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Unit 5

The document outlines exam questions related to operations management, production methods, and quality management for the IB DP Business curriculum. It includes case studies and questions that assess students' understanding of concepts such as operations management, quality control, capacity planning, and various production methods. The exam is structured into easy and medium questions, totaling 44 marks, covering real-world scenarios from various companies.

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0% found this document useful (0 votes)

15 views114 pages

Unit 5

Uploaded by

eshmeet.m03

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IB DP Business 44 mins 14 questions

Exam Questions

5.1 Introduction to
Operations
Management
The Purpose of Operations Management

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Easy (8 questions) /16

Medium (6 questions) /28

Total Marks /44

Case Study
TechGear Manufacturing Ltd, based in Singapore, produces smart wearable
devices. In 2024, TGM implemented new production processes to improve
eﬃciency while maintaining product quality, overseen by the operations
management team.

Deﬁne the term 'operations management'.

(2 marks)

Case Study
Global Fresh Foods PLC, headquartered in Brazil, operates a chain of food
processing facilities. In 2024, GFF implemented new quality control measures in
all factories.

Deﬁne the term 'quality control'.

(2 marks)

Case Study
Gourmet Services International operates high-end restaurants worldwide. In
2024, GSI's tertiary sector operations focused on improving service delivery.

State two typical outputs for tertiary sector operations.

(2 marks)

Case Study
SolarTech Industries PLC, headquartered in New Zealand, manufactures solar
panels. In 2024, the company's operations management team focused on
implementing sustainable practices across their production facilities.

State two elements of sustainable operations management.

(2 marks)

Case Study
FairWork Electronics is a producer of hi-tech consumer gadgets. The company
implemented comprehensive, fair labour practices across their global operations
in 2024.

State two examples of fair labour practices.

(2 marks)

Case Study
Quantum Computing Solutions Ltd, based in Israel, develops advanced
computing systems. In 2024, QCS reorganised their operations, including better
capacity planning, across multiple development centres.

Deﬁne the term 'capacity planning'.

(2 marks)

Case Study
Hawaii-based Paciﬁc Marine Resources Ltd operates commercial ﬁshing vessels.
The company is focused on improving the management of their primary sector
inputs.

State two types of primary sector inputs.

(2 marks)

Case Study
TechNova, a smartphone manufacturer, prioritises quality control to ensure its
devices meet customer expectations. It uses inspections at every production
stage.

Describe one beneﬁt to a business of quality control.

(2 marks)

Case Study
FarmFresh Organic Produce is a large agricultural business focusing on
sustainable farming. The company grows organic fruits and vegetables and
supplies them to supermarkets and local farmers’ markets. FarmFresh’s
operations management team is responsible for designing eﬃcient farming
processes, managing stock levels, and maintaining quality standards.

Recently, FarmFresh implemented a real-time automated stock management

system and green supply chain management practices to minimise its carbon
footprint, such as using renewable energy for storage facilities and reducing
transportation waste. However, the company faces challenges in balancing cost-
eﬃciency with sustainability goals.

Explain one advantage and one disadvantage of FarmFresh implementing green supply
chain management practices.

(4 marks)

Recently, FarmFresh implemented a real-time automated stock management

Analyse two advantages and one disadvantage of FarmFresh updating its stock
management systems.

(6 marks)

Case Study
SafeGuardian is a large private security company providing guard and
surveillance services to corporate clients and large events. The company’s
operations management team is focused on capacity planning to ensure the right
number of guards are available for various contracts, ranging from 24/7 oﬃce
security to short-term event coverage.

SafeGuardian recently introduced a quality control system to monitor service

standards, including periodic training and performance evaluations. However,
the company faces challenges in balancing the workloads of its 800 employees'
workloads while maintaining client satisfaction.

Explain one advantage and one disadvantage of SafeGuardian using a quality control
system to monitor service standards.

(4 marks)

SafeGuardian recently introduced a quality control system to monitor service

Describe two methods SafeGuardian could use to improve employee training as part of
its quality control system.

(4 marks)

Case Study
Ocean Clean Marine Services is an organisation specialising in cleaning marine
environments by removing plastic waste and other pollutants. The company uses
a ﬂeet of vessels equipped with advanced waste collection systems and employs
divers for underwater clean-up operations.

To improve eﬃciency, Ocean Clean has introduced lean production techniques,

including a just-in-time (JIT) inventory system for equipment as well as
continuous improvement initiatives. However, the company faces challenges in
reducing downtime between clean-ups and ensuring safety standards are upheld
during operations.

Analyse two advantages and one disadvantage of Ocean Clean implementing lean
production techniques

(6 marks)

To improve eﬃciency, Ocean Clean has introduced lean production techniques,

Describe two ways Ocean Clean could maintain safety standards during its marine clean-
up operations.

(4 marks)

Exam Questions

5.2 Operations
Methods
Types of Production Methods

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Easy (8 questions) /16

Medium (7 questions) /30

Total Marks /46

Case Study
Global Technology Inc, a multinational technology company headquartered in
Manila, produces both hardware and software outputs for businesses worldwide.
In 2024, GTI's board is reviewing their product portfolio.

State two types of output that businesses can produce.

(2 marks)

Case Study
Dynamic Electronics Ltd, a British consumer electronics manufacturer, must
consider several elements when deciding how to organise their production
processes, including production methods, in their new factory.

State two factors that inﬂuence a business's choice of production method.

(2 marks)

Case Study
Bespoke Furniture Ltd, a high-end Danish furniture manufacturer, produces
unique pieces tailored to individual customer speciﬁcations. Each item requires
skilled craftsmen and specialised techniques, resulting in long lead times.

Deﬁne the term 'lead time'.

(2 marks)

Case Study
Custom Yachts International, based in Auckland, builds luxury vessels to exact
client speciﬁcations using job production. Each yacht is crafted individually using
specialist materials and techniques.

State two characteristics of job production.

(2 marks)

Case Study
Neo Beauty, a Norwegian cosmetics manufacturer, produces skincare products
in separate batches.

State two disadvantages of batch production.

(2 marks)

Case Study
German Motors AG, a leading automotive manufacturer, uses ﬂow production,
operating a continuous production line where vehicles move through a series of
workstations. Most processes are carried out by robots.

Deﬁne the term 'ﬂow production'.

(2 marks)

Case Study
Huntley Strang, a premium bathroom tile manufacturer, has adopted a mass
customisation approach which combines standard production processes with
personalisation options. Their customers can select from a wide range of pre-
designed features.

Deﬁne the term 'mass customisation'.

(2 marks)

Case Study
TechGadgets, a consumer electronics company, uses mass customisation to oﬀer
personalised smartphones. Customers can select colours, storage capacity, and
additional features.

Explain one beneﬁt of mass customisation for TechGadgets.

(2 marks)

Case Study
Tailor Tech is a high-end tailoring business oﬀering bespoke suits for
professionals and special occasions. Each suit is crafted to the speciﬁc
measurements and design preferences of the customer. The company uses job
production to ensure a unique product for every client.

Recently, Tailor Tech introduced an online customisation platform allowing

customers to choose fabrics, styles, and details like buttons and lapels. While this
approach enhances customer satisfaction, it also presents challenges, such as
longer lead times and higher costs compared to mass production methods.

Explain one advantage and one disadvantage of Tailor Tech using job production for its
suits.

(4 marks)

Recently, Tailor Tech introduced an online customisation platform allowing

Describe two challenges Tailor Tech faces with longer lead times in its production
process.

(4 marks)

Case Study
LuxBake is a premium chocolatier specialising in handcrafted chocolates. The
company uses batch production to create small quantities of customised
products, such as truﬄes and bonbons, for special occasions and corporate
clients.

While batch production allows for variety and quality control, it also presents
challenges, such as higher per-unit costs and potential ineﬃciencies during
equipment changeovers. LuxBake is exploring ways to optimise its production
process without compromising its focus on artisanal quality.

Analyse two advantages and one disadvantage of LuxBake investing in more eﬃcient
equipment for its batch production process.

(6 marks)

Explain one advantage and one disadvantage of LuxBake using batch production for its
chocolates.

(4 marks)

Case Study
RapidBuild manufactures prefabricated construction materials, including wall
panels and roof beams, using ﬂow production. This method ensures consistency
and high output to meet the demands of large-scale construction projects.

While flow production is efficient, it relies heavily on machinery, which can lead
to significant downtime during breakdowns. RapidBuild is exploring preventive
maintenance strategies to reduce risks and improve overall productivity.

Analyse two advantages and one disadvantage of RapidBuild implementing a preventive

maintenance strategy for its machinery.

(6 marks)

Case Study
RapidBuild manufactures prefabricated construction materials, including panels
and beams, using ﬂow production. This method ensures consistency and high
output to meet the demands of large-scale construction projects.

Describe two methods RapidBuild could use to reduce the risk of downtime in its ﬂow
production process.

(4 marks)

Case Study
EcoMeals Ltd produces pre-packaged organic meals for supermarkets. In a
recent production run, the company encountered several challenges, including
damaged packaging and incorrect portioning. Management wants to calculate
the wastage rate to assess production eﬃciency and identify areas for
improvement.

Total Units Produced 15,470

Defective Units 855

Returns rate 0.62%

Calculate the wastage rate for EcoMeals Ltd (show all your working).

(2 marks)

Exam Questions

5.3 Lean Production &

Quality Management
Lean Production / Quality Management

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Easy (14 questions) /28

Medium (6 questions) /28

Total Marks /56

Case Study
Hugg Boots, a premium footwear manufacturer, implemented a series of waste
reduction strategies in 2024. The company aims to identify and eliminate seven
diﬀerent types of production waste in their production operations.

State two of the seven wastes in lean production.

(2 marks)

Case Study
Canadian Construction Materials PLC produces prefabricated housing
components. The company's lean production consultant has identiﬁed
overproduction as their primary source of waste.

Deﬁne the term 'overproduction'.

(2 marks)

Case Study
South African Mining Corporation, a platinum mining company, implemented
Kaizen principles in 2023. This change has led to annual output increasing by
45%.

Deﬁne the term 'Kaizen'.

(2 marks)

Case Study
Positano Furniture Ltd manufactures high-end furniture. In 2024, it implemented
just-in-time stock management to reduce warehousing costs and improve
eﬃciency.

Deﬁne the term 'just-in-time stock management'.

(2 marks)

Case Study
Rio Pharmaceuticals, a Brazilian manufacturer of generic medicines,
implemented just-in-time stock management in 2023. The company has
identiﬁed several disadvantages during implementation in their production
facilities.

State two disadvantages of just-in-time stock management.

(2 marks)

Case Study
French Luxury Packaging SA produces cosmetics packaging. In 2024, FLP moved
away from the traditional cradle to grave approach, implementing cradle-to-
cradle design principles.

Deﬁne the term 'cradle to grave approach'.

(2 marks)

Case Study
British Home Furnishings PLC designs and manufactures household furniture. In
2024, BHF adopted cradle to cradle design principles, most particularly
responsible material selection.

State two principles of responsible material selection in cradle-to-cradle design.

(2 marks)

Case Study
Spanish Hotel Group SA, a luxury hotel chain, implemented new quality
measures in 2024. The company uses various metrics to measure the quality of
their service delivery.

State two quantitative measures of service quality.

(2 marks)

Case Study
Eastern Construction Ltd, a commercial building contractor, conducted research
in 2024 to understand factors inﬂuencing customer perceptions of quality in their
projects.

State two factors that inﬂuence customer perceptions of quality.

(2 marks)

Case Study
Murcia Fruits, a premium juice producer, implemented quality assurance in 2024.
The company has identiﬁed several advantages of this approach in their
orchards, processing plants and warehouses.

State two advantages of quality assurance over quality control.

(2 marks)

Case Study
Peruvian Coﬀee Exporters SA processes premium coﬀee beans. In 2024, the
company established quality circles across the business.

Deﬁne the term 'quality circle'.

(2 marks)

Case Study
Marriott Hotels International, a global hospitality chain, recently implemented
principles of Total Quality Management to improve guest service standards.

Deﬁne the term 'Total Quality Management'.

(2 marks)

Case Study
Scandinavian Furniture Design Ltd, a manufacturer of premium furniture,
achieved quality accreditation in 2024. The company has identiﬁed several
beneﬁts from this achievement.

State two beneﬁts of achieving quality standard accreditation.

Case Study
GreenHomes, a sustainable building company, follows the cradle-to-cradle (C2C)
design approach. It uses recyclable materials and renewable energy in its
manufacturing processes.

Describe one feature of cradle-to-cradle (C2C) design.

(2 marks)

Case Study
PureCure is a pharmaceutical company committed to producing high-quality
medicines. It implements total quality management (TQM) principles to ensure
every stage of production meets stringent quality standards.

The company recently acquired ISO certiﬁcation, demonstrating its commitment

to international quality standards. PureCure is also exploring Six Sigma
methodologies to further reduce defects and improve operational eﬃciency.
However, these quality-focused initiatives come with high implementation costs
and require signiﬁcant employee training.

Explain one advantage and one disadvantage of PureCure acquiring ISO certiﬁcation.

(4 marks)

The company recently acquired ISO certiﬁcation, demonstrating its commitment

Describe two beneﬁts of PureCure using TQM principles in its operations.

(4 marks)

Case Study
Fresh Fleet is a grocery delivery service that specialises in delivering fresh
produce directly to customers’ homes. The company prides itself on quick
delivery times and maintaining the quality of its produce. Fresh Fleet uses a ﬂeet
of refrigerated vehicles to ensure perishable goods are kept fresh during transit.

To improve eﬃciency, Fresh Fleet has implemented just-in-time (JIT) stock

management, ensuring produce is sourced and loaded onto vehicles only as
orders come in. While this reduces waste, the company faces challenges in
managing unpredictable demand and ensuring supplier reliability. Fresh Fleet
also conducts regular quality checks at its distribution centre to maintain high
standards, but this adds to operational costs.

Analyse two advantages and one disadvantage of Fresh Fleet using refrigerated vehicles
in its operations.

(6 marks)

To improve eﬃciency, Fresh Fleet has implemented just-in-time (JIT) stock

Explain one advantage and one disadvantage of Fresh Fleet conducting regular quality
checks at its distribution centre.

(4 marks)

Case Study
Green Grow is a sustainable farming company that produces vegetables using
hydroponics, a soil-free farming method where plants are grown in nutrient-rich
water. This method reduces the need for large land areas and allows for eﬃcient
use of resources like water and nutrients.

Green Grow is committed to minimising waste and improving eﬃciency, making

lean production a core focus. The company uses just-in-time (JIT) stock
management to avoid overstocking and reduce waste. However, it faces
challenges with unreliable suppliers, which can disrupt production schedules. To
ensure continuous improvement, Green Grow involves employees in Kaizen
initiatives, where small, ongoing improvements are made to its farming
processes.

Analyse two advantages and one disadvantage of Green Grow involving employees in
Kaizen initiatives.

(6 marks)

Green Grow is committed to minimising waste and improving eﬃciency, making

Describe two ways Green Grow could minimise waste in its farming operations.

(4 marks)

Exam Questions

5.4 Location
Choosing a Production Location / Reorganising Production

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Easy (8 questions) /16

Medium (6 questions) /28

Total Marks /44

Case Study
Bavarian Software Solutions subcontracts specialised coding tasks to external
developers

Deﬁne the term 'subcontracting'.

(2 marks)

Case Study
Dubai Healthcare Management Ltd provides medical services across the Middle
East. DHM is considering outsourcing business functions to external providers.

State two business functions that are commonly outsourced.

(2 marks)

Case Study
Highland Textiles oﬀshored its manufacturing operations to Bangladesh in 2024
to take advantage of lower labour costs while maintaining quality standards.

State two disadvantages of oﬀshoring.

(2 marks)

Case Study
Managers at Iberian Automotive Ltd decided to insource its quality control
operations after experiencing issues with external providers in 2023.

Deﬁne the term 'insourcing'.

(2 marks)

Case Study
Korean Semiconductors PLC produces microchips. KSC is considering reshoring
production to South Korea due to rising costs.

State two cost-related reasons for reshoring.

Case Study
Sunshine Solar Panels Inc, established in Malaysia, produces photovoltaic panels.
SSP is evaluating potential locations for expansion, carefully considering aspects
such as infrastructure.

State two infrastructure considerations that can inﬂuence business location.

(2 marks)

Case Study
Italian Fashion SpA manufactures luxury goods. After experiencing intellectual
property theft overseas, the company is returning production to Italy to protect
its designs.

Deﬁne the term 'intellectual property protection'.

(2 marks)

Case Study
TechNova, a software company, is considering outsourcing customer support to
an external provider.

Explain one beneﬁt for TechNova of outsourcing its customer support.

(2 marks)

Case Study
W H Hausman operates a chain of greenhouse farming facilities that grow fresh
herbs and vegetables. The business selected its current location in a rural area
due to the availability of large, aﬀordable land plots and easy access to
renewable energy sources.

While the location supports sustainable operations, it limits W H Hausman’s

access to urban markets, requiring additional transportation to reach customers.
The company is considering relocating to an area closer to its key customers but
faces challenges such as higher rental costs and the potential disruption of its
eco-friendly initiatives.

Explain one advantage and one disadvantage of W H Hausman’s current rural location.

(4 marks)

While the location supports sustainable operations, it limits W H Hausman’s

Describe two factors W H Hausman should consider when deciding on a new location.

(4 marks)

Case Study
SoleMate operates a chain of shoe shops specialising in aﬀordable yet
fashionable footwear for men, women, and children. The company’s stores are
located primarily in suburban shopping centres, providing ample parking and
convenience for families. This aligns with SoleMate’s mission to make stylish
footwear accessible to budget-conscious households.

Recently, SoleMate has experienced declining sales in suburban locations due to

increased competition from online retailers. To address this, the company is
considering expanding into urban high streets to attract a younger, trendier
demographic and improve brand visibility.

However, moving into urban areas presents challenges. The cost of renting a high
street store is approximately 50% higher than the rent in suburban shopping
centres. Additionally, SoleMate will need to invest an estimated £50,000 per store
to redesign interiors and tailor its product oﬀerings to meet urban customer
preferences. Despite these costs, the management believes the shift could
rejuvenate the brand and position SoleMate for long-term growth.

Analyse two advantages and one disadvantage of SoleMate expanding into urban high
streets.

(6 marks)

Recently, SoleMate has experienced declining sales in suburban locations due to

increased competition from online retailers. To address this, the company is
considering expanding into urban high streets to attract a younger, trendier
demographic and improve brand visibility.

Describe two factors SoleMate should consider when selecting a new location for urban
high streets.

(4 marks)

Case Study
BrightGrow operates nurseries supplying ornamental plants to homeowners and
garden centres. Its main facility is located near a highway, ensuring eﬃcient
delivery routes to regional customers. BrightGrow is known for its eco-friendly
practices, such as using organic fertilisers and water-eﬃcient irrigation systems,
which align with its mission to promote sustainable gardening.

BrightGrow is considering opening a second nursery in a neighbouring region to

meet growing demand for its products. The new nursery is expected to cost
£300,000 to establish, including the purchase of land, construction, and initial
setup of greenhouses. Local government representatives support the expansion,
as it could create jobs and boost the local economy. However, some
environmental groups have expressed concerns about potential habitat
disruption caused by the new facility.

The company is evaluating key factors such as market potential, transportation

infrastructure, environmental impact, and stakeholder views. Management aims
to ensure the new nursery aligns with its sustainability goals while meeting the
needs of its expanding customer base.

Explain one advantage and one disadvantage of BrightGrow’s current location near a
highway.

(4 marks)

BrightGrow is considering opening a second nursery in a neighbouring region to

The company is evaluating key factors such as market potential, transportation

infrastructure, environmental impact, and stakeholder views. Management aims
to ensure the new nursery aligns with its sustainability goals while meeting the
needs of its expanding customer base.

Analyse two advantages and one disadvantage of BrightGrow opening a second nursery
in a neighbouring region.

(6 marks)

Exam Questions

5.5 Break-Even
Analysis
Break-Even Analysis / Changes to & Limitations of Break-Even

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Easy (8 questions) /16

Medium (12 questions) /42

Total Marks /58

Case Study
Himalayan Trekking Ltd operates guided mountaineering expeditions in Nepal.
HTL's management is analysing its ﬁxed and variable costs to determine
minimum participant numbers needed for each expedition.

Deﬁne the term 'variable costs'.

(2 marks)

Case Study
Global Spice Trading Ltd sources and processes speciality spices for restaurants
worldwide. GST is reviewing its pricing strategy and wants to be sure that it will
make a proﬁt. Its ﬁnance manager is intending to carry out a break even analysis.

Deﬁne the term 'break-even analysis'.

(2 marks)

Case Study
Swiss company Eco-Pack Solutions manufactures biodegradable packaging. Its
ﬁnance team is analysing sales data to understand their ﬁnancial performance
and will carry out a break even analysis.

State two components of break-even analysis.

(2 marks)

Case Study
Contribution is an essential ﬁnancial concept in break-even analysis, especially
for global businesses like CacaoPlus Ltd, a Swiss chocolate exporter.

Deﬁne the term 'contribution'.

(2 marks)

Case Study
Maple Technologies Ltd, a Canadian manufacturer of smart home devices, uses
break-even charts to visualise their cost structure, identify the margin of safety
and determine proﬁtability.

Deﬁne the term 'margin of safety'.

(2 marks)

Case Study
Tropical Juices Ltd is launching a new organic drink and wants to understand its
break-even point to decide production targets. They have calculated their ﬁxed
costs and contribution per unit for this purpose.

State two beneﬁts of calculating the break-even point.

(2 marks)

Case Study
In 2024, SunGlo Solar Ltd, a Namibian renewable energy company, uses break-
even analysis to evaluate the ﬁnancial feasibility of expanding its operations into
Asia. However, their management recognises that break-even analysis has some
limitations.

State two limitations of break-even analysis.

(2 marks)

Case Study
GreenGarden, a producer of eco-friendly garden tools, uses break-even analysis
in its production planning.

Describe one beneﬁt for a business of using break-even analysis.

(2 marks)

Case Study
ActiveKids Academy runs extracurricular activity clubs for children, oﬀering
gymnastics, dance, and martial arts classes. The academy’s current goal is to
expand to a new location, which will require signiﬁcant investment in equipment
and rent.

The company estimates the following costs and revenues for the expansion:

Fixed costs £45,000 per year, including rent and instructor salaries

Variable costs £12 per student, covering equipment and utilities

Revenue £40 per student per session

ActiveKids Academy plans to use break-even analysis to determine how many

students it must enrol to cover its costs. Stakeholders, including investors, are
particularly interested in the proﬁtability and margin of safety for this new
venture.

Analyse two beneﬁts and one limitation of ActiveKids Academy including break-even
analysis in its business plan.

(6 marks)

The company estimates the following costs and revenues for the expansion:

Fixed costs £45,000 per year, including rent and instructor salaries

Variable costs £12 per student, covering equipment and utilities

Revenue £40 per student per session

ActiveKids Academy plans to use break-even analysis to determine how many

students it must enrol to cover its costs. Stakeholders, including investors, are
particularly interested in the proﬁtability and margin of safety for this new
venture.

Describe two limitations of break-even analysis for ActiveKids Academy.

(4 marks)

Case Study
PureTaste Catering provides bespoke catering services for weddings, corporate
functions, and private events. To meet growing demand, the company is
evaluating how to achieve its annual proﬁt target of £50,000 while covering its
costs.

PureTaste’s cost structure is:

Fixed costs: £80,000 annually, including rent, utilities, and staﬀ salaries.
Variable costs: £15 per guest.
Revenue: £50 per guest.

Management is also analysing how ﬂuctuations in variable costs, such as

ingredient prices, could impact its proﬁt margins and overall ﬁnancial
performance.

Explain one advantage and one disadvantage of PureTaste setting a target proﬁt for the
year.

(4 marks)

PureTaste’s cost structure is:

Fixed costs: £80,000 annually, including rent, utilities, and staﬀ salaries.
Variable costs: £15 per guest.
Revenue: £50 per guest.

Management is also analysing how ﬂuctuations in variable costs, such as

ingredient prices, could impact its proﬁt margins and overall ﬁnancial
performance.

Describe two impacts of an increase in ﬁxed costs on PureTaste Catering’s ﬁnancial

performance.

(4 marks)

Case Study
PetFit operates exercise and agility centres for dogs, charging £30 per session.
The company plans to open a new facility in a neighbouring town and is
evaluating how to maintain proﬁtability while managing ﬁxed and variable costs.

The new facility’s costs are:

Fixed costs: £60,000 annually for rent, staﬀ salaries, and insurance.
Variable costs: £10 per session.

PetFit’s management also wants to analyse its margin of safety to assess ﬁnancial
risks and determine strategies to increase customer attendance.

Explain one advantage and one disadvantage of analysing the margin of safety for
PetFit’s new facility.

(4 marks)

The new facility’s costs are:

Fixed costs: £60,000 annually for rent, staﬀ salaries, and insurance.
Variable costs: £10 per session.

PetFit’s management also wants to analyse its margin of safety to assess ﬁnancial
risks and determine strategies to increase customer attendance.

Analyse two advantages and one disadvantage of increasing the price per session for
PetFit’s services.

(6 marks)

Case Study
Sunny Panels installs solar panels for homeowners who want to save on
electricity bills. Each solar panel system is sold for $5,150. The company spends a
lot on advertising and training its workers, which increases its ﬁxed costs.
However, its variable costs are kept low because it buys parts in bulk.

Selected Financial Data for 2024 Amount ($)

Fixed Costs 1,010,200

Variable Cost per Solar Panel System 2,150

Target Proﬁt 200,100

Calculate the break-even level of output for Sunny Panels Ltd (show all your working).

(2 marks)

(b) Calculate the margin of safety for Sunny Panels Ltd if it produces and sells 520 solar
panels (show all your working).

(2 marks)

Case Study
ComfyTees makes cotton t-shirts for teenagers and young adults. The company
focuses on simple, comfortable designs that are sold in shops and online. Each t-

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shirt is priced at $24.50. ComfyTees has recently increased its advertising budget
to attract more customers. The company plans to sell 22,000 t-shirts this year.

Selected Financial Data for 2024 Amount ($)

Fixed Costs 299,100

Variable Cost per T-shirt 10.25

Planned Output (in units) 22,000

Using the planned output, calculate ComfyTees’ target proﬁt for 2024 (show all your
working).

(2 marks)

Selected Financial Data for 2024 Amount ($)

Fixed Costs 1,010,200

Variable Cost per Solar Panel System 2,150

Target Proﬁt 200,100

Calculate the number of solar panel systems Sunny Panels needs to sell to achieve a
target proﬁt of $200,100 (show all your working).

Case Study
BrightLights Ltd. makes energy-saving light bulbs for homes and small
businesses. The company prides itself on offering affordable and eco-friendly
products. BrightLights has invested in new machinery, which has increased its
fixed costs but helps keep its variable costs low. The company plans to sell 25,000
light bulbs this year and aims to achieve a target profit of $50,000.

Selected Financial Data for 2024 Amount

Fixed costs $210,750

Variable cost per lightbulb $8.40

Target proﬁt $50,000

Planned output 25,000 units

Calculate the target price per light bulb for BrightLights Ltd. (show all your working).

(2 marks)

© 2025 Save My Exams, Ltd. Get more and ace your exams at savemyexams.com 14
materials for making drones adds to the variable costs. SkyView Drones expects
to sell 381 drones this year.

Selected Financial Data for 2024 Amount ($)

Fixed Costs $498,700

Variable Cost per Drone $1,180

Selling Price per Drone $2,490

Break even point 350

Using the forecast sales, calculate the expected proﬁt for SkyView Drones in 2024 (show
all your working).

(2 marks)

Case Study
SkyView Drones sells drones for taking photos and videos. These drones are
popular with photographers and small businesses. Each drone is sold for $2,490.
The company has to cover ﬁxed costs like rent and salaries, and the cost of
materials for making drones adds to the variable costs. SkyView Drones expects
to sell 381 drones this year.

Fixed Costs $498,700

Variable Cost per Drone $1,180

Selling Price per Drone $2,490

Break even point 350

Calculate the change in the break even point if variable costs increase to $1,340 (show all
your working).

(2 marks)

Exam Questions

5.6 Production
Planning
Supply Chain Processes / Stock Control Charts / Useful Production Metrics

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Easy (9 questions) /18

Medium (12 questions) /40

Total Marks /58

Case Study
Veerva Motors Ltd manufactures electric scooters in Thailand. The company has
to have a strong approach to supply chain management, as it sources
components from suppliers across Asia.

Deﬁne the term 'supply chain management'.

(2 marks)

Case Study
Precision Parts India Ltd manufactures automotive components in Chennai. The
company tracks inventory movement using detailed stock control charts to
identify the reorder level and manage buﬀer stock levels eﬀectively.

Deﬁne the term 'reorder level'.

(2 marks)

Case Study
Nordic Pharmaceuticals produces medical supplies in Oslo, Norway. The
company implemented new stock control measures in 2024 to prevent stockouts.

State two consequences of poor stock control.

(2 marks)

Case Study
Brazilian Wood Products Ltd manufactures furniture components in São Paulo.
The company monitors its inventory levels using computerised stock control
charts.

State two elements shown on a stock control chart.

(2 marks)

Case Study
Regensburg Spielzeuge manufactures traditional toys. The factory had a relatively
low capacity utilisation in 2024, operating at 65% of its maximum output capacity.

Deﬁne the term 'capacity utilisation'.

Case Study
Malaglazia produces industrial glass in Spain. The company faces increasing
pressure to reduce waste in 2024, including halving its defect rate.

State two consequences of a high defect rate.

(2 marks)

Case Study
Blatt Maschinen GmbH manufactures industrial equipment in Hamburg. The
company invested in automated systems in 2024 to improve capital productivity.

Deﬁne the term 'capital productivity'.

(2 marks)

Case Study
New Zealand Dairy Ltd produces dairy products in Auckland. The company is
considering outsourcing packaging in 2024 but must ﬁrst weigh up a range of
quantitative and qualitative factors.

State two quantitative factors in make or buy decisions.

(2 marks)

Case Study
GreenTech, a solar panel manufacturer, relies on global supply chains to source
rare materials like silicon. It aims to maintain strong supplier relationships.

Explain one reason why GreenTech focuses on strong supplier relationships.

(2 marks)

Case Study
BrightClean manufactures and supplies cleaning products to industrial clients.
The company recently adopted a just-in-time (JIT) stock management system to
improve eﬃciency and reduce costs.

However, this has created challenges. BrightClean relies heavily on punctual

deliveries from suppliers to meet client orders, and any delays disrupt
production. Despite these risks, JIT has reduced stockholding costs signiﬁcantly
and improved cash ﬂow. The company is considering switching back to a just-in-
case (JIC) system to mitigate risks.

Explain one advantage and one disadvantage of BrightClean’s adoption of a just-in-time

stock management system.

(4 marks)

However, this has created challenges. BrightClean relies heavily on punctual

Describe two factors BrightClean should consider when deciding between just-in-time
and just-in-case stock management systems.

(4 marks)

Case Study
GreenField Agriculture grows organic vegetables and distributes them to
supermarkets. The company has been struggling with under-utilised capacity at
its processing facility, which has led to increased unit costs.

GreenField is considering increasing production to optimise its capacity

utilisation but is concerned about the risks of overproduction, including potential
waste and storage issues. The company also aims to ensure that it can respond
to sudden increases in demand without straining resources.

Analyse two advantages and one disadvantage to GreenField Agriculture of increasing

production to improve capacity utilisation.

(6 marks)

GreenField is considering increasing production to optimise its capacity

Describe two strategies GreenField could use to improve capacity utilisation.

(4 marks)

Case Study
SwiftSnacks operates a network of vending machines that sell healthy snacks and
beverages in oﬃce buildings and schools. The company has grown rapidly, but
inconsistent supply chain management has led to stockouts in some vending
machines and overstocking in others, causing waste and reduced customer
satisfaction.

To address this, SwiftSnacks is evaluating its supply chain processes, including

the use of automated stock control systems to optimise replenishment
schedules. Additionally, the company is considering outsourcing the stocking of
its vending machines to a third-party logistics provider. SwiftSnacks must balance
the beneﬁts of outsourcing with the need to maintain control over product
quality and brand reputation.

Explain one advantage and one disadvantage of SwiftSnacks outsourcing the stocking of
its vending machines.

(4 marks)

To address this, SwiftSnacks is evaluating its supply chain processes, including

Analyse two beneﬁts and one drawback of SwiftSnacks implementing an automated

stock control system.

(6 marks)

Case Study
SteelBuild Ltd manufactures prefabricated steel components for construction
projects. The company carefully manages its stock to ensure uninterrupted

Stock Control Data Value

Maximum Stock Level 1,200 units

Reorder Quantity 1,000 units

Minimum Stock Level 200 units

Average Weekly Usage 150 units

Lead Time 2 weeks

Storage Costs per Unit ($) 2

Calculate the reorder level for SteelBuild Ltd (show all your working).

(2 marks)

Case Study
Bright Bakery Ltd produces artisanal bread and pastries for local retailers. The
bakery has a maximum production capacity of 80,000 units per month. In
November 2024, the bakery produced 60,000 units to meet demand. However,
3,000 units were returned due to spoilage during transport. Management wants
to calculate the capacity utilisation rate to evaluate operational eﬃciency.

Maximum Production Capacity (units) 80,280

Actual Output (units) 61,445

Spoiled Units (units) 3,272

Average Selling Price Per Unit ($) 2.50

Calculate the capacity utilisation rate for Bright Bakery Ltd. (show all your working).

(2 marks)

Case Study
GreenGrow Ltd produces organic fertilisers for the agricultural sector. The
company employs 22 workers in its factory, who collectively worked 3,130 hours
in November 2024. During this period, the factory produced 32,410 units of
fertiliser. Management wants to calculate the labour productivity to monitor
workforce eﬃciency.

Production Data Value

Total Units Produced 32,410

Average Hourly Wage Per Worker $15.40

Average Monthly Hours Per Worker 142

Number of Workers 22

Calculate the labour productivity for GreenGrow Ltd in November 2024 (show all your
working).

Case Study
EcoLights Ltd manufactures energy-eﬃcient LED bulbs. In December 2024, the
company produced 240,680 standard bulbs and 4,870 bespoke bulbs using
machinery valued at $1,253,000. The company also spent $350,420 on labour
costs during the month. Management wants to calculate the capital productivity
to evaluate how eﬀectively the company utilises its equipment.

Production Data Value

Standard Units Produced 240,680

Bespoke Units Produced 4,870

Labour Costs ($) 350,420

Value of Machinery ($) 1,253,000

Calculate the capital productivity for EcoLights Ltd in December 2024 (show all your
working).

(2 marks)

Case Study
SweetTreats Ltd produces gourmet chocolates for retailers. Management is
concerned that the defect rate has increased from 3.2% last year and wants to

© 2025 Save My Exams, Ltd. Get more and ace your exams at savemyexams.com 14
calculate the current defect rate to identify areas for process improvement. The
company also received 375 customer complaints during the same period.

Production Data Value

Total Units Produced 49,875

Defective Units 2,345

Customer Complaints 375

Calculate the defect rate for SweetTreats Ltd in December 2024 (show all your working).

(2 marks)

Case Study
FreshWrap Ltd. produces reusable food wraps and is considering whether to
continue outsourcing production or bring manufacturing in-house. The company
currently purchases wraps from a supplier for $38,000. If FreshWrap
manufactures the wraps internally, ﬁxed costs would be $12,500 per month, and
variable costs would be $2.50 per unit. The company plans to produce or buy
10,220 units per month. Additionally, the company spends $4,500 per month on
marketing.

Costs Data Value

Fixed Costs for In-house Production ($) 12,500

Variable Cost Per Unit for In-house ($) 2.50

Monthly Marketing Costs ($) 4,500

Planned Monthly Production or Purchase 10,220 units

© 2025 Save My Exams, Ltd. Get more and ace your exams at savemyexams.com 15
Calculate the total cost to make 10,000 units in-house (show all your working).

(2 marks)

Exam Questions

5.7 Crisis
Management &
Contingency Planning
Crisis Management / Contingency Planning

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Easy (8 questions) /16

Medium (6 questions) /28

Total Marks /44

Case Study
Tropical Shores Resort (TSR) operates luxury beachfront properties across
Southeast Asia. In December 2023, TSR developed detailed contingency plans for
responding to potential tsunamis, including evacuation routes, emergency supply
stockpiles, and staﬀ training protocols.

Deﬁne the term 'contingency plan'.

(2 marks)

Case Study
Atlas Manufacturing Ltd produces precision engineering components in multiple
locations worldwide. After conducting risk assessments in 2024, AML identiﬁed
several potential threats from crisis situations to business continuity.

State two potential crisis situations that could aﬀect a business.

(2 marks)

Case Study
Eastern Food Corporation, a major food producer in Indonesia, faced allegations
of contamination in January 2024. Their management team managed the crisis
situation well, with a particularly eﬀective approach to communication.

State two elements of eﬀective crisis communication.

(2 marks)

Case Study
Alpine Solutions Ltd, a European logistics company, conducted detailed risk
assessments in January 2024 to identify potential disruptions to their operations.

Deﬁne the term 'risk assessment'.

(2 marks)

Case Study
As an important element of its contingency planning, Caribbean Cruise Lines
developed new emergency protocols in March 2024 following changes to
industry regulations.

State two key elements of contingency planning.

(2 marks)

Case Study
Paciﬁc Freight Limited conducted comprehensive risk assessments in February
2024 to identify potential threats to their operations.

State two limitations of risk assessment in contingency planning.

(2 marks)

Case Study
Nomad Healthcare Solutions, a medical equipment manufacturer, implemented
new organisational structures in March 2024 to improve their crisis management
capabilities.

State two characteristics of crisis management.

(2 marks)

Case Study
FoodWave, a restaurant chain, suﬀered a power outage aﬀecting operations at
multiple locations. It implemented a contingency plan that included backup
generators and alternative cooking methods.

Explain one beneﬁt for FoodWave of having a contingency plan during the power outage.

(2 marks)

Case Study
AirEase Airlines is a low-cost airline operating domestic and regional ﬂights. The
company recently experienced a signiﬁcant crisis when one of its planes
encountered a mid-air technical failure, resulting in an emergency landing. While
no injuries occurred, the incident caused widespread media attention, raising
concerns about passenger safety.

To address the crisis, AirEase immediately grounded its ﬂeet for inspections,
issued public statements to reassure passengers, and provided compensation to
aﬀected customers. The company is now evaluating its contingency planning and
communication strategies to minimise reputational damage and prevent similar
incidents.

Explain one advantage and one disadvantage of AirEase Airlines’ crisis management
approach during the technical failure incident.

(4 marks)

Describe two factors AirEase Airlines should consider when revising its contingency
plans.

(4 marks)

Case Study
HealthPlus operates a chain of private hospitals. During a recent outbreak of a
contagious virus in one of its facilities, the hospital faced a crisis when 20 staﬀ
members and patients were infected. The incident attracted media attention,
and the hospital was criticised for its lack of preparedness.

To manage the crisis, HealthPlus implemented strict infection control measures,

issued regular updates to the media, and provided counselling services for
aﬀected individuals. The company is now developing contingency plans to
prevent similar crises in the future.

Analyse two beneﬁts and one limitation of HealthPlus issuing regular updates to the
media during the crisis.

(6 marks)

To manage the crisis, HealthPlus implemented strict infection control measures,

issued regular updates to the media, and provided counselling services for
aﬀected individuals. The company is now developing contingency plans to
prevent similar crises in the future.

Explain one advantage and one disadvantage of HealthPlus implementing strict infection
control measures during the virus outbreak.

(4 marks)

Case Study
CleanWave installs water purification systems for residential and commercial
customers. Recently, the company faced a crisis when its flagship water filter
model was found to have a manufacturing defect that compromised water
quality. This led to customer complaints, returns, and widespread criticism on
social media.

To manage the crisis, CleanWave issued a product recall, oﬀered free

replacements, and posted updates on its website and social media channels. The
company is now reviewing its production and quality control processes to
prevent similar issues.

Explain one advantage and one disadvantage of CleanWave recalling its defective
product.

(4 marks)

To manage the crisis, CleanWave issued a product recall, oﬀered free

replacements, and posted updates on its website and social media channels. The
company is now reviewing its production and quality control processes to
prevent similar issues.

Analyse two beneﬁts and one drawback of CleanWave posting updates on social media
during the crisis.

(6 marks)

Exam Questions

5.8 Research &

Development (R&D)
Research, Development & Innovation

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Easy (8 questions) /16

Medium (6 questions) /28

Total Marks /44

Case Study
Nanjing Automotive Solutions Ltd, a vehicle component manufacturer, invested
signiﬁcantly in research and development during 2023. Despite the high costs
involved, NAS believes this investment is crucial for maintaining competitiveness.

Deﬁne the term 'research and development'.

(2 marks)

Case Study
Meridian Pharmaceuticals Ltd developed several prototypes for a new
medication delivery system in 2023.

Deﬁne the term 'prototype'.

(2 marks)

Case Study
Brasilia Fashion discovered unauthorised use of its distinctive logo in 2023. The
company's legal department identiﬁed several ways their intellectual property
rights had been violated.

State two reasons why businesses protect their intellectual property rights.

(2 marks)

Case Study
Wellington Ceramics Ltd creates distinctive, copyrighted pottery designs for
luxury hotels. In 2023, WCL discovered that a competitor was selling identical
copies of their signature pattern.

Deﬁne the term 'copyright'.

(2 marks)

Case Study
Cape Town Innovations Ltd successfully launched several new products in 2023
that eﬀectively met previously unidentiﬁed customer needs.

State two beneﬁts of meeting customer needs eﬀectively.

(2 marks)

Case Study
Dubai Electronics Manufacturing Ltd used incremental innovation to improve its
smartphone design throughout 2023, adding enhanced camera features and
battery life with each new model release.

Deﬁne the term 'incremental innovation'.

(2 marks)

Case Study
Mumbai Technologies PLC launched a revolutionary payment system in 2023 that
fundamentally changed how small businesses process transactions. This
innovation has signiﬁcantly disrupted traditional banking services.

State two characteristics of disruptive innovation.

(2 marks)

Case Study
EcoDrive, an electric vehicle company, uses patents to protect its battery
technology.

Describe one beneﬁt of patenting new technology.

(2 marks)

Case Study
NanoFlex specialises in creating advanced medical devices. The company is
investing in R&D to develop a ﬂexible, bio-compatible implant for joint
replacement surgery. This innovation aims to provide patients with faster
recovery times and longer-lasting solutions compared to traditional implants.

The project requires signiﬁcant funding for clinical trials and collaboration with
academic researchers. NanoFlex is also focused on securing patents to protect its
intellectual property from competitors. However, the high-risk nature of the
project and strict regulatory requirements pose signiﬁcant challenges.

Explain one advantage and one disadvantage of NanoFlex securing patents for its
innovative medical implant.

(4 marks)

Analyse two beneﬁts and one drawback of NanoFlex collaborating with academic
researchers on its R&D project.

(6 marks)

Case Study
SwiftGrow produces organic fertilisers for commercial farms. The company is
developing a slow-release fertiliser that minimises nutrient runoﬀ, improving
sustainability while boosting crop yields. This R&D project involves pilot testing
on farms and collaboration with agricultural scientists.

SwiftGrow anticipates signiﬁcant demand for the product but faces challenges,
including high upfront investment and uncertain long-term demand. Additionally,
SwiftGrow must consider its competitors’ ability to replicate the product quickly
once launched.

Analyse two advantages and one limitation of SwiftGrow conducting pilot testing on
commercial farms before launching its product.

(6 marks)

Describe two competitive risks SwiftGrow should consider when launching its slow-
release fertiliser.

(4 marks)

Case Study
EcoWave Cleaning Solutions specialises in eco-friendly cleaning products for
households. The company is investing in research and development (R&D) to
create a biodegradable cleaning agent that breaks down grease without leaving
harmful residues.

This project requires signiﬁcant funding, including hiring specialist scientists and
testing prototypes. EcoWave aims to launch the product within two years to gain
a competitive edge in the growing eco-conscious market. However, management
is concerned about the risks, including high costs and the possibility of product
failure during trials.

Explain one advantage and one disadvantage of EcoWave investing heavily in R&D for its
new product.

(4 marks)

Describe two risks EcoWave should consider when undertaking its R&D project.

(4 marks)

Exam Questions

5.9 Management
Information Systems
Information System Terminology / Data Management

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Easy (9 questions) /18

Medium (6 questions) /28

Total Marks /46

Case Study
Delta Research Ltd recently implemented a new system for processing their
business clients' sales data. The CEO explains that their software can handle 'big
data' that usually overwhelms traditional data processing applications.

Deﬁne the term 'big data'.

(2 marks)

Case Study
Nectar360 manages customer loyalty programs for UK retail chains, including
Sainsburys. Their systems collect various types of customer data to help retailers
understand shopping patterns.

State two types of data collected through customer loyalty programmes.

(2 marks)

Case Study
DataFlex International specialises in data management systems. The company's
latest project involves helping businesses use accumulated customer information
eﬀectively through data mining.

Deﬁne the term 'data mining'.

(2 marks)

Case Study
Cloud Secure Ltd provides data storage solutions for multinational corporations.
They emphasise the importance of protecting sensitive business data.

State two ways to protect sensitive business data.

(2 marks)

Case Study
Digital Defense Ltd specialises in protecting businesses from online threats and
cybercrime. Their recent report highlights various methods criminals use to
target organisations.

State two forms of cybercrime.

(2 marks)

Case Study
VirtuTech Solutions develops virtual reality applications for businesses. Their
products are used across diﬀerent sectors for various purposes.

State two business uses of virtual reality.

(2 marks)

Case Study
WorkMetrics International Ltd provides software that tracks employee
productivity in call centres. It has received criticism from trade unions for
promoting 'Digital Taylorism'.

Deﬁne the term 'Digital Taylorism'.

(2 marks)

Case Study
Focusing on growing concerns about ethical concerns related to business use of
technology, Humanitech advises ﬁrms on responsible implementation of IT
equipment and processes.

State two ethical concerns related to business use of technology.

(2 marks)

Case Study
EcoGro, a farming cooperative, implemented a database system to track crop
yields, manage inventory, and monitor sales. It aims to improve decision-making
and eﬃciency.

Explain one beneﬁt for EcoGro of using a database system to support its decision-
making.

(2 marks)

Case Study
SafeScan Security Services provides high-tech security systems to corporate
clients, including surveillance cameras and biometric access controls. To improve
eﬃciency, the company has implemented a centralised management information
system (MIS) that tracks equipment status, maintenance schedules, and
customer support queries in real time.

While the MIS has streamlined operations and reduced response times, it has
raised concerns about data security and the cost of maintaining the system.
SafeScan is now evaluating how to optimise its MIS while ensuring robust
cybersecurity measures are in place.

Explain one advantage and one disadvantage of SafeScan using a centralised

management information system (MIS).

(4 marks)

Describe two factors SafeScan should consider when maintaining its MIS.

(4 marks)

Case Study
VitaFit operates a chain of wellness centres oﬀering ﬁtness classes, therapy
sessions, and personalised nutrition plans. The company recently implemented a
customer relationship management (CRM) system to track booking patterns,
feedback, and preferences, enabling better personalisation of its services.

The CRM system has increased customer satisfaction and loyalty but has also
raised concerns about data privacy regulations, particularly regarding sensitive
customer information. VitaFit must balance the beneﬁts of data-driven insights
with the need for compliance and customer trust.

Analyse two beneﬁts and one drawback of VitaFit ensuring compliance with data
regulations.

(6 marks)

Explain one advantage and one disadvantage of VitaFit using a CRM system to track
customer preferences.

(4 marks)

Case Study
AquaBlue operates a chain of luxury hotels oﬀering tailored guest experiences.
To enhance its services, AquaBlue introduced a property management system
(PMS) that tracks room availability, guest preferences, and service requests in
real time.

The PMS has improved operational eﬃciency, but AquaBlue faces challenges in
maintaining system reliability during peak seasons and ensuring data security
across multiple locations. Management is exploring whether to upgrade the PMS
to a cloud-based solution for better scalability.

Analyse two advantages and one drawback of AquaBlue using a real-time property
management system (PMS).

(6 marks)

Describe two factors AquaBlue should consider when ensuring the reliability of its
property management system (PMS).

(4 marks)

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