Exam-style Questions: Production Decision Making

1. The decision tree below represents the problem faced by a manager considering the introduction of a new product. Cash flows are shown in £million and probabilities are marked.

The manager could employ a firm of consultants to give advice on either "launch" or "do not launch". The cost of employing the consultants is £100,000.

a) (i) Calculate the probabilities A and B.

(ii) Calculate the expected values (cashflows) at C and D.

b) Advise the manager whether she should employ the firm of consultants.

(Marks available: 10)

Answer

Answer outline and marking scheme for question: 1

Give yourself marks for mentioning any of the points below:

A = 0.3

B = 0.45

C = 4.15

D = 4.17

b) Candidate argument and calculation to decide whether to employ consultans and take their advice.

(Marks available: 10)

2. a) State briefly the key production decisions a business must make to supply its market.

b) How might the objectives of the production department conflict with the objectives of the marketing department?

(Marks available: 10)

Answer

Answer outline and marking scheme for question: 2

Give yourself marks for mentioning any of the points below:

a) Key production decisions a business must take to supply its market: what goods to produce, quantity of product to be supplied, variations of the product to be supplied, which markets to produce for, the nature of raw materials and its suppliers and the conversion of raw materials into the finished product.

b) The production department will wish to keep the volume of production steady so that incoming raw materials, workload and finished goods remain constant and predictable

The marketing department will wish to increase sales through promotional campaigns and will expect the production department to respond immediately to changes in levels of demand.

They will also expect the production department to accommodate changes in customer orders, to implement the production of newly developed products rapidly and easily.

(Marks available: 10)

3. The owner of a shopping centre plans to extend the centre by building new shopping units and finding tenants for them. He has listed the jobs to be done and the time each job will take.

a) Draw a critical path diagram. Identify the critical path and state the total time required to complete the whole project.

b) If the time required for job F could be reduced by 2 weeks, what would be the effect on the time required for the project and what would be the new critical path?

(Marks available: 10)

Answer

Answer outline and marking scheme for question: 3

Give yourself marks for mentioning any of the points below:

a) PICTURE

Total time 30

CP A E F G I

b) Total time 29

CP A D G I

(Marks available: 10)

4.

a) How may the roles of a manager and a leader differ in business?

b) Explain briefly in what situations a manager might adopt different management styles.

(Marks available: 10)

Answer

Answer outline and marking scheme for question: 4

Give yourself marks for mentioning any of the points below:

a) A leader normally sets objectives.

A manager organises resources to achieve the objectives.

(5 marks)

b) Depends on situation, time, and the decision to be made.

For example: a logistics manager of a transport company will tend to direct his drivers. He may adopt a different style when managing office staff.

(5 marks)

(Marks available: 10)