CAIE A-Level Business 4.2.1 Managing Inventory

CAIE A-Level Business 4.2.1 Managing Inventory
Cambridge International AS & A Level Business 9609 syllabus for exams in 2026, 2027 and 20282026–2028

Practise analysing raw material, work-in-progress and finished-goods inventory, interpreting control measures and evaluating stock or supply-chain choices for the case.

How this is tested

  • distinguish raw materials, work in progress and finished goods and explain why each is held
  • use buffer inventory, reorder level and lead time to interpret a simple stock-control chart
  • evaluate high stock, JIT or supply-chain management through cost, risk and service continuity

Question 2(c)

[Maximum number: 8]



Popular Drinks (PD)

PD is a mass market fizzy drinks manufacturer in country Z. The fizzy drinks market in country Z is dominated by a few well-known brands. The total market value is $ 5.3 bn and the PD brand has a 17% share of this market.

Pablo was recruited to be the Marketing Director of PD in 2022. He launched a new promotional campaign based on trending music on social media. He decided to use social media influencers to focus on this market.

Online feedback of the campaign was poor. Many of PD's customers did not want to be associated with trending music. National news highlighted the negative feedback and PD's sales volume decreased by 20% within a week and continued falling. This led to excess inventory in PD's warehouses. The bad publicity also caused a drop in PD's share price and a negative impact on cash flow.

Fig. 2.1 shows feedback from a recent questionnaire where previous PD customers were asked what they thought about the promotional campaign.

Fig. 2.1 Market analysis data of a sample of PD's customers

Fig. 2.1 Market analysis data of a sample of PD's customers

Pablo has called an emergency meeting of PD's marketing managers to repair the damage done to the PD brand from this recent promotional campaign.

Analyse two possible costs to PD of holding inventory.