CAIE A-Level Business 4.3.1 Capacity Utilisation

Refer to Table 1.1. Calculate NS's capacity utilisation in 2024.

Indicative content

Rate of capacity utilisation $=\frac{\text { Current output level }}{\text { Maximum output level }} \times 100 \quad$ (1 mark - formula only)

NS capacity utilisation $=\frac{145000}{150000} \times 100 \quad$ (1 mark - use of correct figures in formula)

Answer = 9 6. 6 7 ( % ) or 96.7 or 97 (3 marks - correct answer no working or \% needed)

OFR applies

Exemplar and annotations

1(b)(i)

No creditable content.

1 mark

Correct formula

To award one mark, there must be:

- One and two

0 marks

To award zero marks, there must be

Explain one possible disadvantage to NS of high capacity utilisation.

Indicative content

AO1 Knowledge and understanding

Identification of a disadvantage of high capacity utilisation □ (max. 1 mark), including:

- Pressure on employees to work at full/near capacity constantly (accept anxiety / stress / need to work overtime)

- Pressure to keep employees motivated

- No margin for production errors / scheduling mistakes

- Cannot accept increased/additional orders

- No time for maintenance of machinery / machines break down a lot

- Over-production (accept inventory going off before it can be sold)

- Low inventory of inputs/raw materials / run out of materials

- No space left for finished product

- Not sustainable in the long-term

AO2 Application

- Explanation of a disadvantage of high capacity utilisation $\Delta^{\mathrm{RFP}}$ (max 1 mark), including:

- Pressure on employees to work at full/near capacity constantly - increased employee absenteeism / demotivation / increased labour turnover - reduced productivity long-term

1(b)(ii)

- No margin for production errors / scheduling mistakes - may lead to customer dissatisfaction due to lower quality

- Cannot take on increased/additional orders - may lead to customer dissatisfaction / customers may go to competitors who are able to accept increased/additional orders

- Machines break down a lot - no output

Context applied to NS ${ }^{\mathrm{s} \text { pe }}$ (max 1 mark), including:

- Answer to Q1(b)(i) (OFR)

- Market leader for natural hair care

- Five years since John's investment

- Sold in major retailer

- Private limited company operated as a social enterprise

- Focuses on customer (market) orientation

- Aim to donate to local charities and improving gender equality in the workplace

Accept all valid responses.

1(b)(ii)

Mark 2

No margin for error is □ . The context to major retail customers is reasonable $\Delta^{\mathrm{s} F}$, but only one point of application.

Cannot increase orders is a factor. The rest of the answer is not applying it to the context, so ${ }^{\mathrm{NA} \oplus \mathrm{O}}$ (Not Answering Question).

Although there is some relevant context, there is no knowledge of a factor, so no marks can be awarded.