Refer to Table 1 and lines 45–48. Calculate the:

Mark scheme

Marking points from the official mark scheme (May/June 2022). The mark or mark type is shown in brackets.

1. [1] Labour turnover is number of employees leaving employment / Number employed in a time period × 100
2. [1] (1 mark if no rewardable calculation)
3. [1] Design: 5 / 18 × 100 = 27.78(%)
4. [1] Manufacturing: 1 / 22 × 100 = 4.55 (%)
5. [3] Difference = 27.78 – 4.55 = 23.23(%) or 23.2(%)
6. [0] Likely variations
7. [0] 28 – 5 = 23
8. [0] 27.8 – 4.6 = 23.2
9. [0] 3 marks for 23 to 23.45
10. [1] Other answer 5 – 1 = 4
11. [0] OFR
12. [1] Capacity utilisation = current output level / maximum output level × 100
13. [1] (1 mark if no rewardable calculation)
14. [1] 1.05 / 1 x 100
15. [2] = 105% or 105 (NOT 105 m or $105 m (max 1 mark for relevant working))
16. Capacity utilisation is the proportion of maximum output capacity currently being used.
17. Maximum capacity is the highest level of sustained output that can be achieved.
18. Outsourcing is using another business to undertake a part of the production process rather than doing it within the business using its own resources
19. Expansion will increase capacity
20. Factors in decision
21. Short term v long term solution
22. Cost of options
23. Impact on quality
24. Timescale
25. Making use of the business context:
26. HD make and supply circuit boards
27. 40% standard circuit boards, 60% custom made - linked to consideration of which to outsource
28. Significant increase in demand linked to 5% over capacity and future capacity utilisation
29. Lack of time for machine maintenance and link to quality
30. Manufacturing employees under pressure and link to quality
31. Low labour turnover in Manufacturing Division
32. Gearing is low (16.7%) and link to finance for expansion
33. HD's mission to produce 'world class software solutions' linked to outsourcing and control of quality
34. Building of chains of arguments linked to Knowledge and Application points raised above, drawing out an implication or consequence for HD.
35. The current problem is orders are outpacing resources available which may lead to dissatisfied customers
36. Sustainability of the level of overcapacity – only 5% but demand is increasing
37. Outsource manufacturing advantages
38. Flexible to changing patterns of demand so enable HD to reduce output if sales decline without facing higher average costs
39. Outsourcing disadvantages
40. Loss of control over quality could risk reputation of HD resulting in dissatisfied customers
41. Investment in a bigger factory will be more expensive in the short-term, increasing costs. May result in operating at excess capacity initially, increasing the average cost of production of circuit boards.
42. Factory expansion will enable HD to retain direct control over quality which is one reason why HD has been successful and helps to differentiate them from competition
43. Expansion will take time and potentially disrupt current customer orders leading to dissatisfaction.
44. Alternatives to outsourcing and expansion
45. Reduce level of sales to 1m or less. However, will conflict with corporate objectives.
46. Could consult with electronic engineers as they are motivated, self-directed and professional. Could generate ideas to solve overcapacity.
47. Restructure Manufacturing Division to be more flexible and less centralised so more efficient.
48. Quality assurance audit leading to streamlining of production and increase in maximum possible output.
49. Investment in capital equipment to increase productivity and maximum capacity
50. Only award EVAL if the candidate has also demonstrated APP.
51. Justified recommendation of method(s).
52. Justified rejection of method(s).
53. Loss of control over quality threatens HD's USP of high quality and is therefore significant risk
54. Justified ranking of methods.
55. Importance of involving employees in any decision.
56. Is the problem short term or long term?
57. Little information on availability of finance.
58. No guarantee of success