Bear Bears (BB) BB is a business partnership owned by Sade and Chika. BB produces personalised teddy bears (toys) for children. The toys are made using mass customisation targeted at specific market segments. Each toy has the same shape and size but it is customised with names and words provided by the customer. These are hand-stitched onto the toy and the employees are paid using piece rate. Customers receive their products within a week of ordering. Each toy is sold for $50 and has a unit contribution of $6. Last month BB sold 4000 units with a margin of safety of 120 units. BB currently holds a large amount of inventory in a temperature-controlled warehouse (see Table 2.1). Table 2.1 BB's current inventory | Type of inventory | Items | |:------------------|:----------------------------| | Raw materials | 100 kg cotton fabric | | | 300 kg synthetic fibre (filling) | | Work in progress | 300 non-customised toys | | Finished products | None | Sade thinks that BB should adopt a just in time (JIT) approach to inventory management. However, Chika is concerned about the possible impact on BB. The stitching department is managed by Chika. She has recently received a complaint from David who is the only male employee in the stitching department (see Fig. 2.1). [Figure 2.1] 'I feel that I am being discriminated against because I am a man. There are no washroom facilities for me on the ground floor but there are for the women. I have to go up two floors for a washroom which takes me a lot of time. I am given all the tasks which require heavy lifting. I am often asked to fix problems with other people's stitching machines, and this slows my production. I earn less money than anyone else in the stitching department.' Fig. 2.1 Complaint from David in the stitching department After some further investigation, Chika believes there needs to be increased equality in the stitching department.

Mark scheme

Marking points from the official mark scheme (Oct/Nov 2023). The mark or mark type is shown in brackets.

1. [1] Geographic
2. [1] Demographic
3. [1] Psychographic/behavioural
4. [1] A production process where some elements can be changed to meet customer needs.
5. [2] (Developed Application to BB) This applies to BB as they produce large amounts of teddy bears, but each toy is customised with names and words requested by the customer, allowing for variation within a mass-produced item.
6. [1] Break-even point = Sales – Margin of Safety = 4000 units – 120 units = 3880 units.
7. [1] Fixed Costs = Break-even point × Unit Contribution.
8. [1] Fixed Costs = 3880 units × $6 = $23 280.
9. [3] Final Answer: $23 280.
10. [1] Knowledge of a limitation of using break-even analysis (e.g., fixed costs may not be constant, assumption that output equals sales, unit variable costs or price remain constant, only useful for individual product lines, does not take into account external changes, only a forecast/estimate).
11. [2] (Developed Application to BB) For BB, if they introduce JIT, their fixed costs might change (e.g., lower storage costs but higher delivery costs), making the constant fixed cost assumption inaccurate. Also, for personalised products, variable costs per unit might not be perfectly constant across all customisations, further limiting accuracy.
12. [1] Knowledge of an impact of JIT (e.g., less space needed, waste reduction, reduces capital tied up in inventory control, risk of stock-outs, requires planning/forecasting).
13. [1] Application of the impact to BB (e.g., BB's current large inventory of raw materials/WIP, temperature-controlled warehouse, one-week lead time, low margin of safety).
14. [2] Analysis of how this impact affects BB (e.g., reduces storage costs/frees capital but increases delivery costs, or increases risk of delays/customer dissatisfaction but reduces capital tied up).
15. [1] Knowledge of a second impact of JIT.
16. [1] Application of the second impact to BB.
17. [2] Analysis of how this second impact affects BB.
18. [2] Knowledge: Increased equality in the workplace means providing equal opportunities and fair treatment to all employees, regardless of protected characteristics such as gender, ensuring an inclusive environment.
19. [2] Application: For BB's stitching department, this would involve addressing David's complaints, such as providing male washroom facilities on the ground floor, ensuring fair distribution of heavy lifting tasks, and guaranteeing equal pay and opportunities for machine-fixing training, rather than disproportionately assigning it to him, which impacts his piece-rate earnings.
20. [2] Analysis (Positive): Improving equality could significantly boost employee motivation and morale in the stitching department, particularly for David. This could lead to increased productivity and higher quality personalised teddy bears, which could enhance BB's reputation as a fair employer. It also reduces the risk of legal action for discrimination (important for a partnership with unlimited liability) and could attract a more diverse talent pool in the future, improving recruitment.
21. [2] Analysis (Negative): However, implementing increased equality will incur costs for BB, such as building new male washroom facilities, potentially investing in equipment for heavy lifting, or retraining other staff to fix machines. These costs could negatively impact BB's profitability, especially if not managed efficiently. Furthermore, admitting to existing inequalities might open BB to past discrimination claims, damaging its reputation and incurring legal expenses.
22. [6] Evaluation: The most likely impact on BB of increased equality in its stitching department is overwhelmingly positive, leading to improved motivation and a stronger employer brand, which is crucial for a business reliant on skilled hand-stitching. This judgement depends on the extent of the current inequality and BB's willingness to invest in genuine change. If the current issues are severe, addressing them will significantly boost morale, reduce labour turnover, and enhance productivity. While there are initial costs (e.g., washroom construction, training), these are likely outweighed by the long-term benefits of a more motivated, efficient workforce and reduced legal risks. A failure to address David's legitimate concerns could lead to decreased productivity, potential legal battles, and a damaged reputation, severely hindering BB's ability to maintain its quality and timely customer deliveries of personalised teddy bears. Thus, the positive impacts, particularly on human resources and reputation, are more critical for long-term success.