Practise applying operations knowledge to production choices, scale effects, JIT, robotics, resource use and quality in business cases.
Define the term economies of scale.
A01-1 mark
Award 1 mark for a correct definition of economies of scale.
- A fall in average costs as output increases (1)
(1)
Artify Studio was set up in 2015 by Tay Hui Jae in the busy Kampong Glam area of Singapore. Artify Studio's aim is to have 'a communal art space where people can come together and paint, where people would be given as much creative freedom as they would have if they were in their own spaces.'
Artify Studio provides many services including its popular Liberty Art Jam where customers can paint as well as listen to music. The studio offers a Corporate Art Jam and Regular Kids Classes. Customers can purchase art materials after attending the studio.
Artify Studio is a profit-making organisation with a social element. It employs seven part-time people, all of whom are art enthusiasts.
Define the term diseconomies of scale.
A01-1 mark
Award 1 mark for a correct definition of diseconomies of scale.
- An increase in average cost per units (1).
(1)
Define the term job production.
AO1-1 mark
Award 1 mark for a correct definition of job production.
- A method of production that involves completing one unit of output at a time (1).
(1)
After a recent increase in customer numbers Four Fitness is considering opening a third gym.
Explain one advantage to a business of using total quality management.
A01-3 marks
Award 1 mark for identification of an advantage to a business of using total quality management, plus 2 further marks for explaining this advantage, for a maximum of 3 marks.
- Increased customer satisfaction (1) as managing quality is the responsibility of all employees (1) so they will be fully trained to complete their role effectively and consistently (1)
NB Answers that list three advantages with no explanation will get 1 mark only.
Accept any other appropriate response.
(3)
The Better Toy Store (TBTS) is a children's toy shop. TBTS has three shops in Singapore. Two of the shops are located in busy shopping malls and the third is located at the Jewel Changi Airport. TBTS has a website for customers looking to buy toys online.
TBTS selects toys to sell that are excellent for play, value, design and quality. All TBTS toys are environmentally friendly.
Define the term diseconomies of scale.
AO1-1 mark
Award 1 mark for a correct definition of diseconomies of scale.
- When the average unit cost increases due to the growth of a business (1).
(1)
State one factor TBTS should consider when selecting its manufacturers.
A02-1 mark
Award 1 mark for a factor TBTS should consider when selecting its manufacturers in the context of TBTS.
- TBTS should select manufacturers that produce toys in an environmentally friendly way (1).
NB Do not accept a factor that is not in the context of TBTS
Accept any other appropriate response.
(1)