Choosing flow production — 9-mark evaluate

Edexcel 1BS0 Paper 2 style

"PowerPack" sells protein bars. It currently uses batch production with 8 staff and produces 5,000 bars per day at unit cost £0.45. The CEO is considering investing £180,000 in flow-production machinery that would cut staff to 3, double capacity to 10,000 bars/day, and reduce unit cost to £0.28.

Evaluate whether PowerPack should invest in flow production.

[9 marks]

AO1 (up to 3 marks):

• Flow production = continuous, uniform output on an assembly line; lowest unit cost; least flexible (B1).
• Productivity rises sharply when machines replace labour for repetitive tasks (B1).
• High capital investment is needed for machinery (B1).

AO2 (up to 3 marks):

• Capacity rises from 5,000 to 10,000 bars — only worth it if demand exists for the extra units (B1).
• Unit cost falls from £0.45 to £0.28 — a £0.17/unit saving × 5,000 baseline daily units = £85/day in current costs alone, plus extra margin on new volume (B1).
• 5 redundancies — financial and reputational cost; also affects culture and morale of the 3 remaining staff (B1).

AO3 (up to 3 marks):

• £180,000 / £85 daily saving = ~2,100 working days payback if demand stays at 5,000 — too long (B1).
• BUT if PowerPack can sell 10,000 bars/day, total cost saving + new revenue justifies the investment in well under a year (B1).
• Justified conclusion: invest ONLY if there is firm market evidence that demand can be doubled. Otherwise the inflexibility of flow production becomes a liability — fixed cost commitments without revenue to match. Recommend market research first to validate demand, then invest in stages (B1 supported conclusion).

Total: 9 marks.