Turning inputs into outputs efficiently, at the right quality and time.
Sustainability
Meeting present needs without harming future generations: economic, social and environmental.
Efficiency
Producing output with the fewest resources.
Operations links with every function: marketing sets demand, HR provides skills, finance funds capacity.
The full notes, worked example and check questions for this subtopic are in the app.
Exam tip: Use the three pillars of sustainability to structure balanced answers.
5.2Operations methods
Key terms
Job production
One-off, unique products made to order.
Batch production
Groups of identical products made together, then switching to the next batch.
Mass / flow production
Continuous production of large volumes of identical products.
Mass customisation
Mass production with options customers can personalise.
Job: high quality, high prices, motivated skilled staff; but high unit costs and slow (e.g. wedding dresses, bridges).
The full notes, worked example and check questions for this subtopic are in the app.
Exam tip: Methods can coexist in one business: recommending a combination is often the strongest answer.
5.3Lean management and quality management HL
Key terms
Lean production
Producing with as little waste as possible (time, materials, space, effort).
Kaizen
Continuous small improvements, suggested by workers.
Just-in-time (JIT)
Inputs arrive exactly when needed; very little stock.
Kanban / Andon
Visual signals to reorder parts / to stop the line when there is a problem.
Quality assurance vs. quality control
Preventing faults at every stage / checking products at the end.
TQM
Total quality management: everyone is responsible for quality.
Lean methods: continuous improvement (kaizen), JIT, kanban, andon, cradle-to-cradle design (products designed to be recycled).
The full notes, worked example and check questions for this subtopic are in the app.
Exam tip: JIT is not always better: discuss when it suits the business (reliable suppliers, stable demand) and when it doesn't.
5.4Location
Key terms
Location factors
Quantitative (costs, grants) and qualitative (quality of life, culture) reasons for choosing a site.
Outsourcing / subcontracting
Using another firm to do part of the work.
Offshoring
Moving operations (own or outsourced) to another country.
Reshoring / insourcing
Bringing operations back to the home country / back inside the business.
Quantitative factors: land and labour costs, transport, government grants and taxes, proximity to customers and suppliers.
The full notes, worked example and check questions for this subtopic are in the app.
Exam tip: Weigh quantitative against qualitative factors: the cheapest location is not always the best.
5.5Break-even analysis
Key terms
Contribution per unit
Price − variable cost per unit: what each unit contributes to fixed costs and profit.
Break-even quantity (BEQ)
The output where total revenue = total cost (no profit, no loss).
Margin of safety
Actual output − break-even output.
Target profit output
The output needed to reach a chosen profit.
On a break-even chart: fixed costs are horizontal; total cost starts at fixed costs; total revenue starts at 0; they cross at the break-even point.
The full notes, worked example, interactive diagram and check questions for this subtopic are in the app.
Exam tip: Label break-even charts fully: axes with units, TR, TC, FC, the break-even point, and the margin of safety.
5.6Production planning HL
Key terms
Supply chain
All the stages from raw materials to the final customer.
Just-in-case (JIC)
Holding buffer stock in case of demand or supply problems.
Capacity utilisation
Actual output as a % of maximum possible output.
Productivity
Output per input (per worker or per machine).
Cost to buy (CTB) vs. cost to make (CTM)
Comparing outsourcing with producing in-house.
Stock control chart: maximum stock level, reorder level, buffer (minimum) stock, lead time, reorder quantity. Reorder level ≈ usage during lead time + buffer stock.
The full notes, worked example and check questions for this subtopic are in the app.
Exam tip: After any CTM vs. CTB calculation, discuss qualitative factors: control over quality, supplier reliability and impact on staff.
5.7Crisis management and contingency planning HL
Key terms
Crisis
An unexpected event that threatens the business (accident, cyberattack, product recall, natural disaster).
Crisis management
How a business responds during and after a crisis.
Contingency planning
Preparing in advance for possible crises.
Effective crisis management depends on: transparency (honesty), communication (fast and clear, to all stakeholders), speed and control (a clear leader and plan).
The full notes, worked example and check questions for this subtopic are in the app.
Exam tip: Use the four factors (transparency, communication, speed, control) to structure crisis questions.
5.8Research and development (R&D) HL
Key terms
Research and development
Investigating and developing new products and processes.
Adaptive creativity
Improving what already exists.
Innovative creativity
Creating something new.
Incremental / disruptive innovation
Small improvements / innovation that transforms a market.
Intellectual property
Legal protection of ideas: patents, copyright, trademarks.
R&D creates competitive advantage, new products for the BCG matrix and more efficient processes, but it is costly and uncertain.
The full notes, worked example and check questions for this subtopic are in the app.
Exam tip: Link R&D to other units: finance (cost, investment appraisal), marketing (product life cycle) and HR (creative culture).
5.9Management information systems (MIS) HL
Key terms
MIS
Systems that collect, process and present data to help managers decide.
Data analytics
Examining data to find patterns and insights.
Big data
Very large, fast-changing data sets.
Cybersecurity
Protecting systems and data from attacks.
Digital Taylorism
Using technology to monitor and control workers very closely.
Tools: databases, data analytics, data mining, cloud computing, artificial intelligence and machine learning, the Internet of Things, virtual reality, customer loyalty programmes.
The full notes, worked example and check questions for this subtopic are in the app.
Exam tip: Balance the benefits of data with privacy, security and ethical costs in every MIS answer.