IB DP Business Management: Lean production and quality management (HL only) – 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 – the IB holds copyright in its own papers. Use these alongside the official past papers available through your school or the IB store.

These questions cover section 5.3, Lean production and quality management (HL only), in Unit 5 of the IB Business management guide, first assessment 2024. All businesses and figures are invented. Read the study guide first, or use the revision notes as a summary. The course hub is IB DP Business Management, the printable list is the syllabus checklist, and the free diagnostics show where to start.

Questions

1. Define the term kaizen. [2]

2. Identify two features of lean production. [2]

3. Explain the difference between quality control and quality assurance. [4]

4. Haverdell Joinery makes 8,000 cabinets a year. Offcut waste currently equals the timber for 11% of cabinets, and a lean redesign cuts this to 7%. The timber for one cabinet costs USD 15. Calculate the annual saving in timber costs. [3]

5. Oakrun Electronics has 60 employees. Each makes an average of 2.5 improvement suggestions a year under its kaizen scheme, and 40% of all suggestions are adopted. Each adopted suggestion saves USD 180 a year.

(a) Calculate the total annual saving from adopted suggestions. [3] (b) Explain one way Oakrun’s managers could encourage employees to keep making suggestions. [2]

6. Seddon Paints is changing from just-in-case to just-in-time. Average inventory will fall from USD 150,000 to USD 60,000. Holding costs are 15% of inventory value. The new system adds USD 6,000 a year in extra delivery costs.

(a) Calculate the net annual saving from the change. [4] (b) Analyse one risk of just-in-time for Seddon Paints. [3]

7. Explain two features of cradle to cradle design and manufacturing. [4]

8. Dernby Home Goods ships 40,000 orders a year. Its returns rate is 7.5%. A best-performing rival, chosen as its benchmark, has a returns rate of 2.0%. Each return costs Dernby USD 18 to process.

(a) Explain how a quality circle could help Dernby reduce its returns. [3] (b) Calculate the annual cost of returns that Dernby would save if it matched the benchmark. [3]

9. Sandrey Audio makes 120,000 speakers a year. Its defect rate is 5%, and each defect costs USD 6 to repair. Quality is checked by inspectors at the end of the line. The managing director is considering total quality management (TQM). Training would cost USD 20,000 once. Running costs would be USD 4,000 a year. The defect rate is expected to fall to 2%. Some supervisors fear the change will take time and that staff will resist it.

(a) Calculate the annual saving from TQM after running costs. [3] (b) Calculate the payback period on the training cost, in months, to the nearest tenth of a month. [2] (c) Evaluate whether Sandrey Audio should adopt TQM. [6]

10. Wrenford Instruments is considering certification to an international quality standard. The certification costs USD 14,000 once, plus USD 3,000 a year in audit fees. Managers expect sales of USD 650,000 a year to rise by 9% as a result. The contribution margin is 30% of sales revenue.

(a) Calculate the extra annual contribution after the audit fees. [3] (b) Calculate the payback period on the USD 14,000 certification cost, in months, to the nearest tenth of a month. [2] (c) Explain why international quality standards may matter to Wrenford’s customers. [3]

11. Fallowby Furniture employs 90 skilled people who have worked there for many years. It buys its timber from a single supplier 200 km away, which has delivered late several times this year. Timber inventory is worth USD 300,000. Seven percent of finished items fail inspection or are returned. The owner is considering just-in-time, kaizen and TQM together. Recommend which methods Fallowby should adopt, and justify your choice. [10]

Answers

1. Kaizen is continuous improvement [1] delivered by many small changes made by employees at all levels [1]. [2] Examiner insight: Credit comes from showing both the continuous nature and the involvement of employees, so a bare “improving things” is usually too thin.

2. Less waste [1] and greater efficiency [1]. [2] Examiner insight: “Identify” asks only for the features, so extra explanation earns nothing further, and answers that name the guide’s two features are the safest.

3. Quality control inspects or tests output to detect defects [1], often at the end of production, so it deals with defects after they happen, for example rejecting faulty units [1]. Quality assurance builds quality into the whole process through training, procedures and supplier checks [1], so it aims to prevent defects from happening [1]. [4] Examiner insight: A “difference” question gains credit when both sides are contrasted, so answers that describe only one method rarely reach full marks.

4. Cabinets’ worth of timber lost before: 8,000 × 0.11 = 880 [1]. After: 8,000 × 0.07 = 560 [1]. Saving: (880 − 560) × 15 = 320 × 15 = USD 4,800 [1]. [3] Examiner insight: Showing the before and after figures lets an examiner credit the method even if the final multiplication slips.

5. (a) Suggestions: 60 × 2.5 = 150 [1]. Adopted: 150 × 0.4 = 60 [1]. Saving: 60 × 180 = USD 10,800 [1]. [3] (b) Reward or recognize adopted ideas, for example through bonuses or public thanks [1], because employees then see that their effort is valued and keep contributing [1]. [2] Examiner insight: An explain question needs a method and a reason, so a bare “give rewards” earns less than one that says why it keeps people suggesting.

6. (a) Holding cost before: 150,000 × 0.15 = USD 22,500 [1]. Holding cost after: 60,000 × 0.15 = USD 9,000 [1]. Gross saving: 22,500 − 9,000 = USD 13,500 [1]. Net saving: 13,500 − 6,000 = USD 7,500 [1]. [4] (b) With little inventory, a late delivery of raw materials such as pigments or tins [1] can halt production because there is no buffer [1], so Seddon may miss customer orders and damage its reputation [1]. [3] Examiner insight: An “analyse” answer is stronger when the risk is developed into a consequence for the named business rather than left as a general drawback of JIT.

7. Feature one: products are designed so materials can be reused or safely returned to nature [1], which removes the idea of waste because used materials become inputs for new products [1]. Feature two: products are designed to be taken apart [1], so parts can be separated and recovered at the end of the product’s life [1]. [4] Examiner insight: Each feature needs a brief explanation to earn its second mark, so naming two features without development gives half credit at most.

8. (a) A quality circle is a small group of employees who meet regularly [1] to find the causes of returns, for example packing or product faults [1], and propose solutions that people closest to the work can see [1]. [3] (b) Returns now: 40,000 × 0.075 = 3,000 [1]. Returns at benchmark: 40,000 × 0.02 = 800 [1]. Saving: (3,000 − 800) × 18 = 2,200 × 18 = USD 39,600 [1]. [3] Examiner insight: Linking the circle to the case (returns, packing, product faults) tends to earn more than a general description of what circles are.

9. (a) Defects now: 120,000 × 0.05 = 6,000, and after: 120,000 × 0.02 = 2,400, so 3,600 fewer [1]. Repair saving: 3,600 × 6 = USD 21,600 [1]. Net of running costs: 21,600 − 4,000 = USD 17,600 [1]. [3] (b) Payback = 20,000 ÷ 17,600 = 1.136 years [1]. In months: 1.136 × 12 = 13.6 months [1]. [2] (c)

• Net saving of USD 17,600 a year pays back the training in about 13.6 months [1].
• Defects fall from 5% to 2%, so fewer faulty speakers reach customers, supporting reputation and repeat sales [1].
• TQM makes all staff responsible for quality, which adds employee involvement and can motivate, unlike end-of-line inspection alone [1].
• Against this, training time and culture change will take time, and supervisors expect resistance, so savings may arrive later than forecast [1].
• Success depends on management commitment and on the quality of parts from suppliers, which the case does not state [1].
• Judgement: adopt TQM, since the payback is about a year, but phase it in with supervisor involvement [1]. [6] Examiner insight: An evaluation answer is stronger when it uses the calculated figures, sets them against the human and timing issues, and then commits to a reasoned decision.

10. (a) Extra sales: 650,000 × 0.09 = USD 58,500 [1]. Extra contribution: 58,500 × 0.30 = USD 17,550 [1]. After audit fees: 17,550 − 3,000 = USD 14,550 [1]. [3] (b) Payback = 14,000 ÷ 14,550 = 0.962 years [1]. In months: 0.962 × 12 = 11.5 months [1]. [2] (c) Customers can trust that products or processes meet an agreed independent requirement [1], so they need not check the supplier themselves [1], and some buyers will only order from certified suppliers, which widens Wrenford’s market, including abroad [1]. [3] Examiner insight: A payback figure needs its unit stated, and a calculation answer that gives years where months were asked tends to lose the last mark.

11. Credit goes for a balanced, case-based recommendation such as the following.

• Lean production aims at less waste and greater efficiency, so methods should be judged by how well they cut waste for Fallowby [1].
• JIT would cut the USD 300,000 inventory and its holding costs and free cash [1].
• But the single distant supplier has delivered late several times, so JIT would risk stopping production with no buffer [1].
• Kaizen suits a skilled, long-serving workforce who know the process and can suggest low-cost improvements [1].
• Kaizen gains are gradual and take employee time, so it will not fix a large problem quickly [1].
• TQM targets the 7% failure and return rate, which should protect reputation and reduce rework costs [1].
• TQM needs training, management commitment and a culture where everyone owns quality, which takes time and cost before benefits appear [1].
• Weighing up: JIT’s benefits are real but conditional on supplier reliability, while kaizen and TQM rely on assets Fallowby already has, its workforce [1].
• Recommendation: adopt kaizen and TQM first, and delay JIT until a reliable or additional supplier is secured [1].
• Justification that links the choice to the evidence (failure rate, late deliveries, skilled staff) and notes that JIT would release cash sooner [1]. [10] Examiner insight: A “recommend” and “justify” response improves when it chooses between the methods rather than praising all three, and when the reasons come from the facts in the stem.

Where marks are usually lost

• Defining kaizen or TQM in one vague phrase such as “getting better”, with no mention of employees or continuous effort.
• Describing JIT as “no stock” without linking it to supplier reliability.
• Mixing up quality control (detect) and quality assurance (prevent).
• Not showing the before and after figures in a savings calculation.
• Giving payback in years when months are asked, or leaving the unit out.
• Writing only the advantages of a method in an evaluation.
• Naming a quality standard without saying why it matters to customers.

Next steps

• Review the revision notes and the study guide.
• Open the IB DP Business Management hub and tick off the syllabus checklist.
• Try all free 10-minute diagnostics at /diagnostics/.
• Book a free trial class at /trial/.

Frequently asked questions

Is lean production and quality management HL only in IB Business Management? Yes. Section 5.3, Lean production and quality management, is labelled HL only in Unit 5 of the IB Business management guide, first assessment 2024.

What are common mistakes on lean production and quality questions? Students often define kaizen or TQM in one vague phrase such as “getting better”, describe JIT as “no stock” without linking it to supplier reliability, and mix up quality control with quality assurance. Leaving out before-and-after figures in a savings calculation, or giving payback in years when months are asked, also loses marks.

How do you calculate a saving from reducing a defect or scrap rate? Convert each rate into units by multiplying output by the rate, multiply by the cost per unit, do this before and after, then subtract. Show both figures so the working can be credited.

How should you evaluate a quality standard in an exam answer? Weigh the benefits, such as customer trust and access to buyers who require certification, against fees, audits, paperwork and staff time. Say why the standard matters to customers in the case, and remember that certification shows a system exists, not that every unit is perfect.

Official syllabus

IB Diploma Programme Business management guide, first assessment 2024, International Baccalaureate Organization, section 5.3, Lean production and quality management (HL only). Marlbridge is not affiliated with the IB.