EDEXCEL GCSE BUSINESS · PAPER 2
Exam Practice: Working with Suppliers
Working with suppliers · Making operational decisions · Lesson 2 of 4 · 17 marks · 25 minutes
Name Date
Answer all questions. Show your working in calculations.
Question 1 DEFINE [1 mark]
Define the term 'lead time'.
Question 2 CALCULATE [2 marks]
A business uses 150 units of stock a day. It reorders when stock falls to 600 units, and the lead time is 3 days. Calculate how many units will be left when the delivery arrives. You are advised to show your working.
Question 3 OUTLINE [2 marks]
Outline one reason why a business holds buffer stock.
Question 4 EXPLAIN [3 marks]
Explain one disadvantage to a business of using just-in-time stock control.
Question 5 JUSTIFY [9 marks]
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SOURCE Pedal Power Ltd makes electric bikes. It needs a new supplier of batteries. Supplier A is based in the UK, delivers within 2 days and has a strong reputation for quality, but charges £180 per battery. Supplier B is based in Asia, charges £120 per battery, but deliveries take 6 weeks and it has had some quality complaints. |
Justify which supplier Pedal Power Ltd should choose.
Answers
Check your answer only once you have written one.
Question 1 [1 mark]
The time between placing an order for stock and the stock arriving.
▸ Time between ordering and delivery 1 mark
Question 2 [2 marks]
Stock used during the lead time = 150 × 3 = 450 units. Stock left = 600 - 450 = 150 units.
▸ Correct method: reorder level - (daily use × lead time) 1 mark
▸ Correct answer: 150 units 1 mark (award 2 marks for the correct answer with no working)
Question 3 [2 marks]
To keep production going if a delivery is late (1), so the business does not run out of materials and let customers down (1).
▸ A reason identified 1 mark
▸ Developed 1 mark
Question 4 [3 marks]
Production may stop if a supplier delivers late (1). Because the business holds almost no stock, it has nothing to fall back on (1). This means it cannot meet customer orders, losing sales and damaging its reputation (1).
▸ A disadvantage identified, e.g. relies on suppliers / cannot meet sudden demand / lost bulk discounts 1 mark
▸ First linked point of explanation 1 mark
▸ Second linked point of explanation 1 mark
Question 5 [9 marks]
Supplier B would cut Pedal Power's costs by £60 per battery, which on thousands of bikes would greatly increase profit or allow lower prices. However, a 6-week lead time means Pedal Power must hold much more stock, tying up cash, and it cannot react quickly to changes in demand. Its quality complaints are also a serious risk: a faulty battery in an electric bike could be dangerous and damage Pedal Power's reputation. Supplier A is more expensive, but its 2-day delivery means Pedal Power can hold little stock, and its reputation for quality protects Pedal Power's brand. On balance Pedal Power should choose Supplier A, because batteries are the most important and safety-critical part of an electric bike, and poor quality could cost far more in recalls and lost reputation than the £60 saving. This depends on whether customers will accept a higher bike price.
▸ AO2 (Application, 3 marks): uses the context - electric bikes, £180 vs £120, 2 days vs 6 weeks, quality complaints Level 1-3
▸ AO3a (Analysis, 3 marks): chains of reasoning about each supplier Level 1-3
▸ AO3b (Evaluation, 3 marks): a justified choice with a supported judgement Level 1-3