Section 2.4 — Annotated model answers for lean production, JIT, quality management, and capacity utilisation.
These model answers demonstrate how to structure responses for Edexcel International A-Level (IAL) Economics and Business exams. Each answer includes a mark scheme breakdown, PEEL structure (where applicable), annotated paragraphs, and examiner commentary explaining what earns marks at each band.
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8 marks
Unit 2 · 2.4 Resource Management · Analysis
Analyse: the benefits and risks of adopting lean production methods such as just-in-time (JIT).
Mark Scheme Breakdown
1–2 marksKnowledge of lean production and JIT (minimising waste, holding zero/minimal stock)
3–5 marksApplication of benefits (reduced costs, less waste) and risks (supply disruption)
6–8 marksDeveloped analysis of conditions needed for success and consequences of failure
KKnowledge/Definition
AApplication
AnAnalysis
Model Answer
Lean production aims to minimise waste at every stage of the production process. Just-in-time (JIT) is a key lean method where materials are delivered only when needed in the production process, eliminating the need to hold large stocks. K
A major benefit is the reduction in stockholding costs — the business saves on warehousing, insurance, and the risk of stock becoming obsolete or damaged. A This frees up working capital that can be invested elsewhere in the business, improving cash flow and profitability. Lean methods also encourage a culture of continuous improvement (kaizen), where employees identify and eliminate inefficiencies. An
However, JIT is highly vulnerable to supply chain disruptions. A If a supplier delivers late or a key component is unavailable, the entire production line can halt because there is no buffer stock to absorb the delay. This was demonstrated during the COVID-19 pandemic when global supply chain disruptions caused major production stoppages for manufacturers using JIT. An JIT also requires reliable, flexible suppliers who can deliver small quantities frequently, and a highly organised production schedule. These conditions are easier to achieve for large firms like Toyota (which pioneered JIT) than for small businesses with less bargaining power over suppliers. An
Examiner Commentary
Examiners reward real-world examples (COVID-19, Toyota) and analysis of the conditions under which lean production works. Simply listing benefits and risks without development limits the mark to the middle band.
Likely Score7 / 8
4 marks
Unit 2 · 2.4 Resource Management · Knowledge & Application
Explain: what is meant by capacity utilisation and why low capacity utilisation is a problem.
Mark Scheme Breakdown
1–2 marksDefinition: actual output as a percentage of maximum output
3–4 marksApplication: why low utilisation increases unit costs
KKnowledge/Definition
AApplication
Model Answer
Capacity utilisation measures how much of a firm's maximum possible output is actually being used, calculated as: (actual output ÷ maximum output) × 100. K A factory that could produce 10,000 units but only produces 6,000 has capacity utilisation of 60%. A
Low capacity utilisation is a problem because fixed costs are spread over fewer units, raising the average cost per unit. K A factory paying £100,000 in rent produces at £10 per unit at full capacity (10,000 units) but £16.67 per unit at 60% (6,000 units). A This makes the firm less competitive and reduces profit margins.
Examiner Commentary
Clear definition with formula and numerical example. The fixed cost per unit calculation makes the problem concrete — £10 vs £16.67 per unit is immediately convincing. Avoid just saying "costs increase" — show why using the fixed cost/output relationship.
Likely Score4 / 4
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