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    S4 Production of Goods Services and Break-Even Analysis

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    Steven Patrick Yu
    Northern Thai Restaurant produces ready-made meals using batch production. It has received a large order from a supermarket chain for 5,000 units per week for 12 months. To fulfill this order, Northern Thai Restaurant will need to invest in a new flow production line and introduce just-in-time inventory management to manage the increased raw materials. Just-in-time inventory management could benefit Northern Thai Restaurant by reducing inventory costs and ensuring the right materials are available when needed in production. The Operations Director should carefully consider the order and potential benefits like increased revenue and economies of scale, but must also consider the investment and changes required to the production process.

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    © All Rights Reserved
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    S4 Production of Goods Services and Break-Even Analysis

    Uploaded by

    Steven Patrick Yu
    39 views5 pages
    Northern Thai Restaurant produces ready-made meals using batch production. It has received a large order from a supermarket chain for 5,000 units per week for 12 months. To fulfill this order, Northern Thai Restaurant will need to invest in a new flow production line and introduce just-in-time inventory management to manage the increased raw materials. Just-in-time inventory management could benefit Northern Thai Restaurant by reducing inventory costs and ensuring the right materials are available when needed in production. The Operations Director should carefully consider the order and potential benefits like increased revenue and economies of scale, but must also consider the investment and changes required to the production process.

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    S4_Production_of_Goods__Services_and_Break-even_Analysis

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    Northern Thai Restaurant produces ready-made meals using batch production. It has received a large order from a supermarket chain for 5,000 units per week for 12 months. To fulfill this order, Northern Thai Restaurant will need to invest in a new flow production line and introduce just-in-time inventory management to manage the increased raw materials. Just-in-time inventory management could benefit Northern Thai Restaurant by reducing inventory costs and ensuring the right materials are available when needed in production. The Operations Director should carefully consider the order and potential benefits like increased revenue and economies of scale, but must also consider the investment and changes required to the production process.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    39 views5 pages

    S4 Production of Goods Services and Break-Even Analysis

    Uploaded by

    Steven Patrick Yu
    Northern Thai Restaurant produces ready-made meals using batch production. It has received a large order from a supermarket chain for 5,000 units per week for 12 months. To fulfill this order, Northern Thai Restaurant will need to invest in a new flow production line and introduce just-in-time inventory management to manage the increased raw materials. Just-in-time inventory management could benefit Northern Thai Restaurant by reducing inventory costs and ensuring the right materials are available when needed in production. The Operations Director should carefully consider the order and potential benefits like increased revenue and economies of scale, but must also consider the investment and changes required to the production process.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    of 5

    Name  

    _______________________________________________          Date  ___________    

    Read  and  analyse  the  case  studies  and  answer  the  questions  that  follow.    

    1.   Northern   Thai   Restaurant   produces   ready-­made   meals   using   the   batch  


    production  method.    

    The   company   has   been   asked   by   a   large   national   supermarket   chain   to  


    supply  it  with  one  of  their  most  popular  dishes.  It  would  need  5,000  units  per  
    week   for   the   next   12   months   and,   if   the   product   proves   popular,   further  
    orders  will  be  placed.    

    Northern  Thai  Restaurant  would  need  to  invest  in  a  new  flow  production  line  
    for  this  order.    

    The  Operations  Director,  Prayut,  realises  this  new  order  will  increase  the  raw  
    materials  he  needs  for  production.  He  is  thinking  about  introducing  just-­in-­
    time  inventory  management.  (17  marks)  

    a.   Define  ‘inventories’.  (1  mark)  


    ______________________________________________________________
    ______________________________________________________________    
     
    b.   Identify  two  inputs  of  the  production  process.  (2  marks)    
       
    Input  1:  _______________________________________________________    
     
    Input  2:  _______________________________________________________  
     
    c.   Identify   and   explain   two   advantages   of   batch   production   to   Northern   Thai  
    Restaurant.  (4  marks)  
     
    Advantage  1:  
    ______________________________________________________________
    ______________________________________________________________    
     
     
     
     
     
    SINGAPORE  SCHOOL  CEBU              SY  2020-­‐2021  
    SECONDARY  3            TERM  3  
    IGCSE  BUSINESS  STUDIES  –  PART  2     TERM  EXAM  
     
    Explanation:    
    ______________________________________________________________
    ______________________________________________________________  
    ______________________________________________________________
    ______________________________________________________________  
     
    Advantage  2:  
    ______________________________________________________________
    ______________________________________________________________  
     
    Explanation:    
    ______________________________________________________________
    ______________________________________________________________
    ______________________________________________________________
    ______________________________________________________________    
     
    d.   Identify   and   explain   two   benefits   of   just-­in-­time   inventory   management   to  
    Northern  Thai  Restaurant.  (4  marks)  
     
    Benefit  1:  
    _____________________________________________________________    
     
    Explanation:  
    _____________________________________________________________
    _____________________________________________________________
    _____________________________________________________________    
     
    Benefit  2:  
    _____________________________________________________________      
     
     

    2    
    SINGAPORE  SCHOOL  CEBU              SY  2020-­‐2021  
    SECONDARY  3            TERM  3  
    IGCSE  BUSINESS  STUDIES  –  PART  2     TERM  EXAM  
     
    Explanation:  
    _____________________________________________________________
    _____________________________________________________________
    _____________________________________________________________    
     
    e.   Do   you   think   Northern   Thai   Restaurant   should   accept   the   order   from   the  
    supermarket   chain?   Justify   your   answer   by   giving   three   strong   points   of  
    argument  with  explanation.  (6  marks)    
     
    ______________________________________________________________
    ______________________________________________________________
    ______________________________________________________________
    ______________________________________________________________
    ______________________________________________________________
    ______________________________________________________________
    ______________________________________________________________
    ______________________________________________________________
    ______________________________________________________________
    ______________________________________________________________
    ______________________________________________________________
    ______________________________________________________________
    ______________________________________________________________
    ______________________________________________________________
    ______________________________________________________________
    ______________________________________________________________
    ______________________________________________________________  
    ______________________________________________________________    
     
     
     
     

    3    
    SINGAPORE  SCHOOL  CEBU              SY  2020-­‐2021  
    SECONDARY  3            TERM  3  
    IGCSE  BUSINESS  STUDIES  –  PART  2     TERM  EXAM  
     
    2.   Mark   Electronics   (ME)   is   a   manufacturer   of   solar   panels.   ME   has   seen   a  
    steady   growth   in   sales  over   the   past  five  years.   In  2012  sales  were   18,000  
    units   and   it   expects   a   15%   increase   in   sales   for   2013.   This   growth   has  
    enabled  ME  to  benefit  from  economies  of  scale.    
     
    ME’s  accountant  keeps  a  tight  control  of  both  fixed  and  variable  costs.  She  
    uses   cost   information   to   produce   break-­even   charts   for   its   most   popular  
    products.  The  Managing  Director  thinks  that  producing  break  even  charts  is  
    a  waste  of  time  and  effort.  (14  marks)    
     
    a.   What  is  meant  by  ‘break-­even’?  (2  marks)    
    ______________________________________________________________    
    ______________________________________________________________    
     
    b.   Calculate  ME’s  expected  sales  for  2013.  (2  marks)    
    ______________________________________________________________    
    ______________________________________________________________    
     
    c.   Using  examples,  explain  the  difference  between  ME’s  fixed  costs  and  variable  
    costs.  (2  marks)    
    ______________________________________________________________    
    ______________________________________________________________  
     
    d.   Identify   and   explain   how   ME   may   have   benefitted   from   any   two   types   of  
    economies  of  scale.  (4  marks)    
     
    Type  1:  
    ______________________________________________________________  
     
    Explanation:  
    ______________________________________________________________    
    ______________________________________________________________    
    ______________________________________________________________  
     
     
     
     
     
    4    
    SINGAPORE  SCHOOL  CEBU              SY  2020-­‐2021  
    SECONDARY  3            TERM  3  
    IGCSE  BUSINESS  STUDIES  –  PART  2     TERM  EXAM  
     
    Type  2:  
    ______________________________________________________________      
     
    Explanation:  
    ______________________________________________________________    
    ______________________________________________________________    
    ______________________________________________________________    
     
     
    e.   Do  you  agree  with  the  Managing  Director  when  he  says  ‘producing  break-­even  
    charts  is  a  waste  of  time  and  effort’?  Justify  your  answer.  Use  the  given  criteria  
    as  your  guide.  (4  marks)  
     
    Definition                                    /1  mark   Analysis      /1  mark  

    Application                                    /1  mark   Evaluation    /1  mark  

     
    ______________________________________________________________
    ______________________________________________________________  
    ______________________________________________________________
    ______________________________________________________________  
    ______________________________________________________________
    ______________________________________________________________
    ______________________________________________________________
    ______________________________________________________________  
    ______________________________________________________________
    ______________________________________________________________
    ______________________________________________________________
    ______________________________________________________________  
    ______________________________________________________________
    ______________________________________________________________
    ______________________________________________________________
    ______________________________________________________________
    ______________________________________________________________  

    5    

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