1. business and industrial

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Prepared by: Megan Jeffery, Northcote High School and
Gillian Somers, Trinity Grammar School, Kew
Sample assessment task for Outcome 3 in Unit 3: test and
case study and suggested answers
Supplement to Compak Issue 2, May 2007, pages 32–34
The following assessment task has been designed for Outcome 3 in VCE Business Management Unit 3. It is
recommended that assessment tasks be formatted as question-and-answer books that allow three lines for
each mark. This will give students practice in the format used for the end-of-year examination. The following
task is provided in question-and-answer book format, together with suggested answers, The case study has
been prepared by Megan Jeffery from Northcote High School. The suggested answers have been prepared by
Gillian Somers from Trinity Grammar School, Kew.
Task: Test and case study
In completing this assessment task you should be able to demonstrate an understanding of the relevant key
knowledge and skills, and the ability to plan, organise and complete written communication.
Unit/area of study
Unit 3: Corporate Management
Area of study 3: The Operations Management Function
Outcome 1
Identify and evaluate practices and processes related to operations management.
Time allowed: 80 minutes
Total marks available: 40 marks (the marks for each question are indicated at the end of each question)
Conditions: Closed book (no notes or textbooks may be used when completing this task)
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Section A: Multiple-choice questions
Circle the response that is correct or that best answers the question.
1 An operations manager:
A aims to achieve organisational goals through minimising productivity and quality standards.
B aims to maximise productivity and quality standards through the operations system.
C always tries to increase staff turnover.
D aims to optimise productivity and quality through the employees.
2 Which of the following is classified as a capital input item?
A machinery
B labour
C employee skills and knowledge levels
D water
3 Circle the statement that is NOT correct.
A Large-scale organisations aim to maximise their level of competitiveness through improved
productivity.
B Large-scale organisations cannot afford to ignore ethical and social considerations.
C Clients/customers generally want the best-quality product at the lowest price.
D Higher productivity is the only concern of an operations manager.
4 Reductions in the level of Australian import tariffs have:
A had little effect on Australian producers
B made Australian producers much more competitive
C made the price of imported items more expensive relative to locally produced items
D forced Australian manufacturers to develop strategies designed to improve levels of efficiency and
quality.
5 Which is NOT one of the five P’s of operational planning?
A product
B people
C programs
D productivity
E plant and equipment
F processes
6 Facilities design and layout:
A is the responsibility of the board of directors.
B is a human resource management responsibility.
C should always be given a high priority and completed early in the planning process.
D is not very important in terms of productivity.
7 Which type of layout is the most appropriate for the construction of a large multi-storey building?
A process/functional layout
B fixed-position layout
C retail layout
D product layout
8 The Just in Time inventory management system:
A aims to reduce production costs through maximising the amounts of inventory held.
B involves larger amounts of inventory items being delivered less frequently.
C involves inventory items only being replaced as they are used in the production process.
D aims to increase inventory costs.
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9 A quality certification program:
A involves checking and rejecting products that do not meet required standards
B involves attaining certification from an external standards authority
C is a reactive approach to quality management
D is really total quality management (TQM).
10 The study of the relationship between people and their working environment is referred to as:
A aerodynamics.
B ergonomics.
C a time-and-motion study.
D occupational health and safety.
10 marks
Section B: Short-answer questions
Question 1
For each of the following pairs of terms:
• identify the link/similarity between the two
• identify the key difference between the two.
a production and productivity
b inputs and outputs
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c raw materials and component parts
3 + 3 + 3 = 9 marks
Question 2
Describe and justify the most appropriate production method—project, batch, continuous or mass
customisations—for each of the following.
a the manufacture of designer jewellery
b an oil refinery
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c the production of individual wedding and birthday cakes by a bakery
3 + 3 + 3 = 9 marks
Section C: Case study analysis
Read the case study and answer the questions that follow.
Bollard Ltd
Bollard Ltd is Australia’s leading producer of garden gnomes. Employing 300 people, Bollard’s main plant
is located in the Melbourne suburb of Moonee Ponds.
In recent times Bollard’s market share has fallen by 25%. This has coincided with the federal government’s
decision to reduce import tariffs on imported garden gnomes.
As a consequence, Asian imports have become relatively cheaper and Bollard has been unable to match the
lower labour costs of the Asian manufacturers.
Bollard’s reputation for quality also took a blow when a highly publicised gift of two specially designed
garden gnomes sent as a royal wedding gift disintegrated within two months of being placed in the
Buckingham Palace garden.
Bollard’s management have identified that the following changes need to be made to enable the business to
successfully compete in the new global garden gnome market:
• production of higher quality products
• a reduction in production costs.
Question 1
List two inputs of the operations system of Bollard’s.
2 marks
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Question 2
Define the following terms and explain how each affects the level of business competitiveness.
a quality
b import tariffs
2 + 2 = 4 marks
Question 3
Explain how each of the following operations management strategies can affect business
efficiency/productivity at Bollard.
a a Just in Time inventory management system
b the adoption of a virtual factory (organic/network) operations model
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c the adoption of a quality management program
2 + 2 + 2 = 6 marks
Total: 40 marks
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Suggested answers
Section A: Multiple-choice questions
1. B
2. A
3. D
4. D
5. D
6. C
7. B
8. C
9. B
10. B
Section B: Short-answer questions
Question 1
a Production and productivity are both operations management terms and relate to the operating process
and system. Where they differ is that production relates to the process of transforming resource inputs
into finished goods and services. Productivity, however, measures the functioning and efficiency of the
production system. This is done by comparing the level of output obtained from a set level of input.
b Inputs and outputs are both components of an operating system, they are linked together to provide the
formula for determining productivity. The key difference is that inputs form the first step in the operating
system—namely, the resources required—whereas outputs are the finished product or service generated
by the operating system.
c Raw materials and component parts are linked as both are inputs in the operating system. They are
different in that raw materials are in their raw state, for example no manufacturing or processing has
occurred, whereas component parts are the outputs of another operating system.
Question 2
a Designer jewellery would be produced using a project production method. This method involves the
production of a single, one-off item by a highly skilled workforce, that is, jewellers. The item being
produced will be of a high quality with a large amount of value being added by the jeweller.
b An oil refinery would use a continuous flow production method. It is a large-scale production process,
using specialised and expensive capital equipment. It is not recommended that this process be interrupted
due to volatility of the production method.
c The production of individual cakes could be undertaken using either a project or batch process. Many
bakers manufacture the actual cake using a batch process, but use a project production method to
individualise the cake based on the form of decoration required. Either way, the cost is high and timeconsuming due to the required individuality of the product and the skills required of the pastry cook.
Section C: Case study analysis
Question 1
Inputs—choose two from the following list: raw materials, such as concrete and paint, human resources,
plant, capital, information, equipment (moulds).
Question 2
a Quality relates to the level of excellence associated with a good or service and its ability to satisfy the
customer. For a business to be competitive it must gain a competitive edge over its competitors. Providing
either a quality product or service is an important way of establishing a competitive edge.
b Import tariffs are a tax placed on imported goods by the government. It becomes a cost to the business. It
affects the competitiveness of businesses as it raises the costs associated with producing or selling the
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product. If a business is subject to import tariffs and its competitor is not, this can affect the pricing of the
products being sold, thus impacting on their level of business competitiveness.
Question 3
a Adopting a Just in Time inventory management system positively affects a business’s efficiency and
productivity. This system aims to avoid holding any stocks (inputs or finished goods). Supplies arrive just
as needed for production, and finished goods are despatched immediately or sold to customers. Improved
efficiency is achieved through the better management of resources. Productivity is increased as the inputs
are now better managed so reducing the likelihood of out-of-date products and wastage due to overordering.
b A virtual factory set-up where manufacturing is decentralised or various functions outsourced, such as
overseas, is a model that Bollard could adopt. Because of import tariffs and high production costs in
Australia, Bollard may want to consider outsourcing their production to a factory in South East Asia. The
level of business efficiency and productivity could increase due to the decreased cost of inputs; however,
the issue of quality would be an issue requiring great consideration. If the rate of defects and wastage
increases then this change has not delivered the desired outcome. If the quality issue is not handled
properly, this would result impact negatively on Bollard’s business competitiveness in terms of other
imported products.
c The purpose of adopting a quality management program is to direct and control an organisation through a
series of coordinated activities, with the aim of efficiently producing an increased number of quality
products as its output. By adopting quality control, the quality standards of the garden gnomes would be
periodically checked against the predetermined standards. Quality assurance would ensure that processes
and procedures in place throughout the organisation are continuously being improved to ensure efficiency
in Bollard’s operations. By adopting a total quality management approach, Bollard would then have the
full commitment of all staff to ensure that the processes and procedures relating to quality control, quality
assurance and continuous improvements are being adopted by everyone at the workplace. This approach
would be the best alternative to ensure optimum efficiency and productivity.
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