Refer to Table 1.1 and lines 49 to 51. Calculate the forecast capacity utilisation in 2024.

Mark scheme

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

1. [1] (a) Formula: (Forecast) capacity utilisation = (Forecast) output / maximum output × 100
2. [1] (a) Calculation of maximum capacity 2024: 15 million + 20% = 18 million
3. [1] (a) Final answer: 88.89% or 88.9% or 89%
4. [2] (a) Alternative answers: 14/15 × 100 = 93.3%
5. [2] (a) Alternative answers: 16/15 × 100 = 106.7%
6. [1] (b) If average incomes go up by 1.5%, then demand will increase by 1.5 × 2 = 3%
7. [1] (c) Efficiency: maximum output from available inputs.
8. [1] (c) Knowledge of automated production systems such as (CAM) use of computer software to control machine tools and equipment in manufacturing products.
9. [1] (c) Impacts of automated machinery: less labour.
10. [1] (c) Impacts of automated machinery: increased maximum output.
11. [1] (c) Impacts of automated machinery: lower unit costs.
12. [1] (c) Impacts of automated machinery: more consistent standards of output.
13. [1] (c) Automation will lead to capital intensive manufacturing, a change from the current labour intensive batch production.
14. [1] (c) The high ($15m) initial cost will require finance.
15. [1] (c) There will be less need for production workers in the factory, the trade union representative is threatening to resist job losses.
16. [1] (c) The trend of rising demand suggests the need for greater capacity at the pet food factory.
17. [1] (c) Modernisation will increase the forecast capacity in 2024 to 18 million units.
18. [1] (c) The forecast for capacity utilisation in 2024 is high (89%).
19. [1] (c) Automation can lead to precise manufacturing which will reduce quality problems and therefore making more efficient use of inputs.
20. [1] (c) Machinery can replace labour and therefore reduce the labour force whilst maintaining or increasing output. Therefore, there is an increase in labour productivity.
21. [1] (c) Automated machinery can enable more flexible production which allows a quicker changeover from one product to another thus reducing downtime and increasing productivity.
22. [1] (c) The high forecast capacity utilisation in 2024 means there is little, if any spare capacity, so modernisation may enable an increase in output and sales and therefore an increase in market share.
23. [1] (c) Favourable current economic conditions mean the market for this luxury pet food product is growing, potential for higher sales and market share if capacity is available.
24. [1] (c) The change from batch production could result in lower levels of inventory and therefore increase efficiency.
25. [1] (c) However: Introducing the new machinery may be resisted by trade unions resulting in disruption to production causing a decrease production and efficiency.
26. [1] (c) However: Economic conditions may not continue to be favourable, which could lead to pet owners switching to lower priced products and sales not increasing so fast, this would lead to excess capacity in future.
27. [1] (c) However: The change to capital intensive will lead to job losses and redundancy payments increasing costs in the short term and possibly resulting in negative publicity impacting sales.
28. [1] (c) Factors that increasing efficiency might depend on: How accurate might sales forecasts turn out to be?
29. [1] (c) Factors that increasing efficiency might depend on: If sales don't increase then efficiency will decrease as there will be an increase in excess capacity.
30. [1] (c) Factors that increasing efficiency might depend on: Possible impact of external factors, such as changes in economic conditions.
31. [1] (c) Factors that increasing efficiency might depend on: Reliability of machinery. Hardware failure and breakdowns can be complex and time-consuming to fix.
32. [1] (c) Factors that increasing efficiency might depend on: Response of trade union to modernisation.
33. [1] (c) Factors that increasing efficiency might depend on: Need for employee training following modernisation.
34. [1] (c) Factors that increasing efficiency might depend on: Quality assurance is still needed. Errors in programs can produce faults that have to be identified and corrected.
35. [1] (c) Evaluation of alternative approaches to increasing efficiency/output, such as out sourcing.