Clean Arena (CA) Nala lives in country P. She left school in 2014 and started university in city A to study Business. In her first year she joined CA as a part-time cleaner. CA is a large business that cleans offices. When Nala graduated in 2018, she tried to find a management job while still working as a cleaner. As country P's economy was in recession, there were no suitable vacancies available. Fortunately, the owners of CA offered Nala the post of Operations Manager. She accepted and became a full-time employee. Timeline of CA 2019 Nala is employed as Operations Manager. 2020 Nala recommends that CA should open a new branch in city Z. She believes the new branch could open in 10 weeks. Nala uses a network diagram to plan the opening (see Appendix 1). Nala is given responsibility for the management of the city Z branch. 2021 Nala implements lean production in the city Z branch (see Appendix 2). 2022 Nala introduces a new customer services artificial intelligence (AI) system (see Appendix 3). 2023 The owners of CA are concerned about the performance of the city Z branch. They ask Nala to produce a comparison between the operations of the city Z branch and the city A branch (see Appendix 4). 2024 The owners of CA close the city Z branch and make Nala redundant. Developing a corporate plan CA offer Nala the opportunity to buy the city Z branch at a very low price. However, to gain finance from a bank, she has been asked to create a corporate plan for the future of the city Z branch. Appendix 1: Network diagram used by Nala for city Z branch in 2020 [Figure Appendix 1] Activity Task Duration (weeks) A Secondary market research of cleaning market in city Z 5 B Primary market research of city Z target customers 3 C Advertise for employees in city Z 2 D Recruit and select employees in city Z 3 E Advertising of CA in city Z 4 F Find a suitable location in city Z 4 G Setup office in city Z location 2 H Open office in city Z 1 J Bookings taken for cleaning jobs in city Z 1 Appendix 2: Lean production methods implemented by Nala at city Z branch in 2021 • Kaizen is introduced throughout the city Z branch. • All cleaners are assigned to a quality circle, with each quality circle to include eight cleaners and one manager. • A target to ethically recycle 90% of customers' waste. • Inventory of cleaning materials ordered on a just in time (JIT) basis. Appendix 3: Local news article in city Z about CA's AI system in 2022 Cleaning firm CA has made the majority of its customer service operatives redundant. The company has replaced these workers with a new 'chatbot' system that uses an online database to respond to customer needs. The system can book appointments, answer customer queries and even take complaints, most of which have been about the chatbot itself. A spokesperson from a local business which is a customer of CA is quoted as saying 'when you replace people with computers you might save money, but it's the customers who suffer.' Appendix 4: Comparison between the operations of the city Z branch and the city A branch of CA City Z branch City A branch 2021 2023 2021 2023 Annual revenue (m) 0.45 0.46 1.0 1.1 Profit for the year (m) 0.05 (0.1) 0.2 0.5 Number of cleaners employed 18 18 24 26 Direct costs ($m) 0.3 0.32 0.5 0.5 Rate of inventory turnover 6 12 6 6

Mark scheme

Marking points from the official mark scheme (May/June 2024). The mark or mark type is shown in brackets.

1. [AO1 Knowledge and understanding] Knowledge (max 1 mark) can be awarded for any relevant business knowledge about operations, including:
2. [K_point] The transformation process
3. [K_point] Efficiency, effectiveness, productivity and sustainability
4. [K_point] Capital intensive and labour intensive operations
5. [K_point] Job, batch, flow and mass customisation
6. [K_point] Managing inventory, including JIT
7. [K_point] Capacity utilisation
8. [K_point] Outsourcing
9. [K_point] Location
10. [K_point] Economies and diseconomies of scale
11. [K_point] Quality management, including benchmarking
12. [K_point] The influence of human, marketing and finance resource availability on operations decisions
13. [K_point] The changing role of Information Technology (IT) and Artificial Intelligence (AI)
14. [K_point] The need for flexibility with regard to volume, delivery time and specification
15. [K_point] Process innovation: changing current processes or adopting new ways of producing products or delivering services
16. [K_point] Location
17. [K_point] Internal and external economies and diseconomies of scale
18. [K_point] Quality management
19. [K_point] Benchmarking
20. [K_point] Improving flexibility and innovation
21. [K_point] Enterprise resource planning (ERP)
22. [K_point] Lean production
23. [K_point] Operations planning, including critical path analysis.
24. [2] Award DEV for any explanation of relevant business knowledge, up to a max of 2 marks.
25. [1] Operations strategy involves lean production, which is about reducing waste. [1] One way to implement lean production is using just in time, which involves only ordering inventory when it is needed.
26. [1] AI can improve the efficiency of a business because it uses a computer instead of a person. [2] A computer can work seven days a week for 24 hours a day. Unlike a person who is legally allowed to take comfort breaks and breaks for meals.
27. [AO2 Application] Application (max 2 marks) can be awarded for applying operations/operations strategy to CA between 2019 and 2024 CA's operations decisions, including:
28. [APP_point] CA is Nala's first job after university, only experience before being made Operations Manager was as a cleaner for CA.
29. [APP_point] Planning opening of the new city Z branch, including:
30. [APP_point] - The use of critical path analysis
31. [APP_point] - 13 weeks to plan and open the branch (assuming no delays)
32. [APP_point] - Float available on activities C, D, F, G and H
33. [APP_point] - Critical path = A, B, E and J
34. [APP_point] - No built-in time to respond to research results
35. [APP_point] Lean production methods introduced by Nala in 2021, including:
36. [APP_point] - Kaizen (continuous improvement) introduced throughout city Z branch
37. [APP_point] - All cleaners are placed in a quality circle, including one manager and eight cleaners in each team
38. [APP_point] - A target to ethically recycle 90% of customers waste
39. [APP_point] - Just in time re-ordering of cleaning materials
40. [APP_point] CA's new AI system introduced in 2022, including:
41. [APP_point] - Majority of customer services operatives made redundant
42. [APP_point] - Chatbot system to interact with customers
43. [APP_point] - Book appointments, answer customer queries and take complaints
44. [APP_point] - Poor customer/media reaction
45. [APP_point] Comparison between the operations of the city Z branch and the city A branch of CA in 2023, including:
46. [APP_point] - City Z branch has lower revenue than city A
47. [APP_point] - City Z branch has sightly improved revenue between 2021 and 2023 (2% increase)
48. [APP_point] - City A branch has 10% improved revenue between 2021 and 2023
49. [APP_point] - City Z branch has improved revenue, same number of cleaners whereas city A branch has increased cleaners
50. [APP_point] - City Z branch has a loss of $0.1m in 2023, compared to an increased profit for city A branch.
51. [APP_point] - City Z branch has increased direct costs, despite introduction of lean production methods
52. [APP_point] - Rate of inventory turnover has increased in city Z branch (suggesting improvement) but may not have added to cost savings.
53. [AO3 Analysis] (Level descriptors apply for marks 1-8):
54. [7-8 marks] Developed analysis of the overall strategy that identifies connections between causes, impacts and/or consequences.
55. [4-6 marks] Developed analysis of individual strategic element(s) that identifies connections between causes, impacts and/or consequences.
56. [1-3 marks] Limited analysis that identifies connections between causes, impacts and/or consequences.
57. [level_dependent_analysis] Analysis is likely to be based on how operations may have affected CA's decision making between 2019 and 2024, including:
58. [level_dependent_analysis] Nala's inexperience – poor decision making – too much responsibility – may have been integral to the failure of city Z branch - particularly important since city A branch has increased profitability.
59. [level_dependent_analysis] Did the city Z branch open too quickly? – Is 13 weeks long enough to plan such a large investment? – poor implementation of decisions.
60. [level_dependent_analysis] Critical path analysis is a useful theoretical tool, but does it have enough practical value when Nala and the business are new to the city? – increased costs – reduced profit.
61. [level_dependent_analysis] Built-in float may suggest inefficiency – Was the rent paid for too long before opening? – increased costs – reduced profitability.
62. [level_dependent_analysis] Employee recruitment in city Z had float – increased costs – reduced profit.
63. [level_dependent_analysis] However, CPA may have led to a more efficient opening – reduced costs – increased profit.
64. [level_dependent_analysis] No float between advertising and bookings – efficient.
65. [level_dependent_analysis] CPA allowed Nala to focus on what areas are most important – increased efficiency.
66. [level_dependent_analysis] Kaizen may have allowed more creative ideas to come from every area of the business – lower costs – however also detracts from the primary task of the cleaners (and other employees) – increased costs.
67. [level_dependent_analysis] Likewise, quality circles may detract from cleaning – may theoretically (academically) increase value of workforce but could lead to wasted time not focused on primary tasks like cleaning – increased costs. Also there may be problems of bringing mainly part-time employees together for meeting – may incur additional costs for wages. Also, attendance and contributions might depend on whether workers are paid for attending or not – employees may feel resentful and become demotivated – deceased productivity.
68. [level_dependent_analysis] Ethical recycling of customer waste may provide a USP to CA in city Z – however only if customers value this in the market.
69. [level_dependent_analysis] Just in time ordering may decrease costs of holding inventory – however it may lead to wasted time without necessary supplies.
70. [level_dependent_analysis] Chatbot system may lead to reduced indirect costs (less customer service employees needed) – however seems to have irritated customers and may lead to losing established customers going to other firms.
71. [level_dependent_analysis] Link between figures in Appendix 4 and operations decisions.
72. [AO4 Evaluation] (Level descriptors apply for marks 1-7):
73. [6-7 marks] Effective evaluation. A developed judgement/conclusion is made in the business context that draws together developed evaluative comments which balance some key arguments in the business context.
74. [3-5 marks] Developed evaluation. A developed judgement/conclusion is made. Developed evaluative comments which balance some key arguments.
75. [1-2 marks] Limited evaluation. A judgement/conclusion is made with limited supporting comment/evidence. An attempt is made to balance the arguments.
76. [level_dependent_evaluation] Evaluation will largely depend on the points raised in the analysis.
77. [level_dependent_evaluation] A judgement over the extent to which operational decisions between 2019 and 2024 led to the failure of CA's city Z branch.
78. [level_dependent_evaluation] Discussion over the contribution of the separate and combined decisions on the eventual failure of the city Z branch,
79. [level_dependent_evaluation] The extent to which the decisions alone led to the failure of the city Z branch.
80. [level_dependent_evaluation] Other likely influences on the failure of the city Z branch, such as the state of the economy in city Z, human resource management of the cleaners and indirect staff, Nala's personality, unrealistic expectations of the board of directors of CA, marketing of CA, especially for the city Z branch, the financing given to help the city Z branch become successful etc.
81. [level_dependent_evaluation] The extent to which the failure of the city Z branch could be attributed to the operational decisions alone.
82. [level_dependent_evaluation] The extent to which CA itself was deemed successful (city A branch).
83. [level_dependent_evaluation] Accept all valid responses.