IB B&M Stock Management 2011

1. Explain how just-in-time manufacture, and the use of modern technologies, allows Stoves to
customize their products, whilst still producing in bulk.
(Total 5 marks)

2. Stock valuation

Trend-Setter, established in January 2004, produces

dresses for fashion conscious clients. The company buys a
fixed amount of the silk material used for production from
cheap, but very reliable overseas suppliers.

In the first three months of its first trading year, Trend-

Setter sold 2 000 dresses per month at $20 each. However,
in the next three months of operation the company
experienced a 50% drop in the number of dresses sold
despite a 20% price cut. Consequently, the amount of
stock held increased.

The manager, therefore, is thinking of introducing the JIT

(just-in-time) method of production and stock control.

Stock data for Trend-Setter for the first six months of 2004 is shown below

Month / 2004 Purchases Stock used

(sq meters and price) (sq meters)

January 5 000 @ $3 2 000

February NIL 2 000

March 5 000 @ $4 2 000

April NIL 1 000

May 5 000 @ $4 500

June NIL 500

Evaluate whether Trend-Setter should introduce a JIT (just-in-time) method of production and
stock control.
(Total 6 marks)

1
 IB B&M Stock Management 2011

3. Jaguar

When the US car manufacturer, Ford, acquired Jaguar in the

early 1990s, it decided to produce its new model, the Jaguar X’
Type in a dedicated plant located in the UK. The Halewood
factory was chosen to produce the X’ Type because the
“Britishness” associated with Jaguar made overseas production
inappropriate. $300 million was invested by Ford to upgrade
Halewood to deliver exceptional quality products using highly
efficient “lean manufacturing”. Totally new production lines were installed allowing complete
production in a single location. Production efficiency was further improved by locating all major
parts suppliers alongside the factory allowing for just-in-time production system.

The “Halewood Vision” is a statement of principles aiming to create a world-class

manufacturing facility. A new set of working relationships was agreed with employees.
Production line workers were given responsibility for identifying continuous improvements and
were organized into smaller teams working with a group leader. These teams were given
considerable responsibility for implementing change. This led to dramatic increases in
productivity, and increased pride and commitment within the workforce.

Implementing the total quality culture involved workshops for managers, union representatives,
supervisors and production line workers based on participation and empowerment. The
production process and working culture at the plant was transformed by over a million hours of
training; an average of approximately 350 hours for each employee.

[Source: adapted from www.jaguarcars.com]

Explain the advantages and disadvantages for Jaguar of using just-in-time (JIT) production
rather than the more traditional just-in-case stock systems.
(Total 6 marks)

4. Assess the problems that Gadgets2u.com may face if it chooses to implement just-in-time (JIT)
stock control (line 98).
(Total 8 marks)