AQA A-Level Business: Operations

Read the following case study and answer the question that follows.

The following case study was written for this exercise.

Castleford Ceramics Ltd is a UK manufacturer of mid-market tableware and kitchenware, employing around 320 staff at a single factory in West Yorkshire. It sells to department stores, independent retailers and increasingly through its own website, where buyers value the brand's "designed and made in Britain" story. In 2025 the business produced about 2.1 million pieces against an installed capacity of 3.0 million, so its plant runs well below full capacity, and its unit costs have risen as energy and wage costs have climbed faster than prices.

The board is under pressure on margin. One director proposes relocating most production to a contract manufacturer in South-East Asia, where labour costs are far lower, arguing this would cut unit costs sharply, allow far larger production runs and let Castleford compete on price. Others on the board are worried: they point to the loss of the "made in Britain" positioning that supports the brand's premium, the difficulty of controlling quality and dependability at long distance, the loss of flexibility to respond quickly to small bespoke orders, and the reputational and redundancy consequences of closing the Yorkshire factory. A third group argues the better route is to invest in automation and lean production at the existing site to raise capacity utilisation and labour productivity at home.

Question: Evaluate whether Castleford Ceramics Ltd should relocate production overseas to improve its operational performance. [25 marks]

Read the following case study and answer the question that follows.

The following case study was written for this exercise.

Brightway Electronics Ltd assembles smart-home devices at a factory in the Midlands. At present it holds large buffer stocks of components, ordering in big batches from a range of suppliers to be sure it never runs out. Warehousing is expensive, a good deal of cash is tied up in stock, and some components become obsolete before they are used as designs change quickly.

The operations director wants to move to just-in-time (JIT) stock management, with components delivered in small quantities only as they are needed on the assembly line, holding almost no buffer stock. She argues this would free up cash, cut warehousing costs and reduce waste from obsolescence. Others on the board are cautious. Two of Brightway's key components come from a single overseas supplier whose deliveries have been unreliable in the past, and the factory has occasionally lost days to shipping delays and port congestion. They worry that with no buffer stock, a single late delivery could halt the whole assembly line and that JIT depends on a level of supplier reliability Brightway may not have.

Question: Assess the value of adopting just-in-time (JIT) stock management for Brightway Electronics Ltd. [16 marks]

Read the following case study and answer the question that follows.

The following case study was written for this exercise.

Pennine Joinery Ltd makes fitted kitchens and bespoke furniture in a workshop employing 40 skilled and semi-skilled staff. Output per worker has been falling: the workshop relies on older machinery that frequently breaks down, several staff have had little recent training, and workers often wait for materials and instructions, leaving them idle for part of the day. The owners want to raise labour productivity so that the workshop produces more from the same workforce and lowers its unit costs.

Question: Analyse two ways in which Pennine Joinery Ltd could improve its labour productivity. [9 marks]

Meridian Furniture Ltd manufactures flat-pack furniture at a single factory. The table below shows the factory's operations data for one month.

Operations data (one month)	Value
Actual output	36,000 units
Maximum possible output (capacity)	45,000 units
Number of production workers	60

Calculate both the factory's capacity utilisation and its labour productivity for the month, and briefly state what these figures suggest about the factory's use of its resources. (6 marks)

Harlow Bottling Ltd runs a drinks-bottling plant whose machinery, rent and supervisory wages are largely fixed costs. Demand has fallen, and the plant is now running at only 55 per cent of its capacity.

Explain why operating well below full capacity is likely to raise Harlow Bottling Ltd's unit costs. (5 marks)

Selby Components Ltd makes moulded plastic parts. In one month its total production costs were £612,000 and it produced 34,000 units.

Calculate Selby Components Ltd's unit cost (average cost) for the month. (4 marks)