Practice 5.6 Production planning (HL only) with authentic IB Business Management exam questions for both SL and HL students. This question bank mirrors Paper 1, 2, 3 structure, covering key topics like systems and structures, human behavior and interaction, and sustainability and ethics. Get instant solutions, detailed explanations, and build exam confidence with questions in the style of IB examiners.
Paper
Level
Question 1
HLPaper 2
TerraVolt Ltd.
TerraVolt Ltd. is a European company specialising in the production of modular battery storage systems for renewable energy projects. After identifying an opportunity to expand into off-grid African markets, TerraVolt invested heavily in a new research and development (R&D) project to develop a lightweight, durable battery model.
However, unexpected production delays caused by supply chain disruptions forced TerraVolt to activate parts of its contingency plan, including outsourcing key components at higher costs. The finance team has prepared the company's final accounts and depreciation schedules to assess the financial impact and to plan for future investment needs.
Table 1: Statement of Profit or Loss for TerraVolt Ltd. for the year ending 31 December 2024 (figures in €000s)
| Item | Amount (€000) |
|---|---|
| Sales revenue | 10,200 |
| Cost of sales | 6,300 |
| Gross profit | 3,900 |
| Operating expenses | 2,400 |
| Depreciation expense | 400 |
| Interest | 150 |
| Profit before tax | — |
| Tax | 150 |
| Profit for the year | — |
Table 2: Statement of Financial Position for TerraVolt Ltd. as at 31 December 2024 (figures in €000s)
| Item | Amount (€000) |
|---|---|
| Non-current assets (at cost) | 2,000 |
| Accumulated depreciation | (800) |
| Current assets | 1,100 |
| Current liabilities | 750 |
| Long-term borrowings | 600 |
| Share capital | 700 |
| Retained earnings | — |
Additional information:
- The initial investment in machinery was €2,000,000.
- Machinery has an expected useful life of 5 years and a residual value of €0.
1.[2]
Calculate the profit before tax in 2024 for TerraVolt Ltd. Show all your working.
2.[2]
Calculate TerraVolt Ltd.’s net book value of non-current assets as at 31 December 2024. Show all your working.
3.[2]
Using the straight-line depreciation method, calculate TerraVolt Ltd.’s annual depreciation expense based on the machinery investment. Show all your working.
4.[2]
Calculate the current ratio for TerraVolt Ltd. as at 31 December 2024. Show all your working.
5.[2]
Comment on what the financial statements reveal about TerraVolt Ltd.’s profitability and liquidity position.
Question 2
HLPaper 3
SolvoHealth
Resource 1 – Business model and service offering
SolvoHealth is a rapidly growing mobile health company based in Vietnam. It operates a network of telehealth pods—solar-powered kiosks placed in rural communities that allow patients to consult doctors remotely, order basic diagnostics, and schedule medicine delivery.
Each pod includes a screen, smart diagnostic tools, and a local “health navigator” who guides users. SolvoHealth employs:
40 health navigators (frontline staff)
15 remote doctors (contracted)
30 staff at its operations HQ in Ho Chi Minh City (marketing, product, supply chain, HR)
SolvoHealth positions itself as affordable, hyper-local, and technology-enabled. The leadership team now plans to launch 60 pods in Indonesia and Bangladesh over the next 18 months.
Resource 2 – Internal HR report
“Navigator turnover remains high at 28% annually. Interviews cite poor training, emotional fatigue, and a disconnect between field roles and central ops decisions. Navigators receive basic onboarding but no career pathway or local adaptation in training. They also report being treated more as hardware support than as care professionals.
Headquarters recently introduced a CRM-linked performance bonus system based on call completion and upsell conversions—but this has increased pressure on already fatigued staff.”
Resource 3 – Weekly Ops Brief (March 2025)
Visual suggestion: This operations table can be converted into a bar chart or dashboard screenshot to test interpretation skills.
| Metric | Vietnam (live) | Indonesia (pilot) |
|---|---|---|
| Avg. pod uptime | 94% | 71% |
| Avg. medicine delivery time | 26 hours | 61 hours |
| Navigator-reported escalations | 9.2/week | 18.4/week |
| Inventory out-of-stock events | 3.1/week | 7.5/week |
Resource 4 – Brand perception audit (external)
In Vietnam, SolvoHealth scores high for accessibility and usefulness, but low for empathy and personalisation. Many patients feel “talked to” by doctors, not “heard.”
In Indonesia (pilot), users were confused by medical terms and unable to complete video sessions. 47% believed the navigator was “just a receptionist.”
A competitor, SehatNow, offers similar services but invests heavily in navigator-patient relationship-building and community health workshops to build trust.
Resource 5 - Email from Head of Marketing to CEO
Resource 6 – Slack thread
@Linh (HR): “One navigator resigned mid-shift—said she felt like a vending machine operator.”
@Dara (Marketing): “How are we still pushing bonuses on upsells when trust is crumbling?”
@Tung (Ops): “I’ll review the KPIs. But we can’t rebuild loyalty with posters.”
@Dara: “Maybe not. But we can’t scale a service that feels robotic either.”
*Note Slack is an internal team communications tool
1.[2]
With reference to Resource 2, describe one HR issue that may impact SolvoHealth’s service performance.
2.[6]
Explain one marketing challenge and one operations challenge SolvoHealth may face as it expands across Indonesia and Bangladesh.
3.[17]
Using all the resources provided and your knowledge of business management tools and theories, recommend a possible plan of action for SolvoHealth over the next five years.
Question 3
HLPaper 3
Global Solar Solutions (GSS)
Resource 1 – Background of the social enterprise
Three years ago, electrical engineer and entrepreneur Nadira Khan founded Global Solar Solutions (GSS) as a social enterprise in Morocco. Her goal was to provide affordable, modular solar lighting kits to off-grid rural communities. These kits, manufactured at GSS’s urban facility, include rechargeable LED lights and mobile charging ports. GSS reinvests 100% of profits into R&D and local hiring.
GSS operates in partnership with local NGOs and community councils. Its workforce includes 40 technicians and 20 community trainers who educate households about solar usage and maintenance. GSS applies lean production, Kaizen, and maintains a strong internal emphasis on quality control and after-sales support.
Resource 2 – Recent internal report on workforce issues
"High staff turnover and trainer burnout have increased over the past 12 months. Trainers, who work in remote villages for weeks at a time, report fatigue and a lack of recognition. Some have requested additional health support and clearer promotion opportunities."
The HR department suggested non-financial incentives such as increased job rotation and monthly feedback sessions but reported mixed engagement.
Resource 3 – Email from the Director of Rural Development (DRD)
To: nadira.khan@GSS.org
Subject: Expansion proposal
Dear Ms. Khan,
We are impressed by GSS’s impact. The Ministry would like to propose a contract to expand the solar program to 80,000 homes across North and West Africa over five years. Your team would need to train local technicians and build capacity in three new countries. Please note, the contract requires local sourcing of at least 60% of parts.
We will require an initial trial rollout in 5,000 homes and evidence of social impact.
Regards,
Director, DRD
Resource 4 – Extract from a marketing audit summary
GSS currently relies on word-of-mouth and NGO referrals. Its brand is associated with trust and affordability. However, a 2024 brand perception survey in new markets revealed low awareness and concerns about product durability compared to larger multinationals such as SolarX.
GSS’s marketing team is small (3 staff) and has no formal digital strategy. There is also no localized messaging for francophone West African markets.
Resource 5 – Operations update from the Head of Production
Our current facility is operating at 92% capacity. To meet a major scale-up, we would need to either expand production or outsource subassembly. We have identified two regional partners with experience in sustainable component manufacturing. However, we are concerned about quality assurance if we lose full process control.
Resource 6 – Excerpt from a local newspaper article
“Access to solar power has transformed daily life in remote villages. Children now study at night, families charge phones to access mobile banking, and kerosene usage has dropped. However, NGOs report that replacement parts for some GSS kits have been slow to arrive, creating frustrations in isolated regions.”
1.[2]
With reference to business management motivation theory, describe one need that GSS satisfies for rural households requiring solar lighting.
2.[6]
Explain one human resource challenge and one operations challenge GSS may face if it accepts the DRD expansion contract.
3.[17]
Using all the resources provided and your knowledge of business management tools and theories, recommend a possible plan of action for GSS over the next five years.
Question 4
HLPaper 2
ZenMoto Ltd.
ZenMoto Ltd. is a Japanese company that manufactures electric scooters designed for city commuting. To improve operational efficiency, ZenMoto has implemented lean production techniques such as just-in-time (JIT) inventory management, kaizen (continuous improvement), and quality circles across its factories. It is also reviewing its production planning processes to better match seasonal demand fluctuations.
The company plans to expand into new Southeast Asian markets and needs funding for a new manufacturing plant. The finance department has provided key efficiency data and is evaluating whether internal cash flows are sufficient or if external sources of finance are needed.
Table 1: Selected Financial Data – ZenMoto Ltd. (2024)
| Item | Amount (¥) |
|---|---|
| Revenue | 8,500,000,000 |
| Cost of goods sold | 5,200,000,000 |
| Operating expenses | 2,700,000,000 |
| Net profit | 600,000,000 |
| Capital employed | 5,000,000,000 |
1.[2]
Explain one way lean production techniques could improve ZenMoto Ltd.'s operational efficiency.
2.[2]
Calculate the return on capital employed (ROCE) for ZenMoto Ltd. Show all your working.
3.[2]
Comment on how ZenMoto Ltd.’s ROCE result might influence its decision to use internal or external finance for expansion.
4.[2]
Suggest one internal and one external source of finance ZenMoto Ltd. could consider for the new manufacturing plant.
5.[2]
Suggest how improvements in production planning could contribute to better financial performance at ZenMoto Ltd.
Question 5
HLPaper 2
PulseTech Ltd.
PulseTech Ltd. is a mid-sized electronics manufacturer that produces wireless health-tracking wristbands. It recently shifted to partial automation and invested in research and development to enhance the accuracy of its sensors. PulseTech’s board is reviewing whether to scale up R&D spending further in response to emerging customer demand for more personalized health data.
To manage inputs, PulseTech uses stock control charts and a reorder system. Figure 1 shows the stock level for PulseTech’s microchips, and Table 1 provides selected operational and financial data.
Figure 1: PulseTech Ltd.'s stock control chart
Table 1: Selected operational data for 2024
| Metric | Value |
|---|---|
| Total annual output | 160,000 units |
| Machine investment cost | $4 million |
| Total labour hours | 40,000 hours |
| Total machine hours | 20,000 hours |
| Defect rate | 2% |
| Maximum capacity | 200,000 units |
1.[2]
Using Figure 1, state: (i) PulseTech Ltd.’s lead time (ii) PulseTech Ltd.’s reorder quantity
2.[2]
Calculate for PulseTech Ltd.: (i) Capacity utilization rate (ii) Number of defective units produced
3.[2]
Calculate for PulseTech Ltd.: (i) Labour productivity (units per labour hour) (ii) Capital productivity (units per $ of machine investment)
4.[2]
Explain one difference between contingency planning and crisis management, using PulseTech Ltd. as a context.
5.[2]
Explain one reason why investing in R&D may help PulseTech Ltd. better meet customer needs.
Question 6
HLPaper 2
RapidFit Gym
RapidFit Gym is a small chain of fitness centers offering affordable memberships and group classes. The company has seen consistent growth over the past five years but is now facing increased competition from boutique fitness studios and online fitness platforms.
RapidFit is considering investing in a new gym location or upgrading its existing facilities to attract more members. The management is also concerned about operational inefficiencies, particularly with inventory management for gym equipment and receivables from corporate clients who pay for bulk memberships.
The following financial data is provided for the year ending December 31, 2023:
| Financial Metric | Value (USD) |
|---|---|
| Revenue | 2,000,000 |
| Cost of Goods Sold (COGS) | 1,200,000 |
| Operating Expenses | 600,000 |
| Net Profit | 200,000 |
| Average Inventory | 100,000 |
| Average Accounts Receivable | 120,000 |
| Initial Investment for New Gym | 1,000,000 |
| Initial Investment for Upgrade | 500,000 |
| Projected Annual Cash Flow (Gym) | 200,000 |
| Projected Annual Cash Flow (Upgrade) | 120,000 |
| Discount Rate | 10% |
| Useful Life (years) | 5 |
1.[4]
Calculate the payback period and net present value (NPV) for both investment options (new gym location and upgrade).
2.[4]
Using the provided data, analyze RapidFit’s inventory turnover ratio and evaluate its operational efficiency.
3.[4]
Explain the impact of inefficiencies in receivables management on RapidFit’s liquidity and suggest strategies to address this issue.
Question 7
HLPaper 3
Alpha Robotics – Optimizing HR and Operations for Growth
Resource 1 – News Article
Alpha Robotics Struggles with HR and Operational Efficiency
Alpha Robotics, a technology firm specializing in AI-powered industrial robots, is experiencing rapid expansion as demand for automation increases globally. The company was founded in 2015 and has since grown to 2,500 employees across four locations: the United States, Germany, Japan, and India.
Key Challenges:
(1) HR management issues – Employees complain about unclear leadership, poor communication, and lack of motivation due to a highly hierarchical structure.
(2) Production inefficiencies – The company’s batch production method is increasing lead times and reducing product quality.
(3) Location challenges – With rising costs in the US and Germany, Alpha Robotics must decide whether to expand in India (lower labor costs) or develop a new R&D facility in Singapore.
CEO Daniel Carter is considering the following strategic changes:
(1) Restructuring the organization to improve communication and motivation.
(2) Shifting to lean production and just-in-time (JIT) inventory management.
(3) Relocating part of production to India or Singapore while maintaining efficiency.
Resource 2 – Internal HR Survey Results
Key Insights:
(1) Employees feel disconnected from leadership, affecting productivity.
(2) A lack of career growth opportunities is reducing motivation and increasing turnover.
(3) Middle management struggles with effective communication due to a rigid hierarchical structure.
| Issue | Percentage of Employees Concerned |
|---|---|
| Lack of leadership clarity | 42% |
| Poor communication from managers | 38% |
| Low motivation and workplace morale | 45% |
| Limited career advancement | 41% |
Resource 3 – Cost-Benefit Analysis for Production Relocation
Alpha Robotics – Cost Analysis for Facility Expansion
Key Considerations:
(1) India offers lower costs, but efficiency gains are lower compared to Singapore.
(2) Singapore provides greater efficiency but has significantly higher setup costs.
| Location | Labor Costs per Hour ($) | Setup Costs ($M) | Expected Efficiency Gains |
|---|---|---|---|
| India | 12 | 30 | 10% increase |
| Singapore | 22 | 50 | 18% increase |
1.[2]
Using an appropriate business management theory, describe an HR challenge that Alpha Robotics is facing.
2.[6]
Explain two operational challenges Alpha Robotics faces in improving production efficiency.
3.[17]
Using all the resources provided and your knowledge of business management, recommend a possible plan of action to improve both HR and operations management at Alpha Robotics.
Question 8
SLPaper 2
FreshStart Organic
FreshStart Organic is a small business specializing in locally sourced organic produce. Established in 2018, the business prides itself on sustainability and community engagement. FreshStart Organic supplies its products to local markets and runs a subscription box service for home delivery.
Recently, FreshStart has seen increased competition from larger retailers entering the organic market. To remain competitive, the company is considering two options: (1) launching a new marketing campaign to raise awareness of its unique value, or (2) expanding its subscription box service to neighboring towns. However, these strategies require significant investment.
Below is selected financial data for the year ending December 31, 2023:
| Financial Metric | Value (USD) |
|---|---|
| Revenue | 200,000 |
| Cost of Goods Sold (COGS) | 80,000 |
| Operating Expenses | 90,000 |
| Net Profit | 30,000 |
| Total Assets | 150,000 |
| Total Liabilities | 50,000 |
| Current Assets | 60,000 |
| Current Liabilities | 40,000 |
1.[3]
Calculate the Return on Capital Employed (ROCE) for FreshStart Organic using the provided data. Show your workings.
2.[4]
Using the data provided, calculate the Acid Test Ratio for FreshStart Organic and comment on its short-term liquidity position.
3.[4]
Analyze the potential impact of launching a new marketing campaign on FreshStart Organic’s profitability and competitive position.
4.[6]
Explain whether expanding the subscription box service is a better strategic option than launching a marketing campaign.
Question 9
HLPaper 2
ClearView Tech
ClearView Tech is a company that designs and manufactures innovative smart glass products for residential and commercial buildings. These products allow users to control the amount of light and heat entering a room, reducing energy consumption. The company has been profitable in recent years but faces rising production costs and increasing competition from new entrants.
To address these challenges, ClearView Tech is considering two investment options: (1) launching a new automated production line to improve efficiency and reduce costs, or (2) expanding its product range to include a budget-friendly version of its smart glass. The management is also planning to refine its budgeting system to better control operating expenses and improve cash flow management.
Below is selected financial data for ClearView Tech for the year ending December 31, 2023:
Investment Options
| Financial Metric | Automated Line | New Product Range |
|---|---|---|
| Initial Investment (USD) | 2,500,000 | 1,800,000 |
| Projected Annual Cash Flow (USD) | 600,000 | 450,000 |
| Useful Life (years) | 5 | 5 |
| Residual Value (USD) | 500,000 | 200,000 |
| Discount Rate | 10% | 10% |
Additional Company Financial Data
| Financial Metric | Value (USD) |
|---|---|
| Revenue | 10,000,000 |
| Cost of Goods Sold (COGS) | 6,000,000 |
| Operating Expenses | 2,500,000 |
| Net Profit | 1,500,000 |
| Average Inventory | 400,000 |
| Average Accounts Receivable | 600,000 |
| Average Accounts Payable | 350,000 |
| Marketing Budget | 700,000 |
| Capital Budget | 3,000,000 |
1.[4]
Using the data provided, calculate and analyze the inventory turnover and receivables days ratios for ClearView Tech. Evaluate how these ratios reflect the company’s efficiency.
2.[4]
Calculate the net present value (NPV) for both investment options (Automated Line and New Product Range). Recommend which investment ClearView Tech should pursue based on your calculations.
3.[4]
Analyze the importance of budgeting in managing ClearView Tech’s financial resources, particularly in relation to these investment decisions.
4.[10]
Evaluate the strategic implications of the automated production line compared to the new product range in addressing ClearView Tech’s challenges.
Question 10
HLPaper 2
Prep Chef (PC)
Prep Chef (PC) produces froze ready-made meals that are organic and sold to food retailers around the country.
PC buys large quantities of organic ingredients from local farmers for its just-in-case (JIC) stock control management, using a cost-plus (mark-up) pricing strategy.
PC is known for its:
- good-quality organic frozen meals, which are perceived as good value for money
- flexibility with retailers in terms of quantity of meals supplied, credit given and efficient delivery at pre-arranged dates
- corporate social responsibility (CSR) based on a long-term commitment made to farmers to purchase large quantities of organic ingredients every four months and pay a fair price promptly
- PC has an excellent working relationship with farmers, who always prioritize PC’s requests in terms of quantity and delivery.
Recently, an economic downturn and increased competition, especially from non-organic frozen meal suppliers, has decreased demand for frozen organic meals.
The finance manager of PC, Connie, provided the following financial information.
Table 1: Selected financial information for PC
| Total revenue | $6000000 | $3500000 |
| Gross profit margin | ||
| Net profit margin | ||
| Creditor days | 10 | 5 |
| Debtor days | 50 | 70 |
| Stock turnover days | 20 | 40 |
| Current ratio | 2.1 | 2.4 |
| Acid test (quick) ratio | 0.8 | 0.6 |
Connie is worried about the cash flow of PC and suggested the company changes the stock control method from just-in-case (JIC) to just-in-time (JIT). She is also looking at other strategies to improve PC’s financial position.
1.[2]
Define the term corporate social responsibility (CSR).
2.[4]
Explain one advantage and one disadvantage for PC of using a cost-plus (mark-up) pricing strategy.
3.[4]
Explain one advantage and one disadvantage for PC of changing its stock control method from just-in-case (JIC) to just-in-time (JIT).
4.[10]
With reference to Table 1, evaluate two strategies that PC could use to improve its financial position other than transitioning to a just-in-time (JIT) stock control method.