Operations Management (AS Level)

What is capacity utilization?

• Maximum output level
• Proportion of maximum output achieved
• Minimum output level
• Resources available

Answer explanation

Capacity utilization measures how efficiently a business uses its resources relative to maximum capacity.

Which method manages inventory with minimal stock levels?

• Just-in-Case (JIC)
• Just-in-Time (JIT)
• Economic Order Quantity (EOQ)
• Maximum Inventory Control

Answer explanation

JIT minimizes inventory levels by ordering goods only when needed, reducing storage costs.

What is a key benefit of adopting sustainable practices for a business?

• Higher short-term profits

• Improved brand reputation and customer loyalty

• Increased waste and resource costs

• Reduced employee satisfaction

Answer explanation

Adopting sustainable practices enhances a business's brand reputation, builds customer loyalty, and attracts socially responsible investors. It also helps businesses lower long-term costs by optimizing resources and reducing waste

What is the Economic Order Quantity (EOQ)?

• Maximum inventory
• Optimal inventory level
• Reorder quantity
• Total inventory costs

Answer explanation

EOQ minimizes both holding and ordering costs by determining the optimal inventory level.

What does "added value" mean in business?

• Total revenue
• Difference between input costs and price
• Total profit
• Resources saved

Answer explanation

Added value is the enhancement a business adds to raw materials through production, reflected in the final selling price.

What happens when a business operates at maximum capacity?

• Fixed costs increase
• Fixed costs are spread across more units
• Employee stress decreases
• Machine maintenance improves

Answer explanation

Operating at maximum capacity spreads fixed costs over more units, reducing per-unit costs.

Which inventory system minimizes the risk of obsolescence?

• Just-in-Time (JIT)
• Just-in-Case (JIC)
• Maximum Inventory
• Buffer Inventory

Answer explanation

JIT minimizes inventory levels, reducing the likelihood of items becoming obsolete.

How is labor productivity calculated?

• Total output divided by total workers employed

• Total input divided by total output
• Output per worker
• Input per hour

Answer explanation

Labor Productivity is measured as total output per worker employed

What does operating with excess capacity mean?

• Maximum utilization
• Producing below capacity
• Using only fixed assets
• Exceeding production demand

Answer explanation

Excess capacity occurs when a business produces below its potential maximum output.

What is a finished good in inventory terms?

• Raw materials awaiting processing
• Goods ready for sale
• Work-in-progress items
• Surplus inventory

Answer explanation

Finished goods are completed products ready to be sold to customers.