Question
Sam and Finn are having difficulties resolving their disagreements. Finn was convinced that the problems at AFA should be resolved by a change in the organizational structure. Sam, however, was convinced that he should strengthen the organizational culture. Sam reluctantly accepted the need for greater delegation but insisted that there should be more training for all employees on the culture and ethics of AFA.
As part of greater delegation, Kim was given responsibility for the relationship between AFA and its suppliers. Kim is concerned that she spends a lot of time chasing orders that do not arrive and dealing with the poor quality of orders. Some products have to be thrown away because they have passed their sell-by dates*. Others have to be returned to suppliers because the outlet managers do not accept the poor quality and therefore cannot be sold.
AFA’s stock of fair trade woollen hats has now reached 500, with an annual sales average of around 1250 for the whole business. Kim wants to introduce lean production including total quality management (TQM) throughout AFA’s operations and has created a Gantt chart to show the stages in implementation.
Figure 1: Gantt chart for the implementation of lean production including TQM at AFA
* sell-by dates: dates printed on the packaging of products that state the date after which the product can no longer be sold.
a. Refer to the As Fair As case study (SL/HL paper 1 Nov 2018).[2]
State two elements of an organizational culture.
b. Refer to the As Fair As case study (SL/HL paper 1 Nov 2018).
(i) Calculate the inventory/stock turnover for woollen hats (show all your working).
(ii) Comment on your result in (b)(i).
c. Refer to the As Fair As case study (SL/HL paper 1 Nov 2018).
Explain the usefulness of a Gantt chart to $A F A$ in planning the implementation of a new process.
d. Refer to the As Fair As case study (SL/HL paper 1 Nov 2018).[10]
Discuss the value to $A F A$ of lean production methods.
▶️Answer/Explanation
Ans:
a. References could be made to:
- style of management/leadership
- vision/mission statements/goals
- nature of the workforce – simple reference to employees is not enough
- nature of the business
- norms/values/beliefs/morals including tradition
- organizational structure.
Where these are shown above as either/or this can only be rewarded as one element eg if both leadership and management are stated this is only one element.
References could be made to power culture, role culture, task culture and person culture.
Elements should relate to internal factors and not external factors such as the culture of the country.
Award [1] for each element to a maximum of [2]. This answer does not need to be in context.
b. (i) Stocks $=500$, annual sales $=1250$ so turnover $=\frac{1250}{500}=2.5$ times a year.
Allow $\frac{500}{1250} \times 365=146$ days.
Award [2] for a correct answer which must include “2.5 times” or “2.5 times per year” or 146 days.
Award [1] for an attempt (eg calculating days sales in stocks as 146 days, or, making a mistake or no units).
If the [2] mark answer does not appear in (i) but does appear in (ii) then (i) can be rewarded retrospectively – you will have to go back to mark entry for (i).
Do not reward $500+1250$ or $\frac{500}{1250}$.
(ii) Seems very low – is the product seasonal? Is there poor management of stock control?
Use OFR.
Award [1] for a simple statement and [2] if the statement is in context.
Do not reward simply putting the answer into words.
c. Usefulness includes:
- clarity in planning
- determining the likely project time of 20 weeks (context)
- identifying tasks that can be done concurrently, eg researching other businesses and appointing consultants (context)
- exploring the consequences of delays eg delays in training managers (context)
- help scheduling, eg training (context)
- help monitoring progress.
Context could also be lean production.
Usefulness could also be considered using shortcomings of Gantt.
An explanation will usually include at least two uses/features of a Gantt chart.
Award [4] for a good explanation using context effectively.
Award [3] for either:
- an explanation but weak context; or
- a weak explanation but effective context.
Award [2] for an explanation, but no context.
Award [1] for some understanding.
d.
Refer to Paper 1 markbands for May 2016 forward, available under the “Your tests” tab > supplemental materials.
Contextual issues:
poor stock control
poor order management
poor quality control
Aspects of lean production:
lean production examines processes to find and eliminate all forms of waste.
production processes adjusted to eliminate waste such as JIT, increased efficiency, eg with suppliers, managing employees more effectively, increasing capacity utilisation.
Might include: Kaizen, total quality management (TQM), cell production, flexible specialisms, simultaneous engineering, JIT and process innovation, such as greater use of IT.
Most likely are JIT, total quality management (TQM), process innovation, Kaizen.
However:
some techniques are not appropriate for AFA
there are costs involved, eg IT, costs of changing. Can AFA afford these?
are low levels of stocks suitable for retailers such as AFA?
Marks should be allocated according to the paper 1 mark bands for May 2016 forward, section B.
Theoretical answer or context limited to naming the business max [4].
One-sided discussion limited to [5].
Both sides considered, good use of evidence, particularly from section B, but no effective conclusion award a maximum of [8].
For [10] the answer needs to be clearly relevant to AFA with good use of context and a clear sense of the value to AFA argued convincingly.