AQA A-Level Business: Operational management (7132) – Practice Questions

These are original questions written for Marlbridge, for revision and practice on this content. They are not reproduced past-paper questions, and they do not replicate the exam’s exact structure, question count or mark tariffs – examination boards hold copyright in their own papers. Use these alongside the official past papers from your board or school.

These questions cover section 3.4 of the AQA A-level Business specification (7132), “Decision making to improve operational performance” (Marlbridge topic 4, Operational management). Learn the content first from the study guide and the revision notes. Find the course hub and the printable checklist too. All businesses and figures are invented.

Questions

1. Identify two operational objectives, other than costs, that a business could set. [2]

2. Aldwark Fabrics made 13,440 metres of cloth last month with 32 employees. Its capacity is 16,800 metres and its total costs were £60,480.

(a) Calculate labour productivity. [2] (b) Calculate the unit cost. [2] (c) Calculate capacity utilisation. [2]

3. Aldwark Fabrics is considering Just in Time deliveries of dye. Explain one benefit and one difficulty of this for the business. [4]

4. Zenmoor Joinery has capacity for 1,500 doors a month. Its fixed costs are £36,000 a month and its variable cost is £30 a door.

(a) Calculate the unit cost when it makes 900 doors. [2] (b) Calculate the unit cost when it makes 1,200 doors. [2] (c) Analyse why the unit cost differs between the two output levels. [3]

5. Rosedene Foods packs soup pouches. A manual line has fixed costs of £18,000 and variable costs of £8 a batch. An automated line has fixed costs of £54,000 and variable costs of £3 a batch. Demand next year is forecast at 10,000 batches but could fall as low as 5,000.

(a) Calculate the number of batches at which total costs are the same for both lines. [3] (b) Recommend which line Rosedene Foods should choose. Justify your answer. [6]

6. Heskin Print uses 80 reams of paper a day. The lead time is 5 days, the buffer level is 200 reams and the re-order quantity is 800 reams.

(a) Calculate the re-order level. [2] (b) Work out the highest stock level reached. [2] (c) The supplier’s lead time rises to 8 days. Calculate the new re-order level and explain what it means for Heskin Print. [2]

7. Distinguish between quality control and quality assurance. [4]

8. Daskerby Dairy packed 50,000 cartons last month and 4% were returned as faulty. Each faulty carton costs £3.50 to replace and dispose of.

(a) Calculate the cost of the faulty cartons. [2] (b) Analyse two consequences of poor quality for Daskerby Dairy. [4]

9. Kirkbeck Ice Cream sells much more in summer than in winter. Explain two ways in which it could match supply to demand. [6]

10. Wadlow Components buys 10,000 casings a month. Supplier A charges £4.20 a casing and delivers on time 82% of the time. Supplier B charges £4.60 and delivers on time 97% of the time. Late deliveries from Supplier A stopped the assembly line for 10 hours last month; late deliveries from Supplier B would stop it for 1 hour. Each hour of stoppage costs £500.

(a) Calculate the monthly cost of casings from each supplier. [2] (b) Calculate the monthly cost of casings plus stoppages for each supplier. [2] (c) Justify which supplier Wadlow Components should choose. [6]

11. Zenmoor Joinery plans to let customers design their own kitchen doors online.

(a) Define mass customisation. [2] (b) Explain one way technology could help Zenmoor Joinery to offer it. [3]

12. Stoneycroft Preserves packs 400,000 jars a year in-house at a total cost of £62,000. A specialist firm offers to do the packing for £0.14 a jar. Stoneycroft Preserves would sell its packing equipment, and the specialist firm sources its packaging from a supplier with a poor environmental record.

(a) Calculate the annual saving from outsourcing, in pounds and as a percentage of current cost (1 decimal place). [3] (b) Evaluate whether Stoneycroft Preserves should outsource packing. [7]

Answers

1. Any two of: speed of response and flexibility; environmental objectives; added value; or, for example, quality [1] and dependability [1]. [2] Examiner insight: A short identify question asks only for the names, so spend your time on the longer questions instead of explaining.

2. (a) Labour productivity = output ÷ employees [1] = 13,440 ÷ 32 = 420 metres per employee [1]. [2] (b) Unit cost = total costs ÷ output [1] = 60,480 ÷ 13,440 = £4.50 per metre [1]. [2] (c) Utilisation = output ÷ capacity × 100 [1] = 13,440 ÷ 16,800 × 100 = 80% [1]. [2] Examiner insight: Write the formula and the substitution so that credit can be given for method even if the arithmetic slips, and include units.

3. Benefit: lower storage and holding costs because dye is not kept in stock [1], which frees cash and space [1]. Difficulty: Aldwark would depend on the supplier delivering on time [1], so a late delivery could stop production with no buffer stock [1]. [4] Examiner insight: Each point usually needs a reason attached; “it is cheaper” on its own is thin, whereas explaining why gains more credit.

4. (a) Total cost = 36,000 + (30 × 900) = £63,000 [1]; unit cost = 63,000 ÷ 900 = £70 [1]. [2] (b) Total cost = 36,000 + (30 × 1,200) = £72,000 [1]; unit cost = 72,000 ÷ 1,200 = £60 [1]. [2] (c) Utilisation rises from 60% to 80% [1]. Fixed costs of £36,000 are spread over more doors [1], while variable cost stays at £30 a door, so unit cost falls by £10 [1]. [3] Examiner insight: An analysis answer is stronger when it uses the figures from the case and shows the chain from higher output to lower fixed cost per unit.

5. (a) Costs equal when 18,000 + 8q = 54,000 + 3q [1]; 5q = 36,000 [1]; q = 7,200 batches [1]. [3] (b) At 10,000 batches manual costs £98,000 (£9.80 each) and automated £84,000 (£8.40 each) [1], so automated is £14,000 cheaper at the forecast [1]. At 5,000 batches manual costs £58,000 and automated £69,000 [1], so manual is £11,000 cheaper if demand falls [1]. Automated carries higher fixed costs and risk, but suits large steady output and consistent quality; manual is more flexible [1]. Judgement: recommend automated, because the forecast is above 7,200 and the saving at forecast exceeds the loss at the low end, provided the firm can fund the investment; if the low figure is judged likely, manual is safer [1]. [6] Examiner insight: Set the forecast against the downside case and say what the choice depends on, rather than naming a line with no condition attached.

6. (a) Re-order level = buffer + (daily usage × lead time) [1] = 200 + 80 × 5 = 600 reams [1]. [2] (b) Maximum stock = buffer + re-order quantity [1] = 200 + 800 = 1,000 reams [1]. [2] (c) New level = 80 × 8 + 200 = 840 reams [1]. Heskin Print must order earlier, when more stock remains, or the buffer will be used up before the delivery arrives [1]. [2] Examiner insight: Say what you assume: the maximum stock formula takes delivery as stock reaches the buffer, and the buffer belongs in both calculations.

7. Quality control means inspecting products, during or after production, and removing faulty items [1]. It finds faults after they have occurred [1]. Quality assurance means setting standards for every stage, including suppliers and staff responsibility [1], so that faults are prevented [1]. [4] Examiner insight: Draw the contrast explicitly, such as detecting versus preventing faults; two stand-alone definitions may not show the difference.

8. (a) Faulty cartons = 4% × 50,000 = 2,000 [1]; cost = 2,000 × £3.50 = £7,000 [1]. [2] (b) Consequence 1: refunds and replacements cost £7,000 a month [1], which cuts profit and wastes materials [1]. Consequence 2: customers who receive faulty cartons may stop buying or complain online [1], which damages the reputation and reduces future sales [1]. [4] Examiner insight: Linking each consequence to the case and following it through to profit or sales is how analysis tends to be developed.

9. Way 1: use temporary or part time employees in summer [1]. This lets Kirkbeck Ice Cream increase production hours in peak months without paying full-time wages all year [1], though new staff may need training and produce less well [1]. Way 2: outsource some production to another manufacturer in peak months [1]. This adds capacity without buying machines that would be idle in winter [1], but gives less control over quality [1]. [6] Examiner insight: Two distinct methods are needed; two versions of the same idea may be treated as one.

10. (a) A: 10,000 × £4.20 = £42,000 [1]; B: 10,000 × £4.60 = £46,000 [1]. [2] (b) A: stoppages 10 × £500 = £5,000, total £47,000 [1]; B: 1 × £500 = £500, total £46,500 [1]. [2] (c) On price alone A is £4,000 cheaper [1], but including stoppages B is £500 cheaper [1]. Reliability matters because late parts halt the line and risk late orders to customers [1]. B’s 97% on-time record supports dependability for Wadlow’s own customers [1]. The gap is small, so the result is sensitive to the stoppage estimate, which is only one month’s figure [1]. Judgement: choose B, as it is cheaper in total and more dependable, but review the data over several months [1]. [6] Examiner insight: A justification is stronger when it uses the combined cost figure and also notes a limit of the data, instead of choosing on price or reliability alone.

11. (a) Mass customisation is making products to individual customers’ wishes [1] at a cost close to mass production [1]. [2] (b) An online design tool lets customers choose size, finish and style [1] and passes the order straight to computer-controlled machines [1], so no manual re-entry is needed and each door can be made without long set-up delays [1]. [3] Examiner insight: For a “one way” question, develop a single way with a consequence rather than listing several.

12. (a) Outsourced cost = 400,000 × £0.14 = £56,000 [1]; saving = 62,000 - 56,000 = £6,000 [1]; 6,000 ÷ 62,000 × 100 = 9.7% [1]. [3] (b) For: saves £6,000 a year (9.7%) [1]; the specialist’s expertise may raise packing quality [1]; selling equipment releases cash [1]. Against: less control over quality and delivery [1]; the supplier’s poor environmental record could harm Stoneycroft’s reputation if customers find out [1]; hard to bring packing back in-house once the equipment is sold [1]. Judgement: the saving is modest, so outsource only if the specialist agrees quality and environmental standards in writing and the cash is not needed for stronger uses; otherwise the reputational risk could outweigh £6,000 [1]. [7] Examiner insight: An evaluation that reaches a reasoned conclusion, tied to the figures and to the conditions that would change it, tends to fare better than two unbalanced lists.

Where marks are usually lost

• Omitting units, or the percent sign on utilisation.
• Dividing capacity by output instead of output by capacity.
• Leaving the buffer out of the re-order level.
• Treating quality control and quality assurance as the same method.
• Writing about JIT as a benefit only, with no supplier risk.
• Giving a recommendation or justification with no judgement.
• Ignoring the numbers given in the case study.
• Offering two ways that are really the same idea.

Next steps

• Re-read the study guide for any question you missed.
• Use the revision notes to rehearse the formulas.
• Visit the course hub and the printable checklist.
• Try all free 10-minute diagnostics.
• Book a free trial class.

Frequently asked questions

How do you calculate capacity utilisation? Capacity utilisation = current output ÷ maximum capacity × 100, given with a percent sign. Dividing capacity by output instead is a common error.

What should you include when answering on Just in Time? Give the benefit, such as lower stock-holding costs, and the difficulty, especially the risk if a supplier fails to deliver on time. Writing about JIT as a benefit only loses marks.

Why do unit costs change with output? Fixed costs are spread over more units as output rises, so the fixed cost per unit, and therefore the unit cost, falls. Use the case figures to show this.

What makes two “ways” in an answer count separately? Each way must be a genuinely different idea, developed in the context of the business. Offering two ways that are really the same idea earns credit for only one.

Official syllabus

AQA AS and A-level Business specification (7131 and 7132), subject content section 3.4, published by AQA.