CAIE A-Level Business 9.3.4 Lean production

3(c)

Indicative content

Responses may include:

AO1 Knowledge and understanding

Limited knowledge K will be demonstrated through knowledge of lean production or knowledge of impact on operational objectives.

Developed knowledge K+K will be demonstrated through knowledge of lean production and knowledge of impact on operational objectives.

- Definition of lean production: reducing all forms of waste.

- Lean production techniques:

- TQM

- Quality circles

- Cell production

- JIT

- Kaizen

- Simultaneous engineering.

- Need for capital investment such as ERP or flexible machinery.

- Knowledge of relevant ratios such as inventory turnover.

AO2 Application

Limited application, APP applies knowledge to CQ once.

Developed application, $\xrightarrow{\text { APP }}+\xrightarrow{\text { APP }}$ applies knowledge to CQ twice.

- Inventory turnover of 3.08 means that inventory is currently kept for 119 days on average. Objective is to increase inventory turnover to 5 times.

- Need to hold bamboo material for production and finished shoes to meet fluctuations in demand.

- 5% of output is defective - in six months =6000 units. Objective is to cut this by 50%.

- CQ has only just taken over the factory. Objective to increase production to full capacity within eight months and reduce workforce size.

- The shoe manufacturer had been unprofitable when CQ took it over.

- Unions have agreed to changes in working practices.

3(c)

AO3 Analysis

Limited analysis AN - candidate shows one link in the chain of analysis.

Developed analysis L2AN - candidate shows two or more links in the chain of analysis.

- By reducing all forms of waste CQ will be more efficient, and this will reduce unit cost of production AN making CQ more competitive. L2 AN

- Lean production includes TQM and quality circles. Giving workers responsibility for quality may increase motivation resulting in a reduction in defective output, AN improve quality and productivity, making CQ more competitive. L2 AN

- Lean production includes JIT manufacturing. Aim to hold zero inventory which will increase inventory turnover AN resulting in less inventory holding costs. L2 AN

- Training of employees will be required thus increasing costs of CQ AN but this could increase motivation of employees resulting in higher productivity. L2 AN

- Lean production aims to use less of everything and therefore may enable production to be maintained whilst reducing the size of the labour force AN and therefore reduce unit costs. L2 AN

- Lean production by building relationship with suppliers could eliminate the supply chain failures AN thus reducing the high levels of inventory previously needed. L2/AN

- Use of JIT may result in CQ running out of inventory and therefore lead to a loss of sales. AN

AO4 Evaluation

Limited evaluation ${ }^{\text {EvAL }}$ - limited supported judgement and/or a weak attempt at evaluative comment.

Developed evaluation ${ }^{\text {L2 }}$ EvaL - supported judgement and/or reasonable evaluative comment.

Developed evaluation in context ${ }^{\text {L3 }}$ | ${ }_{\text {Eval }}$ - supported judgement in context and/or reasonable evaluative comment in context.

- Elements that the evaluation/judgement might depend on:

- Effectiveness will depend on supplier relationships and reliability of receiving supplies when needed. Supply chain with bamboo coming from the US may make JIT production difficult to implement due to long lead times.

- Can CQ predict demand accurately? JIT risks lost customers if demand is underestimated.

- Is inventory turnover high or low compared to competitors?

- Was part of the problem that workers are unfamiliar with the production methods for the bamboo shoes after the takeover?

- Cost of the investment and current financial situation of CQ such as its high gearing.

PUBLISHED

3(c)

- Significance of other factors that may also impact success of LP:

- Existing factory, workers may have an ingrained culture to overcome.

- Evaluation of alternative approaches to achieving objectives such as investment in capital equipment or increased marketing expenditure to increase sales and inventory turnover.

- Supported overall judgement about introduction of LP.

- Accept all valid responses.