Gabby is the production manager at a factory that manufactures a range of electrical products including televisions. The company uses flow production methods in its factory. Gabby was looking at some data produced by the finance department. This data is shown in Table 1. Table 1: Cost and Output Data Output per week Fixed costs [$000’s] Variable costs [$000’s] Calculate the cost per unit if the output of the factory is 3 000 units per week. Identify two economies of scale that the factory might gain by increasing its weekly output. Economy of scale 1: Economy of scale 2: The factory uses flow production methods. Identify and explain two features of flow production. Feature 1: Feature 2: Rather than making components, Gabby’s company is going to buy them from another manufacturer. Identify and explain three advantages to Gabby’s company of doing this. Advantage 1: Explanation: Advantage 2: Explanation: Advantage 3: Explanation: Recently Gabby’s company has become much larger. Do you think that becoming larger is an advantage for a business? Justify your answer.

7115_s10_qp_11

THEORY

2010

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Halitec makes computers using flow production. It is the market leader and is well known for the quality of its products. The business is ‘product orientated’ and its management believe that this is the reason for its success. However, the management know that efficiency in its factory can be improved. What is meant by a business that is ‘product orientated’? What is meant by ‘market leader’? Identify and explain two advantages to Halitec of using flow production. Advantage 1: Advantage 2: Identify and explain three methods that Halitec could use to improve efficiency in its factory. Method 1: Method 2: Method 3: Do you think that Halitec would benefit from spending money on market research? Justify your answer.

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THEORY

2010

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Bray Electrics is a large manufacturing company. The company makes engine parts for the car industry using batch production. The Managing Director is always looking for ways to introduce new technology in the business. He believes ‘our workers like change’. He is interested in using lean production methods. What is meant by ‘batch production’? Identify two ways of measuring the size of a company. Way 1: Way 2: Identify and explain two benefits of lean production for a business. Benefit 1: Explanation: Benefit 2: Explanation: Identify and explain three advantages to the management of Bray Electrics of introducing new technology in the business. Advantage 1: Explanation: Advantage 2: Explanation: Advantage 3: Explanation: The Managing Director believes ‘our workers like change’. Do you think that all the workers at Bray Electrics would like the introduction of new technology? Justify your answer.

7115_s12_qp_12

THEORY

2012

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Sharma Machine manufactures motorcycles. The company is product orientated. Sharma Machine holds a lot of stock. The owner, Ishant, wants to increase productivity. Also the company plans to open an additional factory to satisfy increased demand. ‘Expansion should mean economies of scale’ said Ishant. ‘The right location for the new factory is going to be important if the business is to remain competitive.’ What is meant by ‘product orientated’? Identify two possible economies of scale the business might benefit from if it expands. Economy of scale 1: Economy of scale 2: Identify and explain two possible problems for Sharma Machine of holding a lot of stock. Problem 1: Explanation: Problem 2: Explanation: Identify and explain three methods that Ishant could use to increase productivity. Method 1: Explanation: Method 2: Explanation: Method 3: Explanation: How important is the right location for the new factory in helping Sharma Machine to remain competitive? Justify your answer.

7115_s13_qp_11

THEORY

2013

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Javid is a company that manufactures a range of luxury chocolates using batch production. Over the past year, profit has fallen due to increased competition. In order to cut costs, the Finance Director has suggested the company introduces new technology into the production process. The Human Resources Director is not sure that workers would benefit from the introduction of new technology. What is meant by ‘batch production’? Identify two advantages (other than cutting costs) to the company of using new technology. Advantage 1: Advantage 2: Identify and explain two reasons why the quality of chocolates might be important to this company. Reason 1: Explanation: Reason 2: Explanation: Identify and explain two problems that a fall in profit might cause for the company. Problem 1: Explanation: Problem 2: Explanation: Do you think that the introduction of new technology would benefit Javid’s workers? Justify your answer.

7115_s15_qp_11

THEORY

2015

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GKK makes plastic bottles for a range of products from food to chemicals. GKK buys its raw materials from a low-cost country. GKK’s organisational structure is wide with a short chain of command which allows for delegation. The Government plans to introduce new legal controls to protect the environment. The Operations manager said: ‘The Government might achieve one of its objectives but how does it affect GKK? This is a competitive market so prices are important.’ He wants to improve efficiency and plans to use lean production. What is meant by ‘chain of command’? Identify two Government economic objectives. Objective 1: Objective 2: Identify and explain two benefits to GKK of increasing efficiency. Benefit 1: Explanation: Benefit 2: Explanation: 1 4 Identify and explain two ways in which new legal controls to protect the environment might affect GKK. Way 1: Explanation: Way 2: Explanation: Explain one lean production technique. Recommend whether GKK should introduce this technique. Justify your answer. 1 4

7115_s17_qp_11

THEORY

2017

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WLT manufactures carpets. It exports 40% of its products. Globalisation has created opportunities and threats for WLT. Its method of production allows WLT to use specialisation. All of its 60 employees understand that quality assurance is important. WLT’s directors are considering the best way to increase efficiency. Define ‘specialisation’. Identify two methods of production. Method 1: Method 2: Outline two advantages to WLT of using quality assurance. Advantage 1: Advantage 2: 1 2 Explain one opportunity and one threat of globalisation for WLT. Opportunity: Explanation: Threat: Explanation: Do you think improving labour skills is the best way for a manufacturing business to increase efficiency? Justify your answer. [ 1 2

7115_s23_qp_11

THEORY

2023

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Crompton Springs, a private limited company, bottles mineral water. The production method is automated but inefficient, because the machinery used was bought 20 years ago. The company uses unskilled and low paid workers to load and unload the production lines. The managers have decided to invest in new machinery. What is meant by ‘production method is automated’? Identify two features of a private limited company. Feature 1: Feature 2: Identify and explain two possible reasons why workers at Crompton Springs are low paid. Reason 1: Explanation: Reason 2: Explanation: Identify and explain three problems that inefficiency can cause a business. Problem 1: Explanation: Problem 2: Explanation: Problem 3: Explanation: Do you think that the employees at Crompton Springs will be happy with the managers’ decision to invest in new machinery? Justify your answer.

7115_w11_qp_11

THEORY

2011

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Gresham Textiles manufactures high quality clothing. Production is labour intensive. Managers are paid more than production line workers in the factory. The business is investing in automated machinery. The management also wants to introduce lean production methods. What is meant by ‘labour intensive’? Identify two suitable sources of finance that Gresham Textiles could use to finance the investment in automated machinery. Source 1: Source 2: Identify and explain two reasons why factory managers are paid more than production line workers at Gresham Textiles. Reason 1: Explanation: Reason 2: Explanation: Identify and explain two ways lean production methods could reduce costs in the factory. Way 1: Explanation: Way 2: Explanation: Do you think that a change to automated methods of production would benefit customers of Gresham Textiles? Justify your answer.

7115_w12_qp_11

THEORY

2012

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Earnshaw is a company that buys raw materials and components in bulk. It uses them to manufacture furniture using flow production methods. Productivity in the factory is high. Currently Earnshaw has high costs of holding stock. The Managing Director wants to introduce lean production methods. What is meant by ‘productivity’? Identify two advantages to Earnshaw of buying raw materials in bulk. Advantage 1: Advantage 2: Identify and explain two features of flow production. Feature 1: Explanation: Feature 2: Explanation: Identify and explain three benefits to Earnshaw of using lean production methods. Benefit 1: Explanation: Benefit 2: Explanation: Benefit 3: Explanation: ‘If Earnshaw is to grow in the future then its unit production costs must fall’. Do you agree? Justify your answer.

7115_w13_qp_11

THEORY

2013

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