Worked example 16 marks

Tolu's Tailors has five skilled tailors. It plans to sell its suits in one small town nearby. Explain two factors Tolu's Tailors should consider when choosing a method of production.

  1. 1

    Knowledge: the size of the market helps decide the level of demand. [1]

  2. 2

    Application: one small town gives Tolu's Tailors a small market, so demand for its suits will be low. [1]

  3. 3

    Analysis: a method with a large output, such as flow production, would make more suits than the town buys, so suits would be left unsold. [1]

  4. 4

    Knowledge: the availability of suitable employees. [1]

  5. 5

    Application: its five workers are skilled tailors, which is what job production needs. [1]

  6. 6

    Analysis: so each suit can be made to the exact needs of the customer, and Tolu's Tailors can charge a higher price for it. [1]

12. Justifying a recommendation

A recommendation needs a supported decision: choose one method and give reasons that use the business in the question.

A long list of unapplied knowledge gains very little credit. Marks come from developing each point for that business, such as the size of its demand or the range of products it makes.

A mirror argument, such as no economies of scale in one method and some in another, is credited once. Flow production is not appropriate for a small business, so do not recommend it for one. A decision that only repeats earlier points does not count as evaluation.

Examiner insight

“Long lists of unapplied knowledge gained very little credit.” “Where a decision was made, this was either not supported or repeated earlier points made so did not count as evaluation.”

Worked example 16 marks

Hana's Kitchen is a bakery with eight employees. It bakes 60 loaves a day in batches for six local cafés, and each café orders a different mix of breads. Hana is thinking of changing to flow production. Do you think she should? Justify your answer.

  1. 1

    Knowledge: flow production is continuous production of a large output. [1]

  2. 2

    Application: each of the six cafés orders a different mix of breads, so Hana needs the flexibility that batch production gives. [1]

  3. 3

    Analysis: flow production would raise output, but high output does not automatically lead to more sales. Six cafés buy 60 loaves a day, so the extra loaves would go unsold. [1]

  4. 4

    Analysis: flow production is not flexible, so Hana could not bake each café's mix and would risk losing those customers. [1]

  5. 5

    Evaluation: Hana should stay with batch production. Demand is the deciding factor: 60 loaves a day is too small to need continuous production. She should change only if orders for one bread grow large enough to sell the higher output. [2]

Recap

  • Job production: a single item at a time, to the customer's exact needs. Slow and more expensive.
  • Batch production: goods made in groups that move together through each stage. Flexible, with resets.
  • Flow production: continuous production of a large output. Not flexible, and not for a small business.
  • Choose by cost, size of market and demand, and availability of suitable employees. Explain each one.
  • High output does not automatically lead to more sales, so end with one supported decision.

13. Technology in production

The syllabus asks how technology has changed, and is changing, production methods. Its example is using computers in design and manufacturing.

Examiner reports also name automation: automated machinery and production lines, which need fewer workers to operate them.

Answers must be about technology used in production. Technology used for selling, such as selling through the internet, is not credited.

Examiner insight

“A significant number of candidates did not focus on technology used in production but focused on more general uses of technology such as selling though the internet.”

Worked example 14 marks

Marlow Fabrics makes cotton shirts in a factory with 80 workers, who cut the cloth by hand. The owner is buying computer-controlled cutting machines. Outline two ways these machines could change production at Marlow Fabrics.

  1. 1

    Knowledge: production is faster. [1]

  2. 2

    Application: the machines cut the cotton cloth in less time than the 80 workers can by hand. [1]

  3. 3

    Knowledge: machines make fewer mistakes, so there is less wastage. [1]

  4. 4

    Application: each shirt piece is cut exactly, so less cotton cloth is thrown away. [1]

14. Benefits of using computers

Computers in manufacturing and design can make production faster and more efficient. Machines make fewer mistakes, so there is less wastage of materials.

Automation also gives standardised quality of products. A business may need fewer workers, so it makes savings on labour costs.

A benefit earns analysis marks only when you explain how it helps this business. A higher output in a shorter time can lower the cost of each unit, which makes the business more competitive.

Examiner insight

“There was often reference to issues such as faster, more efficient, fewer mistakes, less wastage for the introduction of computers and better answers also identified the possible savings on labour costs.” “Weaker answers did not develop the points made but repeated that it would improve efficiency rather than offer any explanation as to how this could be achieved.”

Worked example 16 marks

Kestrel Cycles makes 200 racing bikes a month. Each frame is welded by hand. The owner plans to buy a computer-controlled welding machine. Explain two benefits to Kestrel Cycles of this decision.

  1. 1

    Knowledge: automated machinery makes production faster. [1]

  2. 2

    Application: the machine welds the racing bike frames that are now welded by hand, one at a time. [1]

  3. 3

    Analysis: more than 200 bikes can be made in a month, so the cost of making each bike falls. [1]

  4. 4

    Knowledge: machines make fewer mistakes. [1]

  5. 5

    Application: fewer bike frames have a faulty weld. [1]

  6. 6

    Analysis: fewer frames are scrapped, so less metal is wasted and material costs fall. [1]

15. Costs and risks of new technology

New technology has a high initial capital cost. The machines also need regular maintenance, and this increases expenses.

Machines can suffer breakdowns and power cuts. If a machine breaks down, production stops.

Buying new technology increases cash outflows. A business needs long-term finance for it, because short-term sources are not appropriate.

Examiner insight

“The disadvantages seen most frequently involved the high initial capital cost of machinery and the likelihood of breakdowns and power cuts.” “The weakest candidates stated short term sources, which would not be appropriate for purchasing new technology.”

Worked example 16 marks

Fenwick Print is a printer with 15 employees. It is buying a digital printing press for £120 000. Explain two disadvantages to Fenwick Print of buying the press.

  1. 1

    Knowledge: new technology has a high initial capital cost. [1]

  2. 2

    Application: £120 000 is a large sum for a printer with only 15 employees. [1]

  3. 3

    Analysis: the cash outflow may need a long-term loan, and the loan interest adds to Fenwick Print's costs. [1]

  4. 4

    Knowledge: machines can break down. [1]

  5. 5

    Application: if the press stops, Fenwick Print cannot print its customers' orders. [1]

  6. 6

    Analysis: orders are late and customers may go to a rival printer, so revenue falls. [1]

16. Effects on employees

Fewer workers are needed to operate machines, so some employees may be made redundant. This is the risk that most candidates know.

Other employees can be trained to use the new machine. The work may be more interesting, which can raise motivation. Training costs money, and output is lost while people train.

Automation can also bring safer working conditions. Answer about employees, not about the business.

Examiner insight

“Many candidates correctly realised that employees would be made redundant, but failed to realise that some could be trained on the new machine.” “The strongest candidates discussed the benefits of safer working conditions and the risks of redundancy.”

Worked example 16 marks

Orla Chocolates employs 40 workers who wrap chocolates by hand. The owner plans to install an automated wrapping machine. Explain two ways this could affect the employees of Orla Chocolates.

  1. 1

    Knowledge: some employees may be made redundant, because fewer workers are needed to operate machines. [1]

  2. 2

    Application: the machine does the wrapping that the 40 workers do by hand. [1]

  3. 3

    Analysis: those made redundant lose their income, which lowers their living standards. [1]

  4. 4

    Knowledge: other employees can be trained to use the machine. [1]

  5. 5

    Application: wrappers who already know the factory could learn to run the new wrapping machine. [1]

  6. 6

    Analysis: the work becomes more interesting, so those employees may be more motivated. [1]

17. Deciding whether to adopt it

A recommendation compares the options for this business. State which option is better and give a justified reason, linked to what the question asks for, such as profit.

Then say why the other option was rejected. If employees are already highly skilled, extra training may bring limited benefit. Do not turn one point round into a mirror argument for the other option.

Technology may give long-term efficiency gains. Better skills may deliver only immediate operational benefits.

Examiner insight

“Evaluation points were frequently not awarded, as conclusions were not justified.” “To achieve the higher mark band answers not only have to justify the choice made and be applied to the case, but also justify why the alternative option was rejected.”

Worked example 112 marks

Dunmore Joinery employs 12 skilled joiners who make wooden windows. It has more orders than it can make. The owner can buy computer-controlled cutting machines for £60 000, or train all 12 joiners in new techniques. Consider both options. Recommend which is better for increasing profit. Justify your answer.

  1. 1

    Knowledge: computer-controlled machines work faster and make fewer mistakes. [1]

  2. 2

    Application: the machines cut the window frames, so each window takes less time. [1]

  3. 3

    Analysis: more windows are made to fill the waiting orders and less timber is wasted, so the cost of each window falls. [2]

  4. 4

    Analysis: but £60 000 is a high initial capital cost that needs long-term finance, and a breakdown stops output. [2]

  5. 5

    Knowledge: training gives higher skilled staff, but it costs money and output is lost during training. [2]

  6. 6

    Application: the 12 joiners are already highly skilled, so more training may bring limited benefit. [1]

  7. 7

    Evaluation: I recommend the machines, because they raise output to meet the orders and cut the cost of each window, so profit increases. [2]

  8. 8

    Evaluation: training is rejected because skilled joiners gain little from it, while machines give long-term efficiency gains. [1]

Recap

  • Technology in production: computers in design and manufacturing, and automation.
  • Only technology used in production is credited. Selling through the internet is not.
  • Benefits: faster, fewer mistakes, less wastage, standardised quality, savings on labour costs.
  • Costs: high initial capital cost, maintenance, breakdowns, power cuts, more cash outflows.
  • Employees: redundancy is a risk, but some can be trained. Safer working conditions are a benefit.
  • Long-term finance suits new technology. Short-term finance does not.
  • Higher output does not automatically mean higher sales or profit.
  • Apply every point to the named business, develop it, then give a justified decision and reject the alternative.

End-of-chapter exercise

Test yourself on the whole chapter. Work through these before moving on.

  1. Mei runs a ceramics studio. Define the term productivity.2 marks
  2. Tolu runs a tea shop. Identify two reasons why the shop holds inventories of tea.2 marks
  3. Ricardo's Garage has 5 mechanics and carries out 30 repairs a week. It takes on 5 more mechanics and now carries out 50 repairs a week. Outline what has happened to production and to productivity at Ricardo's Garage.4 marks
  4. Zara's Laundry washes 400 loads a week in 5 machines. New settings on the machines use less detergent and finish each load 10 minutes sooner. Outline two benefits to Zara's Laundry of this increase in efficiency.4 marks
  5. Kofi's Kitchen makes 100 meals a day with 6 cooks. Outline two ways in which Kofi's Kitchen could increase efficiency.4 marks
  6. Nasir sells flowers from a small shop. Customers often order large bunches at short notice, and his supplier sometimes delivers late. Explain two reasons why Nasir holds inventories of flowers.6 marks
  7. Lina's Bakery bakes 300 loaves each morning from flour and yeast. Lina is thinking of using just-in-time inventory control. Explain one advantage and one disadvantage to Lina's Bakery of using it.6 marks
  8. Orbit Phones assembles phones from components that it buys from suppliers. Explain two benefits to Orbit Phones of lean production.6 marks
  9. Sable Couriers sorts parcels by hand in one depot. Last year 8 sorters sorted 4 800 parcels a day. This year 12 sorters sort 6 000 parcels a day, and 300 of them are sent to the wrong town and have to be sorted again. Explain two ways in which Sable Couriers could increase efficiency.8 marks
  10. Tidewater Kayaks builds 40 kayaks a month and sells each for textdollar600. Its plastic resin is imported by sea. Of the last 10 shipments, 2 arrived half a month late. Orders are steady in winter but can double without warning in a hot spring. Tidewater holds a large inventory of resin in a rented warehouse that costs textdollar1 500 a month. The owner must choose between changing to just-in-time inventory control and keeping the large inventory. Which should she choose? Justify your answer.12 marks
  11. Aisha's Bridal makes wedding dresses. Each dress is made to the measurements of one bride. Define job production.2 marks
  12. A pottery makes 200 mugs of one design, then 200 mugs of another design. Define batch production.2 marks
  13. A bottling plant runs day and night to fill a huge number of identical bottles. Define flow production.2 marks
  14. Kofi builds kitchens to each customer's design. Explain one advantage and one disadvantage to Kofi of using job production.4 marks
  15. Pia's Pies bakes steak pies, chicken pies and veggie pies for local shops. She makes one type at a time. Explain two advantages to Pia's Pies of using batch production.4 marks
  16. Rapid Cans has 200 employees. It is changing to flow production to make one size of tin can. Explain two disadvantages to Rapid Cans of using flow production.4 marks
  17. Two friends start a business making handmade guitars. They expect to sell 40 guitars a year. One of them suggests using flow production. Explain two reasons why flow production is not an appropriate method for this business.6 marks
  18. Seat Comfort makes car seats. Its only customer is a large car factory that places huge, regular orders. Explain two factors Seat Comfort should consider when choosing a method of production.6 marks
  19. Kestrel Tiles has 35 employees and makes floor tiles in 30 designs. It sells 6,000 boxes a week in total, and its two best-selling designs sell 1,500 boxes a week each. The kiln is reset each time the design changes, which takes two hours. A flow production line would cost £4 million. Profit last year was £300,000. Kestrel Tiles has decided to use batch production and not flow production. Explain two factors that may have influenced this decision.8 marks
  20. Volta Bikes has 18 skilled employees and makes electric delivery bikes by job production. Orders have grown to 30 bikes a week: 24 are for one of three standard models, and 6 are for a customer's own design. The best-selling standard model has 12 orders a week. Skilled workers are hard to find locally. A flow production line would cost £2 million. The table compares three methods Volta Bikes could use. Consider the three methods. Recommend which one Volta Bikes should use. Justify your answer. | Method | Bikes a week | Cost per bike | What can be made | | --- | --- | --- | --- | | Job (now) | 12 | £1,900 | Any design | | Batch | 30 | £1,600 | The three standard models | | Flow | 150 | £1,200 | One model only |12 marks
  21. Zeta Chairs makes office chairs in a factory. Identify two ways Zeta Chairs could use computers in production.2 marks
  22. Brook Dairy bottles milk. It plans to replace some workers with automated machines. Identify two disadvantages to Brook Dairy of using automated machines.2 marks
  23. Hollis Bakery bakes 3 000 loaves a day. The owner buys computer-controlled mixers for the dough. Outline two benefits to Hollis Bakery of these mixers.4 marks
  24. Calder Biscuits has 60 employees who pack biscuits by hand. The owner introduces an automated packing machine. Outline one advantage and one disadvantage of this to the employees of Calder Biscuits.4 marks
  25. Pike Metalworks has 20 employees and makes steel gates. It plans to buy welding robots for £300 000. Power cuts are common where the factory is. Explain two disadvantages to Pike Metalworks of this decision.6 marks
  26. Norvik Shoes makes leather shoes. Its workers cut the leather by hand. It buys computer-controlled cutting machines. Explain two benefits to Norvik Shoes of this decision.6 marks
  27. Alder Toys makes wooden toys with 30 assemblers. It plans to pay £90 000 for computer-controlled machinery in March. The machinery needs 20 fewer assemblers. Explain two effects this could have on the cash flow forecast of Alder Toys.6 marks
  28. Tern Bikes has 90 workers who build bicycles by hand. They lift heavy frames and some have been injured. The owner plans an automated production line that needs 30 workers. Do you think the line will benefit all the employees of Tern Bikes? Justify your answer.6 marks
  29. Sunna Juice fills 40 000 bottles a month. Its 12 workers fill the bottles by hand and 5% of the bottles are spoiled. Each worker is paid £1 000 a month. An automated filling line costs £180 000. It needs 3 workers and spoils 1% of the bottles, but it stops for maintenance on 2 of the 20 working days each month. Explain two advantages and two disadvantages to Sunna Juice of installing the line. Use the data in each answer.8 marks
  30. Brightwell Tiles makes hand-painted wall tiles. Its 24 skilled painters finish 6 000 tiles a month, sold at £12 each. Each painter is paid £1 500 a month. Orders have risen to 8 000 tiles a month. Option A: an automated printing line for £360 000, paid for with a 5-year bank loan. It prints up to 20 000 tiles a month and needs 6 workers, but printed tiles sell for £7. Option B: more of the existing equipment for £60 000 and 8 more painters. Other costs for each tile are the same. Recommend which option Brightwell Tiles should choose to increase profit. Justify your answer.12 marks

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