A Level Business: Inventory management (Cambridge 9609) – 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 4.2 Inventory management (4.2.1 and 4.2.2), an AS Level topic, of the Cambridge International AS & A Level Business 9609 syllabus for examination in 2026, 2027 and 2028. Learn the content first from the study guide and the revision notes. More Topic 4 questions are in the operations management practice set. Course links: the Cambridge A Level Business hub, the checklist and the free diagnostics.

Questions

1. Pellsworth Bakery makes loaves for local shops. Identify one example of each of the three types of inventory it holds. [3]

2. Define lead time and state how a longer lead time affects the re-order level. [2]

3. Rushwick Lighting uses 36 LED drivers a day. The lead time is 9 days and the buffer inventory is 150 drivers. Each order is for 900 drivers.

(a) Calculate the re-order level. [2] (b) Calculate the maximum inventory level, assuming each delivery arrives as inventory reaches the buffer. [1]

4. Veridane Cycles stocks bicycle frames. Its inventory control chart gives these readings.

Day	0	4	8	12	16	20
Frames in inventory	460	380	300	220	140	60

An order is placed on day 12 and the delivery arrives on day 20.

(a) Identify the buffer inventory, the re-order level and the lead time. [3] (b) The supplier delivers 3 days late. Calculate the inventory on day 23 and state what this shows. [3]

5. Analyse two costs to a business of holding a large amount of inventory. [4]

6. Define Supply Chain Management and explain one benefit of it to a manufacturer. [3]

7. Distinguish between the purpose of JIT and the purpose of JIC inventory management. [4]

8. Dunsmere Toys is thinking of moving from JIC to JIT. It buys 180 000 of materials a year (all figures in dollars). Under JIC it holds an average of 4 000 units, costing 1.50 per unit a year to hold. Under JIT it would hold an average of 500 units. JIT would lose a 2% discount on its purchases.

(a) Calculate the net annual saving from JIT. [4] (b) Explain one risk of JIT that the calculation does not show. [2]

9. Analyse two effects on a restaurant chain of adopting JIT for its fresh ingredients. [6]

10. Rushwick Lighting is a small manufacturer. Demand for its lamps is steady. It buys drivers from one overseas supplier whose delivery times vary between 6 and 14 days. Its warehouse is full and its bank balance is low. The owner is considering JIT. Evaluate whether Rushwick should adopt JIT. [8]

11. Veridane Cycles (question 4) uses 20 frames a day and holds a buffer of 60 frames. Its supplier is sometimes late, by up to 5 days, about twice a year. Holding one frame for a year costs 4. A lost sale costs Veridane 55 in profit per frame. The owner proposes raising the buffer to 120 frames. Recommend whether she should do so, using calculations. [6]

Answers

1. Raw material: flour (or yeast, sugar) [1]. Work in progress: dough being proved or loaves baked but not yet wrapped [1]. Finished product: wrapped loaves awaiting delivery [1]. [3] Examiner insight: name each type and give a specific example from the business; a bare list of the three terms shows knowledge but little application.

2. Lead time is the delay from the moment an order is placed until the goods arrive from the supplier [1]. A longer lead time means more inventory is used while waiting, so the re-order level must be higher [1]. [2] Examiner insight: say the direction of the effect and the reason; “it changes” does not answer a “how” question.

3. (a) Usage during the lead time = 36 x 9 = 324 [1]; re-order level = 324 + 150 = 474 drivers [1]. (b) Maximum = 150 + 900 = 1 050 drivers [1]. [3] Examiner insight: show the working line; a wrong final figure can still earn credit for a correct method, which a bare answer cannot.

4. (a) Buffer inventory = 60 frames, the lowest level, reached on day 20 [1]. Re-order level = 220 frames, the level at which the order was placed [1]. Lead time = 20 - 12 = 8 days [1]. (b) Usage = (460 - 380) / 4 = 20 frames a day [1]. Delivery would have come on day 20, so on day 23 the inventory would be 60 - (3 x 20) = 0 frames [1]. The buffer has been used up completely, and any further delay would cause a stock-out [1]. [6] Examiner insight: read values from the table with their units and say what each one means; interpretation of the result is usually where the final mark sits.

5. First cost: storage and insurance, because a large store needs more space, security and cover [1]. This raises fixed costs and lowers profit if the extra inventory is not sold quickly [1]. Second cost: cash tied up, because money spent on inventory cannot pay bills or be invested [1]. This can create cash flow problems, especially for a small business with little cash [1]. (Other valid costs: damage, theft, obsolescence.) [4] Examiner insight: an “analyse” answer goes beyond naming a cost to show its consequence for the business, so develop each point with a “because” or “which leads to” step.

6. Supply Chain Management is the coordination of the flow of materials, information and payments between suppliers, the business and its customers [1]. One benefit: closer links with reliable suppliers shorten and stabilise lead times [1], so the manufacturer can hold less buffer inventory and cut holding costs [1]. (Other valid benefits: better quality, faster delivery to customers.) [3] Examiner insight: define the term in terms of coordination along the chain, not just “buying from suppliers”, and follow the benefit through to a result.

7. JIT aims to hold as little inventory as possible, with materials arriving just as they are needed [1], so as to cut holding costs and waste [1]. JIC aims to hold enough inventory, including a large buffer, to meet any unexpected demand or supply delay [1], so as to avoid running out and losing sales or output [1]. [4] Examiner insight: a “distinguish” answer must make the contrast explicit for both approaches; describing JIT well and JIC vaguely limits the marks.

8. (a) JIC holding cost = 4 000 x 1.50 = 6 000 [1]. JIT holding cost = 500 x 1.50 = 750, so the holding saving = 5 250 [1]. Discount lost = 2% of 180 000 = 3 600 [1]. Net saving = 5 250 - 3 600 = 1 650 a year [1]. (b) A late delivery under JIT stops production because there is no buffer [1], which could cost far more than the 1 650 saved in lost sales and idle workers [1]. [6] Examiner insight: the lost discount is the step most often forgotten; the final figure needs a clear statement that it is a saving per year.

9. First effect: lower waste and storage cost [1]. Fresh ingredients go off, so ordering small amounts close to use means fewer are thrown away and less refrigeration space is needed [1]; this lifts profit margins [1]. Second effect: greater dependence on suppliers [1]. If a supplier is late, a restaurant may be unable to serve dishes, which loses sales and damages its reputation [1], so the chain needs reliable suppliers and perhaps a second source [1]. [6] Examiner insight: tie each effect to fresh food and a restaurant; points that would fit any business in any industry gain less credit than ones using the case.

10. For JIT: a full warehouse and low cash suggest holding costs are a burden, and JIT would free space and money [1]. Steady demand makes forecasting easier, which supports JIT [1]. Against JIT: one overseas supplier whose delivery times vary from 6 to 14 days is a serious risk, since a late delivery would stop production with no buffer [1]. The firm may also lose bulk discounts and pay for more deliveries [1]. A single source gives little protection [1]. Judgement: JIT is not suitable yet, mainly because supplier unreliability is the biggest risk and the firm cannot easily absorb a stoppage [1]. A better course would be to find a nearer or second supplier, or to reduce the buffer gradually, and to move towards JIT as reliability improves [1]. The decision depends on how dependable the supplier proves to be [1]. [8] Examiner insight: “evaluate” answers earn their top marks for a justified conclusion that weighs the evidence and says what the decision depends on, not for a longer list of points.

11. Cover needed: 5 days x 20 = 100 frames, so the current buffer of 60 covers 60 / 20 = 3 days of delay [1]. A 5-day delay leaves 2 days short, which is 40 frames [1]. Lost profit = 40 x 55 = 2 200 per event, so about 4 400 a year at twice a year [1]. Raising the buffer to 120 covers 6 days, which removes the shortfall [1]. Extra holding cost = 60 x 4 = 240 a year [1]. Recommend raising the buffer, since 240 is far lower than 4 400, though cash tied up and the chance of lateness changing should be reviewed [1]. [6] Examiner insight: a “recommend” answer needs a clear decision supported by the figures; stating the decision without comparing the two costs leaves it unjustified.

Where marks are usually lost

• Leaving the buffer inventory out of the re-order level.
• Giving a numerical answer with no working and no unit.
• Confusing the vertical rise on a chart (a delivery) with usage.
• Naming costs of holding inventory without explaining the effect on the business.
• Forgetting the lost discount when comparing JIT with JIC.
• Writing that JIT means no inventory, when it means the minimum.
• Evaluating with a list of points but no conclusion.
• Using general answers where the question gives a business with specific facts.

Next steps

• Revise from the revision notes.
• Re-read the study guide.
• Course hub: Cambridge A Level Business; checklist.
• Take one of the free diagnostics.
• Book a free trial class.

Frequently asked questions

Which section of Cambridge AS and A Level Business 9609 do these questions cover? Section 4.2 Inventory management (4.2.1 and 4.2.2), an AS Level section, including inventory control charts, re-order levels, supply chain management and JIT.

How do you calculate the re-order level? Multiply daily usage by the lead time in days, then add the buffer inventory. Leaving the buffer out is a common error.

Does just in time mean holding no inventory? No. JIT means holding the minimum inventory, with materials arriving just as they are needed, not zero inventory.

What is often forgotten when comparing JIT with JIC costs? The bulk-buying discount that may be lost by ordering smaller amounts more often. Include it alongside the saving on holding costs.

Official syllabus

Cambridge International AS & A Level Business 9609 syllabus for examination in 2026, 2027 and 2028, published by Cambridge University Press & Assessment (Cambridge International Education), section 4.2 Inventory management.