CAIE IGCSE Business Studies 4.1.1 production processes
Practise production-process questions by defining terms, applying lean methods and weighing JIT advantages or disadvantages.
- Syllabus
- 2027–2029
- Course
- Business 0264
Exam points
- Define specialisation as dividing work so workers focus on specific tasks.
- Explain lean methods such as JIT or reducing waste using the case business.
- Apply JIT advantages and disadvantages to inventory costs, shortages or supplier reliability.
4.1.1—Production processes question 1
[Maximum number: 6]
GAE is a multinational company. It manufactures steel. GAE has 2400 employees and has factories in 4 countries. The business regularly introduces new technology. Holding inventory is important. GAE's directors are planning to build a new factory and want to know how legal controls over location might affect this decision. The Managing Director said, 'The new factory will create many external benefits.'
Explain two reasons why holding inventory might be important for GAE.
Reason 1:
Explanation:
Reason 2:
Explanation:
Award 1 mark for identification of each relevant reason (max 2).
Award 1 mark for each relevant reference to this business (max 2).
Award 1 mark for each relevant explanation (max 2).
Points might include:
- To benefit from economies of scale / discounts for bulk buying / to benefit from special offers / *gain supplier discounts [k] reducing average / unit cost [an] for this multinational company [app]
- To maintain / not delay production / provide backup materials in case of breakdowns [k] at the factories [app] so can meet orders / demand (on time) [an]
- To protect against delays from suppliers / shortage of materials [k] which otherwise could delay production [an] in the 4 countries [app]
- To meet / satisfy demand / customer orders [k] of steel [app] which can increase revenue [an]
- To meet sudden order / unexpected changes in demand [k] helping maintain its reputation [an]
- To meet seasonal changes in demand [k]
Other appropriate responses should be credited.
To use words from the stem as application, the reference must be appropriate (i.e. make sense) in relation to the point being made.
The following words are likely to be appropriate for this question:
- Steel
- Multinational company
- Factory/factories
- 4 countries
- 2400 employees
- New technology
- External benefits
- Legal controls over location
Other appropriate examples can be credited.
Some points can be [k] or [an] but only award once.
Some [an] can be used for different points but only award once.
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