Custom motorcycles (CM) $$\(\mathrm{CM}\)$$ is a private limited company. It was set up by Joyce, who identified a gap in the market for specialist motorcycle components. CM's engineers make the components using job production. The engineers are highly skilled, trained and motivated and very proud of their high-quality products which are sold using price skimming. CM was featured in a popular motorcycle magazine in autumn 2022, which has increased 5 CM's reputation for quality unique products. This led to an increase in CM's sales as shown in Fig. 2.1. Lead times for CM's products have increased from 4 weeks to 10 weeks. This has put additional pressure onto CM's engineers, who are salaried employees. They often have to 10 work evenings and weekends. Harry, the Sales Manager, thinks demand is going to continue to increase. He wants CM to employ more skilled engineers and continue to use job production. However, Joyce wants $$\(\mathrm{CM}\)$$ to invest in new technology and change from using job production to batch production. Evaluate whether CM should change its method of production.

Business
IGCSE&ALevel
CAIE
Exam No:9609_w23_qp_23 Year:2023 Question No:2(d)

Answer:









Knowledge points:

4.1.1.1 the use of factors of production: land, labour, capital and enterprise
4.1.1.2 the stages of the transformational process: inputs to outputs
4.1.1.3 the contribution of operations to added value
4.1.2.1 the importance of efficiency, effectiveness, productivity and sustainability
4.1.2.2 measurement of labour productivity
4.1.2.3 the impact on a business of measures to improve sustainability of operations
4.1.3.1 the benefits and limitations of capital intensive operations
4.1.3.2 the benefits and limitations of labour intensive operations
4.1.4.1 differences between methods – advantages and disadvantages of each method
4.1.4.2 the problems of changing from one method to another
4.3.1.1 the measurement of capacity utilisation
4.3.1.2 the impact of operating under or over maximum capacity on a business
4.3.1.3 methods of improving capacity utilisation
4.3.2.1 the impact of outsourcing on a business

Solution:

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