Cambridge IGCSE · 0450

Business Studies

Operations management — Topic 4

Name: ____________________Date: November 12, 2026

1.
A tailor makes one wedding dress at a time to a customer's exact specification. This production method is: A Flow production B Batch production C Job production D Mass production
[1 mark] · no calculator
Worked explanation
1. Choose C, job production: the tailor makes one dress to an individual specification.
2. Its measurements and design belong to one order, unlike a batch of identical dresses or a standardised flow line. Using a sewing machine does not change this production classification.
Common mistake: Production method is not determined by whether machinery is used.
Marking points
- Selects C: job production, making a single, unique product to order.
Examiner tip: Job production suits unique, customised items; batch groups identical items together; flow production runs a continuous standardised line.
2.
Explain one advantage and one disadvantage of flow production for a business making thousands of identical bottles of soft drink per hour.
[2 marks] · no calculator
Worked explanation
1. Repeated bottling at thousands per hour can spread line costs over many identical bottles, reducing unit cost.
2. The line is expensive to install and may be costly to change for a small run. High throughput helps only if demand absorbs output and breakdowns are controlled.
Common mistake: Efficient production does not guarantee all bottles will sell.
Marking points
- States an advantage such as a low cost per unit due to automation and continuous output at high volume.
- States a disadvantage such as high set-up cost, or inflexibility if the business wants to change the product or produce a smaller quantity.
Examiner tip: Flow production is efficient at very high, standardised volumes but expensive to set up and inflexible to change.
3.
Explain the difference between quality control and quality assurance.
[2 marks] · no calculator
Worked explanation
1. Quality control tests conformity, such as checking fill levels during bottling and rejecting underfilled bottles.
2. Quality assurance establishes calibration and training systems to prevent repeated underfilling. Both can operate together; control need not wait until final packaging.
Common mistake: Quality control can occur during production, not only afterward.
Marking points
- States that quality control inspects, tests or monitors products or processes against standards to detect non-conformance, at intermediate stages or at the end.
- States that quality assurance builds quality checks into every stage of the production process, aiming to prevent faults happening at all.
Examiner tip: Quality control catches faults after they occur; quality assurance is designed to prevent faults occurring in the first place.
4.
Explain one factor, other than cost, that a business should consider when choosing the location for a new factory.
[2 marks] · no calculator
Worked explanation
1. Reliable power supply matters independently of a site's quoted price.
2. Frequent outages interrupt processing and can spoil partly completed work, preventing dependable delivery. A cheap site without suitable utilities can therefore be operationally unsuitable.
Common mistake: Develop reliability, not merely another listed location cost.
Marking points
- Identifies a relevant factor such as proximity to raw materials or suppliers, availability of skilled labour, access to transport links, or proximity to the target market.
- Explains why this factor matters for the factory's efficient operation.
Examiner tip: Location factors trade off against each other; a site cheap for one reason (e.g. rent) may be costly for another (e.g. transport).
5.
Explain one advantage and one disadvantage to a business of automating part of its production process with robots.
[2 marks] · no calculator
Worked explanation
1. Robots can repeat a precise operation consistently, reducing variation and rework.
2. Purchasing and integrating them requires upfront finance and staff training before savings arrive. A small or changing product range may not generate enough repeated work to recover that commitment.
Common mistake: Automation is not a cost-free replacement for every worker.
Marking points
- States an advantage such as lower long-run labour costs, higher consistency, or the ability to work continuously without breaks.
- States a disadvantage such as high initial capital cost, need for staff retraining, or job losses affecting motivation among remaining staff.
Examiner tip: Automation trades a large upfront investment for lower ongoing unit costs, so it suits high, stable volumes best.
6.
A business that only orders raw materials from suppliers just before they are needed, to avoid holding large stocks, is using: A Buffer stock B Just-in-time stock control C Just-in-case stock control D Batch production
[1 mark] · no calculator
Worked explanation
1. Choose B, just-in-time: suppliers deliver near the time materials are used rather than maintaining large inventories.
2. This reduces average holding costs but exposes production to late deliveries. Batch production concerns how goods are made, not when materials arrive.
Common mistake: Low inventory alone does not describe a production method.
Marking points
- Selects B: just-in-time stock control, ordering materials to arrive only when needed for production.
Examiner tip: Just-in-time minimises stock-holding costs but relies on very reliable suppliers; just-in-case holds buffer stock to protect against delays.
7.
A factory has a maximum possible output of 2,000 units per week. Last week it produced 1,500 units. Calculate its capacity utilisation for that week.
[3 marks]
Course scope: Optional enrichment
Syllabus placement evidence: Cambridge 0450 syllabus (2026); 4.1.1 and 4.2, pp.19-20 (printed pages). Capacity-utilisation percentage is additional to specified productivity/cost techniques.
Worked explanation
1. Capacity utilisation = 1500/2000 x 100 = 75% for the week.
2. Unused capacity is 500 units, or 25% of maximum. The percentage says nothing by itself about whether extra output could be sold profitably.
Common mistake: Use maximum capacity, not actual output, as denominator.
Marking points
- Uses capacity utilisation = actual output ÷ maximum possible output × 100.
- Substitutes 1500 ÷ 2000 × 100.
- Obtains 75%.
Examiner tip: Capacity utilisation shows how much of a factory's maximum output is actually being used, not its total output alone.
8.
A furniture maker currently uses job production, making one bespoke item at a time. It is considering switching to batch production of a small standard range. Analyse one benefit and one drawback of this switch.
[3 marks] · no calculator
Worked explanation
1. Batching a standard furniture range lets the maker repeat setups and spread preparation time over several items, lowering unit cost.
2. Bespoke buyers may leave when exact dimensions or finishes are unavailable, reducing premium demand. Compare the extra standard-volume contribution with lost custom margins rather than assume higher output wins.
Common mistake: Standardisation can remove the benefit existing customers value.
Marking points
- Explains that batch production of a standard range can lower the average cost per item through some repetition and bulk material buying.
- Explains that this may allow faster order fulfilment and serve more customers than fully bespoke, one-at-a-time work.
- States a drawback such as losing the unique, fully customised appeal that bespoke customers value, or needing new equipment and planning.
Examiner tip: Moving from job to batch production usually trades some uniqueness and premium pricing for lower unit cost and higher output.
9.
A growing bakery must choose between investing in an automated bread-slicing machine to cut labour costs, or hiring two more part-time staff to keep flexibility during busy and quiet periods. Recommend one option using two relevant factors.
[3 marks] · no calculator
Worked explanation
1. An automatic slicer can lower labour input per loaf when steady high demand keeps it busy; part-time staff offer adaptable hours and broader tasks.
2. I would favour staff while demand is uneven and cash scarce, then consider a machine once slicing throughput is a proven bottleneck. High stable volume and an affordable payback could reverse that choice. Neither demand pattern nor machine cost is supplied.
Common mistake: Do not assume a growing bakery has constant high slicing demand.
Marking points
- Analyses a relevant factor for the machine, such as lower ongoing labour cost per loaf if demand is consistently high.
- Analyses a relevant factor for hiring staff, such as flexibility to adjust hours worked if demand varies significantly by day or season.
- Makes a supported recommendation that weighs the pattern of demand against the upfront cost of the machine.
Examiner tip: Automation suits steady, high, predictable demand; flexible staffing suits demand that varies significantly.
10.
Explain one reason why a business might keep a level of buffer stock rather than ordering raw materials only when they run out.
[2 marks] · no calculator
Worked explanation
1. A buffer allows materials to keep flowing if replenishment arrives late or usage unexpectedly rises.
2. Ordering only at zero would leave production waiting through the delivery lead time even under normal conditions. Buffer stock protects against variation, while the reorder point also needs to cover expected lead-time use.
Common mistake: Buffer stock is not a substitute for timely reordering.
Marking points
- Explains that buffer stock protects the business against running out of materials if a delivery is delayed or demand suddenly rises.
- Develops the reason: avoiding material shortages helps keep production running and meet customer orders. A separate stock-holding-cost drawback is not required.
Examiner tip: Buffer stock reduces the risk of running out but ties up money and storage space that could otherwise be used elsewhere.
11.
A workshop with 8 employees produced 320 units last week. Calculate labour productivity per employee, and state one way the business could use this figure.
[3 marks]
Worked explanation
1. Labour productivity = 320/8 = 40 units per employee-week.
2. Compare that figure with a later week on a consistent hours and quality basis to assess improvement. A higher headcount or more overtime could raise total output without genuine efficiency gains.
Common mistake: A worker-based ratio can hide changing hours per worker.
Marking points
- States the formula: productivity = output ÷ number of employees.
- Calculates 320 ÷ 8 = 40 units per employee.
- States a valid use, such as comparing performance over time or against competitors, or identifying a need for training or investment.
Examiner tip: Productivity measures output per worker, not total output — a bigger workforce can produce more in total while still being less productive per person.
12.
A clothing brand currently manufactures all its products in its own factory. Analyse one advantage and one disadvantage of outsourcing production to an external supplier instead.
[2 marks] · no calculator
Worked explanation
1. A specialist clothing supplier may spread equipment and expertise across clients, offering lower production cost than the brand's own factory.
2. The brand loses direct control over quality and schedules, risking late or defective collections. Include inspection, coordination and switching costs before treating the quoted price as the whole saving.
Common mistake: Outsourcing does not transfer the customer's reputational judgement.
Marking points
- Explains an advantage, such as lower production costs or not needing to invest in its own factory and equipment.
- Explains a disadvantage, such as less control over quality and production schedules, or dependence on the external supplier's reliability.
Examiner tip: Outsourcing usually trades direct control over quality and timing for lower cost and reduced investment.