Edexcel GCSE Business: Business operations and managing stock (1BS0) – 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.

This set follows Pearson Edexcel Level 1/Level 2 GCSE (9-1) Business (1BS0), Issue 2, July 2022, Theme 2 topic 2.3 Making operational decisions, content items 2.3.1 Business operations and 2.3.2 Managing stock. Calculators may be used and workings should be shown. All businesses and figures are invented.

Links: the Edexcel GCSE Business hub, the printable checklist, the study guide and the revision notes. Try the free diagnostics as well.

Questions

1. Define the term “just in time (JIT) stock control”. [2]

2. State the production process (job, batch or flow) that best matches each business. [3] Business A makes one hand-stitched wedding dress to a bride’s own design. Business B bottles milk on a line that runs all day. Business C bakes 200 croissants, then resets the ovens for 150 pain au chocolat.

3. Wharfe Candles made 960 candles in a week with 8 staff. After buying a pouring machine it made 1,260 candles with 9 staff. Calculate the percentage change in productivity (output per worker). Give your answer to 1 decimal place. [4]

4. Explain one way that flow production can help a business keep its unit costs low. [3]

5. Greenfield Garden Centre sells bags of compost. A bar gate stock graph shows: maximum stock 500 bags; reorder level 200 bags; use 25 bags a day; lead time 4 days. (a) State the maximum stock level. [1] (b) Calculate the number of days from a full delivery until the reorder level is reached. [2] (c) Calculate the stock level, in bags, at the moment a delivery arrives. [2] (d) Calculate the size of each delivery. [2]

6. Outline one risk to a manufacturer of using JIT stock control. [2]

7. Hartwood Furniture makes dining tables in batches of 20. The owner is thinking of buying a computer-controlled cutting machine for £80,000. About a third of its sales are made-to-order tables in unusual sizes. Analyse how the machine might affect Hartwood Furniture. [6]

8. Fenwick Chocolates buys 3,000 kg of chocolate in each of 24 deliveries a year. Supplier P charges £6.20 a kg and delivered late on 6 of the 24 deliveries last year. Supplier Q charges £6.55 a kg and delivered late once. Each late delivery stops production and costs Fenwick £1,500 in lost output. (a) Calculate how much more Fenwick would pay Supplier Q than Supplier P over a year, based on price only. [4] (b) Justify which supplier Fenwick should choose. [6]

9. Petal Post sells flowers online and delivers by courier. Last week a courier delivered 40 bouquets two days late. Analyse the impact of this logistics problem on Petal Post. [6]

10. Discuss why trust is important in a business’s relationship with its suppliers. [6]

11. Calder Biscuits uses batch production. It makes 300 packs a day at a unit cost of £5.40. Demand has risen to about 600 packs a day and the owner is considering a flow line costing £250,000. The line could make 900 packs a day at a unit cost of £3.90 when running at full capacity. Calder changes its flavours each season. (a) Calculate the percentage fall in unit cost if the flow line is used at full capacity. Give your answer to 1 decimal place. [3] (b) Evaluate whether Calder Biscuits should buy the flow line. [8]

12. Ashby Cabinets averages £60,000 of materials in stock and wants to move to JIT, cutting average stock to £15,000. Storage, insurance and waste cost 8% a year of stock value. Its main supplier was late on 3 of the last 20 orders. A late order stops assembly for one day, losing 12 cabinets with £85 profit each. Ashby would place about 40 orders a year. (a) Calculate the yearly saving in holding costs from moving to JIT. [3] (b) Evaluate whether Ashby Cabinets should move to JIT. [8]

Answers

1. Stock control in which materials or parts arrive only when they are needed for production [1], so the business holds very little stock [1]. [2] Examiner insight: A definition tends to gain credit when it says when the stock arrives and what that means for the amount held.

2. A: job production [1]. B: flow production [1]. C: batch production [1]. [3] Examiner insight: Match the clue in the stem: resetting between groups points to batch, a continuous line to flow.

3. Productivity before = 960 ÷ 8 = 120 candles per worker [1]. After = 1,260 ÷ 9 = 140 [1]. Change = (140 − 120) ÷ 120 × 100 [1] = 16.7% [1]. [4] Examiner insight: Show the working. Using total output instead of output per worker gives a different percentage.

4. Flow production makes very large quantities on one line [1]. Fixed costs such as the machinery are spread over many units, so each unit carries a small share [1]. The business can then keep its cost per unit low and may be able to charge a competitive price [1]. [3] Examiner insight: Explain answers tend to gain credit when a point is followed by two linked expansions. “It is cheaper” alone stays at one point.

5. (a) 500 bags [1]. [1] (b) Fall in stock = 500 − 200 = 300 bags [1]. Days = 300 ÷ 25 = 12 days [1]. [2] (c) Use during the lead time = 25 × 4 = 100 bags [1]. Stock on arrival = 200 − 100 = 100 bags [1]. [2] (d) Delivery = 500 − 100 [1] = 400 bags [1]. [2] Examiner insight: In part (c) stock keeps falling while the order travels, so take the lead time off the reorder level.

6. A late or wrong delivery leaves too little stock [1], so production stops and orders may be late or lost [1]. [2] Examiner insight: Outline answers need two linked points; a bare risk is one.

7. Faster cutting could raise productivity, so each worker produces more tables [1]. Computer control gives consistent cuts, improving quality and reducing waste [1]. The £80,000 cost adds a large fixed cost, which is hard to cover if sales are uncertain [1]. A programmable machine can be reset for a new size, which helps with the made-to-order third of sales [1]. However, setting it up for each unusual size takes time and skilled staff [1]. Overall it suits Hartwood if batch orders are large enough to cover the cost [1]. [6] Examiner insight: Analyse answers tend to gain credit when points are tied to the business in the stem, such as the batches of 20. General lists stay descriptive.

8. (a) Supplier P per delivery = 3,000 × 6.20 = £18,600 [1]. Supplier Q = 3,000 × 6.55 = £19,650 [1]. Difference = £1,050 per delivery [1]. Over 24 deliveries = 24 × 1,050 = £25,200 [1]. [4] (b) Late deliveries cost Supplier P 6 × 1,500 = £9,000 and Supplier Q 1 × 1,500 = £1,500 [1]. Supplier Q saves 9,000 − 1,500 = £7,500 [1]. Net, Supplier Q is still 25,200 − 7,500 = £17,700 dearer a year [1]. Supplier Q is more reliable, which protects customers and Fenwick’s reputation, and this is not counted in the figures [1]. However, a late rate of 25% (6 of 24) for Supplier P is high [1]. I recommend Supplier P, because the price saving is far larger than the cost of lateness, but Fenwick should hold a small buffer and review the choice if late deliveries lose customers [1]. [6] Examiner insight: Justify answers tend to gain credit when they use the figures and end with a clear recommendation.

9. Customers receive flowers after the date they wanted, so the bouquets may be worthless to them [1]. Refunding or replacing 40 orders raises costs and cuts profit [1]. Customers may leave poor reviews, and the online business depends on its reputation [1]. Satisfaction falls because customers expected reliability, so repeat orders may fall [1]. A more reliable courier may cost more, but protects future sales [1]. Reviews can also reach people who never ordered [1]. [6] Examiner insight: Analyse answers tend to gain credit when the chain of consequences is clear: delay, cost, reputation, satisfaction.

10. Trust means believing the supplier will deliver the right quality, on time and at the agreed price [1]. If the business trusts the supplier, it can hold less stock, which saves storage cost [1]. It is more likely to get help in a shortage [1]. Trust can lead to better terms, such as discounts, because both sides want a long relationship [1]. Without trust the business may check every delivery and keep large buffers, adding cost and time [1]. However, trust does not replace checking quality [1]. [6] Examiner insight: Discuss questions have no context, so credit tends to go to developed points. One point only, however long, limits the mark.

11. (a) Fall = 5.40 − 3.90 = £1.50 [1]. Percentage = 1.50 ÷ 5.40 × 100 [1] = 27.8% [1]. [3] (b) Unit cost falls by 27.8% at full capacity, which could raise profit per pack or allow lower prices [1]. The batch method makes only 300 packs against demand of 600, so without change Calder cannot meet half the demand [1]. At 600 packs a day the line is used at 600 ÷ 900 = 66.7% of capacity [1]. At that level the fixed costs are spread over fewer packs than at full capacity, so the unit cost is likely to be above £3.90 [1]. The £250,000 cost needs enough sales to repay it [1]. Changing flavours each season reduces flexibility, because a flow line is hard to adjust [1]. Adding batch capacity costs less and keeps flexibility, although unit cost stays high [1]. On balance I would buy the line if demand looks lasting and the flavour range can be limited; if demand is uncertain, adding batch capacity is safer [1]. [8] Examiner insight: Evaluate answers tend to gain credit when they use the numbers, weigh both sides and reach a supported judgement.

12. (a) Holding cost now = 60,000 × 0.08 = £4,800 [1]. Under JIT = 15,000 × 0.08 = £1,200 [1]. Saving = £3,600 [1]. [3] (b) The holding cost saving is £3,600 a year [1]. Late orders: 3 of 20 is 15%, so about 40 × 0.15 = 6 late orders a year [1]. Each costs 12 × 85 = £1,020, so about £6,120 a year [1]. On these figures JIT costs about 6,120 − 3,600 = £2,520 more than it saves [1]. JIT also frees space and reduces waste, which the figures do not count [1]. Late orders could also harm Ashby’s reputation [1]. Ashby should not move to JIT with this supplier, because the risk outweighs the saving [1]. A more reliable supplier could reverse this [1]. [8] Examiner insight: Evaluate answers tend to gain credit when the calculated saving is compared with the calculated risk before a judgement is made.

Where marks are usually lost

• Defining JIT as holding “no stock”.
• Calculating productivity from total output instead of output per worker.
• Ignoring the lead time when finding the stock at delivery.
• Listing technology benefits without balancing them against cost and flexibility.
• Choosing the cheapest supplier without costing late deliveries.
• Leaving out a recommendation in a justify or evaluate answer.

Next steps

• Recap with the revision notes and the study guide.
• Course hub: Edexcel GCSE Business and the printable checklist.
• Take the free diagnostics.
• Book a free trial class.

Frequently asked questions

What topics do these Edexcel GCSE Business operations questions cover? They cover Theme 2 topic 2.3 of Pearson Edexcel GCSE Business (1BS0): job, batch and flow production, the impact of technology, bar gate stock graphs, just in time stock control, and choosing and working with suppliers.

Are the formulae for productivity and unit cost given in the exam? No. The specification lists formulae in Appendix 3 but they are not provided in the examinations, so learn productivity (output ÷ number of workers) and unit cost (total cost ÷ units produced) before the exam.

What is a common mistake when defining just in time stock control? Saying JIT means holding no stock at all. JIT means materials arrive only when they are needed for production, so the business holds very little stock, not none.

How should you answer a question that asks you to choose a supplier? Compare suppliers on total cost, including delivery and the cost of late deliveries, rather than on price alone. Then weigh up quality, reliability and trust and finish with a clear recommendation.

Official syllabus

Pearson Edexcel Level 1/Level 2 GCSE (9-1) in Business (1BS0), Specification, Issue 2, July 2022, published by Pearson Education Limited. Theme 2: Building a business, Topic 2.3 Making operational decisions, items 2.3.1 Business operations and 2.3.2 Managing stock (working with suppliers).