VDN is a private limited company. One of VDN’s objectives is to be ethical. VDN produces office products including pens and paperclips. All raw materials are imported. The Managing Director plans to introduce new machinery to help lower average costs. This will require training for VDN’s 380 employees. The Managing Director also wants to introduce Kaizen into the factory. Define ‘private limited company’. Define ‘average cost’. Outline two ways VDN could be ethical when producing its products. Way 1: Way 2: 1 9 Explain one advantage and one disadvantage to VDN of introducing Kaizen. Advantage: Explanation: Disadvantage: Explanation: Do you think off-the-job training is the best method for a large business to use when introducing new machinery? Justify your answer. [ 1 9

0450_w21_qp_13

THEORY

2021

Paper 1, Variant 3

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Gabby is the production manager at a factory that manufactures a range of electrical products, including televisions. The company uses batch production methods in its factory. Gabby has been looking at some data produced by the Finance department. This is shown in Table 1. Table 1: Cost and output data $000’s Output per week Fixed costs Variable costs Calculate the cost per unit if the output of the factory is 2000 units per week. Identify two variable costs that the business might incur. Variable cost 1: Variable cost 2: Identify and explain two features of batch production. Feature 1: Feature 2: Gabby is thinking of subcontracting the manufacturing of some of the company’s products to another company. Identify and explain three disadvantages to Gabby’s company of subcontracting the manufacturing of its products. Disadvantage 1: Disadvantage 2: Disadvantage 3: Governments sometimes pass laws to make markets more competitive. Do you think that competition always benefits consumers? Justify your answer.

0450_s10_qp_12

THEORY

2010

Paper 1, Variant 2

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Gabby is the production manager at a factory that manufactures a range of electrical products, including televisions. The company uses batch production methods in its factory. Gabby has been looking at some data produced by the Finance department. This is shown in Table 1. Table 1: Cost and output data $000’s Output per week Fixed costs Variable costs Calculate the cost per unit if the output of the factory is 2000 units per week. Identify two variable costs that the business might incur. Variable cost 1: Variable cost 2: Identify and explain two features of batch production. Feature 1: Feature 2: Gabby is thinking of subcontracting the manufacturing of some of the company’s products to another company. Identify and explain three disadvantages to Gabby’s company of subcontracting the manufacturing of its products. Disadvantage 1: Disadvantage 2: Disadvantage 3: Governments sometimes pass laws to make markets more competitive. Do you think that competition always benefits consumers? Justify your answer.

0450_s10_qp_13

THEORY

2010

Paper 1, Variant 3

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IRKAM is a company that produces high quality doors for hotels and offices. The company currently uses job production. The Managing Director, Abdul, believes that quality control is important. He is looking for ways to increase productivity. All workers receive on-the-job training. Abdul is thinking of including off-the-job training as well. What is meant by ‘productivity’? What is meant by ‘on-the-job training’? Identify and explain one advantage and one disadvantage of off-the-job training for IRKAM. Advantage: Explanation: Disadvantage: Explanation: Identify and explain two reasons why quality control might be important to IRKAM. Reason 1: Explanation: Reason 2: Explanation: Over the past three years there has been a large increase in demand for IRKAM’s doors. Do you think job production is still the best method of production for IRKAM? Justify your answer.

0450_s12_qp_11

THEORY

2012

Paper 1, Variant 1

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Cutter is a family owned private limited company. It manufactures a luxury brand of coats. In 2013 sales revenue increased by $3m and retained profits also increased. ‘The marketing mix is working’ said the Marketing Director. Cutter’s Operations Director thinks that batch production is still the right method of production to use, but he cannot decide whether on the job or off the job training is better for the business. What is meant by ‘retained profit’? Identify two possible advantages to Cutter of being a private limited company. Advantage 1: Advantage 2: Identify and explain two possible advantages to Cutter of using batch production. Advantage 1: Explanation: Advantage 2: Explanation: Identify and explain two possible elements of a suitable marketing mix for Cutter’s products. Element 1: Explanation: Element 2: Explanation: Do you think it is better for Cutter to use on the job or off the job training? Justify your answer.

0450_s14_qp_12

THEORY

2014

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J and K is a large business that uses flow production methods. Productivity in its factories is high and the business benefits from economies of scale. Output per employee continues to rise, although labour turnover has increased recently. The management thinks that unit costs will continue to fall if the business gets larger. What is meant by ‘flow production methods’? Identify two ways of measuring the size of a business. Measure 1: Measure 2: Identify and explain two reasons why measuring ‘output per employee’ is important to the management of a business. Reason 1: Explanation: Reason 2: Explanation: Identify and explain two reasons why a high labour turnover might occur in a business such as J and K. Reason 1: Explanation: Reason 2: Explanation: The management of J and K thinks that unit costs will continue to fall if the business gets larger. Do you think they are right? Justify your answer.

0450_w12_qp_13

THEORY

2012

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Salters manufactures cans for drinks. It uses flow production methods. Its machinery is inefficient and often breaks down. The company holds a lot of stock of raw materials and finished products. It cannot respond quickly to changes in customer demand. The management is planning to invest in new machinery, although the capital costs would be high. The factory employees are worried about this plan and strike action is possible. In 2013 Salters made a loss. Identify two features of flow production methods. Feature 1: Feature 2: What is meant by ‘inefficient’? Identify and explain two problems to Salters of not responding quickly to changes in customer demand. Problem 1: Explanation: Problem 2: Explanation: Identify and explain two effects on Salters of holding a high level of stock. Effect 1: Explanation: Effect 2: Explanation: Do you think Salters should invest in new machinery? Justify your answer.

0450_w14_qp_13

THEORY

2014

Paper 1, Variant 3

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PYG is a private limited company based in country A. PYG makes metal cans for food products using flow production. The Operations Director has been looking at the operations data in Table 1. Last year PYG found it difficult to replace the 15 production workers who left the company. Most of PYG’s output is exported. The Operations Director thinks there could be more advantages than disadvantages to relocating production to another country. Table 1: Operations data Output per week 660 000 800 000 Number of employees What is meant by a ‘private limited company’? Calculate the output per employee per week in 2014. Identify and explain two reasons why calculating output per employee is important for PYG. Reason 1: Explanation: Reason 2: Explanation: Identify and explain two possible problems for PYG of using flow production. Problem 1: Explanation: Problem 2: Explanation: Do you think that the advantages of relocating production to another country would be greater than the disadvantages for PYG? Justify your answer.

0450_w15_qp_13

THEORY

2015

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SOLS makes 5 styles of luxury shoes for men, using job production. SOLS operates in a niche market. Quality assurance is important. All materials, including leather, are imported. SOLS uses cost plus pricing. The shoes are sold directly to customers through its website. The Managing Director said: ‘We can sell our shoes for $100 less a pair than our competitors because we have no shops.’ Demand is increasing and the Managing Director has to decide whether to change to batch production. What is meant by ‘niche market’? Identify two advantages to SOLS (other than lower prices) of using a website to sell its products. Advantage 1: Advantage 2: Explain, with reference to SOLS, the difference between quality assurance and quality control. 1 12 Identify and explain one advantage and one disadvantage to SOLS of using cost plus pricing. Advantage: Explanation: Disadvantage: Explanation: Do you think SOLS should change its method of production? Justify your answer. [ 1 12

0450_w18_qp_11

THEORY

2018

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VXH produces a range of soft drinks made from fruit using batch production. VXH uses specialisation in its factory. The business has grown quickly over the last two years. VXH has increased the number of production workers from 40 to 80. This has increased the span of control for each manager. It has been difficult for VXH to keep workers motivated. The Human Resources Manager has to decide whether it is better to use job rotation or financial bonuses to improve employee motivation. What is meant by ‘span of control’? What is meant by ‘uses specialisation’? Identify and explain two possible reasons why VXH has grown quickly. Reason 1: Explanation: Reason 2: Explanation: 1 14 Identify and explain two possible reasons why VXH uses batch production. Reason 1: Explanation: Reason 2: Explanation: Do you think VXH should use job rotation or financial bonuses to increase employee motivation? Justify your answer. 1 14

0450_w19_qp_11

THEORY

2019

Paper 1, Variant 1

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