IB Business HL: 5.5

Efficiency in production is not usually measured by using which of the following measures? A. Labour turnover B. Unit costs of production C. Output per worker D. Output per machine hour

C. Output per worker

A disadvantage of low capacity utilization is A. Higher indirect costs of production B. Higher fuel and energy bills C. Higher average fixed costs of production D. Overtime payment to staff

C. Higher average fixed costs of production

The stock handling method based on having stocks being delivered only when they are needed is known as A. Re-order levels B. Usage rate C. Just-in-time D. Just-in-case

C. Just-in-time

One advantage of using a just-in-case stock management system is that A. There is flexibility to meet sudden changes in demand B. Buffer stocks can be minimised C. Stockpiling is less likely to occur D. Productive efficiency is encouraged

A. There is flexibility to meet sudden changes in consumer demand

The rate at which stock levels are used up in the production process is known as A. Usage rate B. Lead time C. Re-order quantity D. Re-order level

A. Usage rate

What is the re-order quantity of Atkinson Farms Ltd? A. 4500 kg B. 3000 kg C. 1500 kg D. zero

B. 3000 kg

Ifa firm's maximum productive capacity is 35 000 units per month but it actually produces 28 000 units per month, then its capacity utilization is A. 125% B. 80% C. 25% D. 20%

B. 80%

Stockpiling means that a business A. Operates at a level lower than its buffer stock B. Builds up excessive levels of inventory C. Produces on a larger scale to benefit from cost savings D. Plans for a large safety margin

B. Builds up excessive levels of inventory

The production level where unit costs are at their lowest is known as the A. Buffer stock B. Economic order quantity C. Productivity rate D. Capacity utilization rate

B. Economic order quantity

The outsourcing of business activities to an external agency or third party that is located overseas is known as A. Outsourcing B. Offshoring C. Globalization D. Subcontracting

B. Offshoring

A danger for a restaurant operating at full capacity is that A. Food quality will fall B. Queuing times will rise C. Staffing costs will rise D. Working capital will be stretched

B. Queuing times will rise

What is the term given to the practice of reassigning business operations to an external firm in order to improve cost effectiveness? A. Offshoring B. Subcontracting C. Delegation D. Portfolio working

B. Subcontracting

Which incident might cause a firm to rely on its buffer stocks? A. Lower costs of production B. Sudden increase in consumer demand C. Shorter lead times D. Timely deliveries from suppliers

B. Sudden increase in consumer demand

What is the buffer stock for Atkinson Farms Ltd? A. 4500 kg B. 3000 kg C. 1500 kg D. Zero

C. 1500 kg

Subcontracting does not benefit from A. Lower unit costs of labour B. Greater labour flexibility C. Greater job security D. Improved labour productivity

C. Greater job security

Which of the following is not a type of stock for a business? A. Work-in-progress B. Raw materials C. Ordinary shares D. Finished goods

C. Ordinary shares

One drawback of outsourcing operations to overseas firms is that A. They might have a more skilled labour force B. They might have lower costs of production C. The quality production might be more difficult to monitor D. Geographical distance becomes a major communication barrier

C. The quality production might be more difficult to monitor

A drawback of holding too much stock is A. Stocks are highly liquid assets B. Inflexibility in production levels C. Working capital is tied up D. Share prices are likely to drop due to excess production

C. Working capital is tied up

What is the lead time for Atkinson Farms Ltd? A. 8 weeks B. 6 weeks C. 2 weeks D. 1 week

D. 1 week

Which of the following is not a reason for offshoring? A. Workforce flexibility B. Reduced costs of production C. The use of specialist labour D. Consideration and observation of overseas regulations

D. Consideration and observation of overseas regulations

Just-in-time does not suffer from A. Total reliance on third party suppliers B. High administrative costs C. Inflexibility in meeting unexpected changes in demand D. Higher levels of wastage and reworking

D. Higher levels of wastage and reworking

Firms with ____ profit margins and ____ levels of break-even will benefit from high capacity utilization. A. High, High B. Low, Low C. High, Low D. Low, High

D. Low, High

Which of the following is not a quantitative method that can be used to help with decisions about the cost to make (CTM) and cost to buy (CTB)? A. Break-even analysis B. Investment appraisal C. Cost benefit analysis D. Ratio analysis

D. Ratio analysis

Drawbacks of a stock-out do not include A. Disgruntled customers B. Loss of sales C. Negative impact on cash flows D. Storage costs

D. Storage costs

Capacity utilization for a business facing high growth rates could be improved by A. Holding lower levels of stock B. Reducing lead times C. Using just-in-time stock control D. Subcontracting work

D. Subcontracting work