CAIE IGCSE Business Studies 4.1 Production of Goods and Services Questions

Use this production page to define production terms, explain lean and JIT effects and justify job, batch or flow production choices.

Exam points

Define terms such as specialisation, lean production or just-in-time inventory control.
Explain JIT and lean production effects on storage, waste, costs or supply risk.
Justify production method choices using order size, product variety and business context.

Covered syllabus points

4.1.1—Production processes 4.1.2—The main methods of production

[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:

[Maximum number: 6]

TJK manufactures candles. Contributing to sustainable development is important to TJK. The business uses batch production in its factory in country X. The target market for TJK's products is females between 20 and 50 years of age. The Managing Director is reviewing TJK's financial data. An extract is shown in Table 3.1. He is also considering the benefits to a business of becoming a multinational company.

Table 3.1

Do you think batch production is the best method of production for a business to use? Justify your answer.

Award 1 mark for each relevant point [max 2].

Award 1 mark for each relevant explanation [max 2].

Award up to 2 marks for a justified decision as to whether batch production is the best method of production for a business to use.

Points might include:

Batch production:

- Flexible / can easily change from one product to another [k] so can respond quickly to changing customer tastes [an]

- Variety of products can be made [k] which can widen its customer base/help spread risk [an]

- (Variety of tasks) can motivate employees [k]

- Machines must be re-set between batches [k] which can reduce output [an]

- Warehouse space needed [k] which increases storage costs [an]

Other methods include:

Flow production [k]

- Quick/high output [an]

- Economies of scale [an]

- Low(er) unit cost [an] so able to charge a lower price [an]

- Can operate 24 hours a day [an]

- Few(er) employees / high levels of automation [an]

- If a machine breaks down the whole production line will stop [an]

- High initial cost of machinery [an]

- Can lower motivation [an]

Job production [k]

- Can charge a high price [an] increasing profit margin [an]

- Can meet the (exact) requirements of customers [an]

- (Often) high quality [an]

- Labour intensive [an] which increases (labour) costs [an]

This is a general question so there are no marks for application.

Some points could be expressed as an advantage or disadvantage of different methods, but only award once.

Some points can be [k] or [an] but only award once.

Can accept comparative points e.g. batch production has higher output than job production [k].
Other appropriate responses should be credited.

Justification might include:

Batch production is flexible [k] which means businesses can quickly respond to changes in customer tastes [an]. However, flow production [k] might be better as a high output is produced [an]. Batch production is better because responding to customer tastes means you are likely to have less waste products [eval] whereas using flow could result in very high quantities of unwanted products which increases costs [eval].

[Maximum number: 6]

NSL is a business based in country X．It manufactures food products including bread and breakfast cereals．NSL uses lean production in its factory．Maintaining quality is important．NSL imports 15% of its raw materials．Changes in country X＇s exchange rate can affect businesses which import raw materials．NSL＇s Marketing Manager knows the business should respond to changes in consumer spending patterns．She is aware that market research can be used to help make business decisions．

Explain two benefits to NSL of using lean production.

Benefit 1:
Explanation:
Benefit 2:
Explanation:

All question bank results loaded

Covered syllabus points

Question 1

Question 2

Question 3