Practice 5.1 Introduction to operations management 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 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 2
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 3
SLPaper 2
AquaSphere Ltd.
AquaSphere Ltd. designs and manufactures compact water purification systems for use in developing countries. The company began as a small domestic manufacturer but has recently opened two international distribution centres in Southeast Asia and South America. Its long-term business objective is to increase access to clean water globally while maintaining financial sustainability.
To support this growth, AquaSphere Ltd. obtained a low-interest development loan and used a sale and leaseback arrangement to improve liquidity. The finance team is evaluating the financial viability of producing a new portable filter model at a new facility. Two location options are being considered:
- Location A: Near a port in an urban area with high rent and labour costs
- Location B: Inland rural zone with lower costs but poor access to infrastructure
AquaSphere's expansion into multiple markets has also introduced exchange rate risks, legal complexity, and new staffing challenges. The board is reviewing how well the company’s financial structure, operations decisions, and growth strategy align with its social mission and long-term objectives.
Table 1: Financial data for the new portable filter (per month)
| Item | Amount ($) |
|---|---|
| Fixed costs | 22,000 |
| Variable cost per unit | 8.00 |
| Selling price per unit | 18.00 |
| Maximum expected output | 5,000 units |
1.[2]
Explain how AquaSphere Ltd.’s choice of financing methods might influence its financial flexibility during international expansion.
2.[2]
Suggest one operational consideration and one financial consideration AquaSphere Ltd. should evaluate when choosing between Location A and Location B.
3.[2]
Draw a fully labelled break-even chart using the data in Table 1. Include the total cost line, total revenue line, and mark the break-even point.
4.[2]
Based on the chart, calculate the margin of safety if the company sells 4,500 units per month. Show all your working.
5.[2]
Explain how AquaSphere Ltd.'s growth might create tension between its social mission and business objectives.
Question 4
SLPaper 2
GreenBites Ltd (GB)
GreenBites Ltd (GB) is a fast-growing organic food manufacturer based in Canada. The company produces organic snacks and beverages, which it sells through major supermarket chains and online platforms. Due to increasing demand, GB is planning to open a new production facility to expand its manufacturing capacity.
GB is considering three possible locations for its new factory:
Toronto, Canada – Close to GB’s headquarters, with high labor costs but good infrastructure. Guadalajara, Mexico – Lower labor costs but more complex supply chain logistics. Rotterdam, Netherlands – Provides easy access to European markets but has higher taxes and environmental regulations. GB currently uses batch production, which allows it to produce a variety of organic snacks efficiently. However, some managers believe that switching to flow production could reduce costs and improve efficiency. Others worry that flow production would reduce product variety and increase waste.
Additionally, GB’s internal communication has become more difficult as the company grows. Employees complain about unclear instructions and slow decision-making, especially between the production and sales teams. Some managers suggest introducing a digital communication platform, while others believe regular face-to-face meetings would be more effective.
1.[2]
Define the term ‘batch production’.
2.[4]
Explain two factors GB should consider when choosing the location for its new production facility.
3.[4]
Explain two advantages for GB of using flow production instead of batch production.
4.[10]
Recommend how GB can improve internal communication to enhance operational efficiency.
Question 5
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 6
SLPaper 2
FreshFields Organic Farm
FreshFields Organic Farm (FreshFields) is a family-owned business that produces and sells organic fruits and vegetables to local supermarkets and farmers' markets. The business has experienced steady growth in recent years due to increasing consumer demand for organic products.
FreshFields is considering expanding its operations by opening a new production site to meet the growing demand. However, the owners must decide between two potential locations: (1) a rural area with lower costs but farther from key markets, or (2) an urban location closer to customers but with higher rent and labor expenses.
Additionally, FreshFields is evaluating its current operations methods, which are highly labor-intensive, and exploring whether switching to a more mechanized process could improve efficiency and reduce costs. However, the family is concerned about maintaining the farm’s reputation for high-quality, hand-harvested produce.
1.[2]
Outline two key objectives of operations management that FreshFields should focus on as it considers expanding its production capacity.
2.[4]
Discuss the factors FreshFields should consider when deciding between the two potential locations for its new production site.
3.[4]
Suggest the advantages and disadvantages of FreshFields transitioning from a labor-intensive production method to a more mechanized process.
4.[10]
To what extent should FreshFields prioritize customer proximity over cost savings when selecting the location for its new production site?
Question 7
SLPaper 2
AquaPure Water Solutions
AquaPure Water Solutions is a small company that manufactures and distributes water filtration systems for homes and offices. The company is experiencing increased demand due to rising concerns about water quality and sustainability. To expand production and meet growing customer needs, AquaPure is planning to open a second production facility.
The management is evaluating two potential locations: (1) a city center location close to major suppliers and customers but with high rental and labor costs, or (2) a suburban location with lower operational costs but farther from suppliers and distribution networks. AquaPure must also ensure that its operational processes are efficient to maintain its reputation for delivering high-quality products on time.
1.[2]
Outline two key functions of operations management that AquaPure should focus on to ensure the success of its new facility.
2.[4]
Analyze two factors AquaPure should consider when deciding between the city center and suburban locations for its new facility.
3.[4]
Explain the advantages and disadvantages of choosing the suburban location for AquaPure’s new facility.
4.[10]
To what extent should AquaPure prioritize operational efficiency over proximity to suppliers and customers when selecting the location for its new facility?
Question 8
HLPaper 2
TerraCraft Ltd (TC)
TerraCraft Ltd (TC) manufactures sustainable furniture products in Sweden. Due to increasing demand, TC is considering investing in a new production facility. To determine the viability of this investment, TC’s finance team has performed an investment appraisal, calculating payback periods and net present value (NPV).
To enhance efficiency and productivity, TC is also evaluating its current operations methods, debating a shift from job production to batch or flow production. The company recently analyzed its operational performance using efficiency ratio analysis, revealing lower-than-expected inventory turnover and declining productivity ratios.
TC has a strong, environmentally-driven organizational culture valued by its stakeholders. However, stakeholders, including employees and environmental activists, are concerned that rapid operational expansion and changes in production methods could negatively affect this culture and TC’s sustainability commitments.
1.[2]
Define the term ‘investment appraisal’.
2.[4]
Explain two potential stakeholder conflicts that might result from TC changing its operations methods.
3.[4]
Explain two benefits for TC of using efficiency ratio analysis.
4.[4]
Outline two ways TC’s strong organizational culture contributes to its business success.
5.[10]
Examine whether TC should switch from job production to flow production to improve efficiency, considering stakeholder concerns, organizational culture, and investment appraisal results.
Question 9
SLPaper 2
UrbanFresh Hydroponics
UrbanFresh Hydroponics (UrbanFresh) is an urban farming company specializing in growing fresh produce using hydroponic systems. Its farms are located in urban areas, allowing for quick delivery of fresh vegetables to local supermarkets and restaurants.
UrbanFresh is facing increased competition from larger agricultural companies offering similar products at lower prices. To address this challenge, UrbanFresh is considering two strategic options: (1) relocating its operations to suburban areas to reduce costs, or (2) expanding its product line by introducing exotic vegetables grown in specialized hydroponic systems.
The company is also reviewing its operations methods, which rely on small-scale systems, and is debating whether investing in larger automated hydroponic facilities would improve efficiency.
1.[2]
Outline two key functions of operations management that UrbanFresh should focus on to ensure its continued success.
2.[4]
Explain the factors UrbanFresh should evaluate when deciding whether to relocate its operations to suburban areas.
3.[4]
Demonstrate the advantages and disadvantages of UrbanFresh transitioning to larger automated hydroponic systems.
4.[10]
To what extent should UrbanFresh prioritize cost reduction over maintaining its urban farming location?
Question 10
HLPaper 2
EcoWheels Ltd.
EcoWheels Ltd. is a medium-sized company that manufactures and sells electric bicycles. The company has positioned itself as an environmentally friendly alternative to traditional bicycles and scooters. Its core market includes urban commuters and eco-conscious customers.
EcoWheels has seen significant growth over the past two years but is now experiencing operational inefficiencies. Inventory management has become a challenge, with excess stock accumulating in warehouses. Additionally, its accounts receivable turnover has slowed, impacting cash flow.
To address these issues, the company is considering two strategies: (1) outsourcing inventory management to a third-party logistics provider, or (2) offering a flexible payment plan to encourage faster payments from customers.
Below is selected financial data for EcoWheels for the year ending December 31, 2024:
| Financial Metric | Value (USD) |
|---|---|
| Revenue | 1,000,000 |
| Cost of Goods Sold (COGS) | 700,000 |
| Operating Expenses | 200,000 |
| Net Profit | 100,000 |
| Average Inventory | 140,000 |
| Average Accounts Receivable | 80,000 |
| Current Assets | 220,000 |
| Current Liabilities | 140,000 |
| Inventory Turnover (times/year) | 5 |
| Receivables Days (days) | 29 |
1.[2]
Calculate EcoWheels’ inventory turnover ratio based on the provided data and explain its implications for inventory management.
2.[2]
Calculate EcoWheels’ receivables days ratio and explain its cash flow management effectiveness.
3.[4]
Explain the advantages and disadvantages of outsourcing inventory management to a third-party logistics provider for EcoWheels.
4.[10]
Evaluate whether offering a flexible payment plan is a better strategy than outsourcing inventory management for improving EcoWheels’ operational efficiency.