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
NutraBeam Ltd.
NutraBeam Ltd. is a health food company that produces organic protein powders and snack bars using renewable energy. The business relies on a batch production method to manufacture its goods and integrates a customised management information system (MIS) that monitors ingredient inventory levels, order fulfilment, and energy consumption in real time.
In Q2 2024, NutraBeam experienced a serious disruption when a contaminated shipment of chia seeds halted production for two weeks. This led to missed retailer delivery targets and negative media coverage. The company activated its crisis management plan, which included supplier audits, public transparency statements, and temporary outsourcing of production.
NutraBeam’s operations manager is now reviewing the company’s production planning, including safety stock levels and quality control procedures. Meanwhile, the finance department has compiled actual vs. budgeted performance data to assess the financial implications of the crisis.
Table 1: Budgeted vs Actual Figures – Q2 2024
| Item | Budgeted ($) | Actual ($) |
|---|---|---|
| Sales revenue | 1,800,000 | 1,540,000 |
| Cost of goods sold | 960,000 | 1,200,000 |
| Operating expenses | 520,000 | 540,000 |
| Net profit | 320,000 | –200,000 |
1.[2]
Calculate the total adverse variance in costs and the revenue variance for NutraBeam Ltd. in Q2 2024. Show all your working.
2.[2]
Comment on what these figures suggest about the financial impact of the production crisis.
3.[2]
Explain one weakness in NutraBeam’s production planning that may have contributed to the severity of the disruption.
4.[2]
Suggest one way NutraBeam could adapt its MIS to improve production resilience in the future.
5.[2]
Outline how budgeting can support better decision-making during and after a crisis.
Question 7
HLPaper 2
AquaPure Ltd.
AquaPure Ltd. is a Spanish company that manufactures portable water purification systems. Following success in domestic markets, the company launched a new product line aimed at rural communities in South America and Southeast Asia. However, issues with production planning led to stockouts during peak demand seasons, damaging customer trust. To address this, management activated parts of its contingency plan, including emergency supplier contracts.
The company’s latest research and development (R&D) project — a solar-powered filter — was recently launched but required significant upfront investment, putting strain on financial resources. The finance team has provided key financial and operational data for review.
Table 1: Selected Financial and Operational Data – AquaPure Ltd. (2024)
| Item | Amount (€) |
|---|---|
| Forecasted sales revenue | 6,000,000 |
| Actual sales revenue | 5,250,000 |
| Cost of goods sold (actual) | 2,900,000 |
| Operating expenses (actual) | 2,100,000 |
| Net profit (actual) | — |
| Capital employed | 7,200,000 |
| Average stock | 800,000 |
| Units forecasted to sell | 50,000 units |
| Units actually sold | 44,000 units |
| Contribution per unit | €60 |
| Fixed costs (annual) | €2,800,000 |
| Net cash inflow from new product (Years 1–4) | €400,000 p.a. |
| Initial investment (solar-powered filter project) | €1,200,000 |
1.[2]
Calculate the sales revenue variance and the number of units variance. Show all your working.
2.[2]
Calculate the net profit margin for AquaPure Ltd. Show all your working.
3.[2]
Calculate the stock turnover ratio for the solar-powered filter project. Show all your working.
4.[2]
Calculate the payback period for the solar-powered filter project. Show all your working.
5.[2]
Comment on the impact of stockouts during peak demand seasons on AquaPure Ltd.’s marketing strategy.
Question 8
HLPaper 2
TrekPro Ltd.
TrekPro Ltd. is a growing company specializing in outdoor equipment, selling products both locally and internationally. The management has implemented lean production techniques such as Just-in-Time (JIT) and kaizen to boost productivity.
Below are excerpts of TrekPro Ltd.'s final accounts for 2024.
Table 1. Excerpt of TrekPro Ltd.'s Statement of Profit and Loss 2024 (in $'000)
| ($'000) | |
|---|---|
| Revenue | 2,400 |
| Cost of goods sold (COGS) | _______ |
| Gross profit | 1,200 |
| Expenses | (700) |
| Net profit before tax | _______ |
Table 2. Excerpt of TrekPro Ltd.'s Statement of Financial Position 2024 (in $'000)
| (in $'000) | |
|---|---|
| Non-current assets | 1,500 |
| Current assets | 600 |
| Current liabilities | (300) |
| Net assets | _______ |
Additional data:
- Total labour hours worked: 20,000 hours.
- Total output produced: 8,000 units.
- Total operating costs: $2,000,000.
- TrekPro Ltd. introduced kaizen and JIT this year to improve efficiency.
1.[2]
Calculate the missing figures for: (i) Cost of goods sold (COGS) (ii) Net assets
2.[2]
Calculate the labour productivity rate in units per labour hour.
3.[2]
Define operating leverage and what it implies for TrekPro Ltd.
4.[2]
Identify one benefit of using Just-in-Time (JIT) for TrekPro Ltd.
5.[2]
Suggest one stakeholder who would be interested in TrekPro Ltd.'s financial statements
Question 9
HLPaper 2
StormGuard Ltd.
StormGuard Ltd. manufactures storm-resistant roofing panels and supplies construction companies throughout Southeast Asia. In early 2024, the company faced severe supply chain disruptions after flash flooding damaged its main raw materials warehouse. As part of its crisis management and contingency planning, StormGuard activated an emergency supply agreement with an overseas provider at significantly higher cost.
The production manager has since reviewed the firm’s production planning systems, concluding that the business lacked adequate stock buffers and had underinvested in inventory forecasting software. Meanwhile, the finance team has finalised StormGuard’s Q2 financial accounts and reviewed its budget to assess the impact of the crisis.
Table 1: Budgeted vs Actual Figures – Q2 2024
| Item | Budgeted ($) | Actual ($) |
|---|---|---|
| Sales revenue | 1,500,000 | 1,420,000 |
| Cost of goods sold | 780,000 | 960,000 |
| Operating expenses | 420,000 | 450,000 |
| Net profit | 300,000 | 10,000 |
Table 2: Statement of Financial Position Extract – as at 30 June 2024
| Item | Amount ($) |
|---|---|
| Current assets | 290,000 |
| Current liabilities | 270,000 |
1.[2]
Calculate the total cost variance and the sales revenue variance for StormGuard Ltd. in Q2 2024. Show all your working.
2.[2]
Calculate the net profit margin and current ratio for StormGuard Ltd. using actual figures. Show all your working.
3.[2]
Explain how the variances and ratio results reflect the financial impact of the crisis.
4.[2]
Explain one weakness in StormGuard’s production planning that may have worsened the effects of the supply chain crisis.
5.[2]
Suggest one way StormGuard Ltd. could strengthen its budgeting and contingency planning to avoid similar disruptions in future.
Question 10
HLPaper 2
Verdia Bottling Ltd.
Verdia Bottling Ltd. is a company that produces sustainably packaged bottled water. The company is known for its minimalist branding and sells through both direct e-commerce and supermarket partnerships. In 2025, Verdia launched a nationwide marketing campaign involving billboard advertisements and social media influencer partnerships.
To reduce operating costs, Verdia recently reviewed its production strategy and introduced employee-led proposals to streamline the manufacturing process.
Verdia’s inventory for custom bottle caps is tracked using a stock control chart. Figure 1 shows a standard inventory cycle for one of its most-used components.
**Figure 1: Verdia’s stock control chart **
1.[2]
Referring to Figure 1, state:
(i) The lead time for stock replenishment
(ii) The reorder quantity
2.[2]
Explain one benefit and one limitation of using sales forecasting at Verdia Bottling Ltd.
3.[2]
Identify two types of promotion used in Verdia’s national campaign.
4.[2]
Outline one way lean production may improve Verdia’s operational performance.
5.[2]
Explain why Verdia’s campaign may be considered an example of through the line promotion.