An electrical assembly business, located in Europe, produces several products. The following data (in US dollars) are available for two of its key components, X and Y:

$$\begin{array}{|l|c|c|} \hline \textbf{ Products } & \mathbf{ X } & \mathbf{ Y } \\ \hline \text { Direct labour costs per unit } & \$ 5 & \$ 7 \\ \hline \text { Direct material costs per unit } & \$ 4 & \$ 12 \\ \hline \text { Fixed factory costs directly allocated to each product (monthly) } & \$ 2000 & \$ 3000 \\ \hline\text { Business overhead costs (administration and marketing) } \\ \text { allocated to each product (monthly) } & \$ 6000 & \$ 8000 \\ \hline \text { Current monthly output (units) } & 500 & 1000 \\ \hline\text { Unit cost of product if bought-in from supplier (including } \\ \text { transport costs from Asia) } & \$ 11 & \$ 24 \\ \hline \end{array}$$

Calculate the unit direct cost of making product X and product Y.

Define the term ‘crisis management’.

What would be meant by the term ‘optimal location’ for a new Walmart supermarket?

The risk of salmonella contaminating millions of chocolate bars put Cadbury's corporate plan in doubt. The problem was caused by a leaking pipe in one of Cadbury's UK factories but the company's contingency plan swung into action. Over a million chocolate bars were recalled by the company, they were disposed of in a completely safe way and the Food Standards Agency was informed. Retailers were fully compensated for stock that was destroyed. Cadbury apologised to all customers. Business consultants doubted whether the incident would cause any long-term damage to the company's image or brand names because of the detailed contingency plan that was put into operation.

Evaluate the importance of contingency planning to a business like Cadbury.

Define the term ‘capacity utilisation’.

With reference to one organisation that you have studied, evaluate how business strategy affects research and development.

With reference to one organisation that you have studied examine the impact innovation and ethics have on sustainable operations management.

Define the term ‘lean production’.

The problems at NTM began several years ago when the previous chief executive took the decision to double production capacity. He could not have foreseen the worldwide recession and how this would reduce the demand for the textiles made in the factory. The following figures tell their own story and the cost impact on the business is now serious:

$$\begin{array}{|l|c|c|c|} \hline & \textbf{ 2012 } & \textbf{ 2013 } & \textbf{ 2014 } \\ \hline \text { Maximum capacity (million metres) } & 5 & 5 & 5 \\ \hline \text { Actual annual output (million metres) } & 4.0 & 3.7 & 3.0 \\ \hline \text { Selling price per metre } & \$ 3 & \$ 3 & \$ 2.7 \\ \hline \text { Annual fixed costs } & \text{ \$3m } & \text{ \$3m } & \text{ \$3m } \\ \hline \text { Variable costs per metre } & \$ 2 & \$ 2 & \$ 2.2 \\ \hline \end{array}$$

Calculate the capacity utilisation rates for Nassau in each of the three years.

Define the term ‘cradle-to-cradle manufacturing’.

On the basis of the information for TLC Cosmetics in the table below, recommend which site it should choose for its new branch.

$$\begin{array}{|l|l|l|} \hline & \textbf { Site } \mathbf{X} \textbf { - capital } & \textbf { Site } \mathbf{Y} \textbf { - capital } \\ & \textbf { cost \pounds2} \textbf { million } &\textbf { cost \pounds3 } \textbf { million } \\ \hline\text { Length of time to repay initial capital cost } \\ \text { (payback period) } \\ & 2.5 \text { years } & 3.8 \text { years } \\ \hline \text { Annual profit (ARR) made as \% of initial cost } & 12 \% & 14 \% \\ \hline \end{array}$$

Define the term ‘batch production’.

Define the term ‘joint venture’.

Define the term ‘sustainable operation’.