Production planning is an essential part of operations management. It is the management and administrative process that ensures there are sufficient resources for an efficient production process. This requires sufficient stocks of raw materials, components, staff, and other necessary resources to create finished products on time, in order to meet the demands of customers. This helps the firm to meet its aims of maximizing profits, minimizing costs and meeting the requirements of its customer.

The learning outcomes (or assessment objectives) for this section of the IB Business Management syllabus (HL only) are:

• The local and global supply chain process (AO2)

• The difference between JIT and just-in-case (JIC) (AO3)

• Stock control charts based on the following (AO2, AO4):
  • Lead time
  • Buffer stock
  • Reorder level
  • Reorder quantity

• Capacity utilization rate (AO2, AO4)

• Defect rate (AO2, AO4)

• Labour productivity, capital productivity, productivity rate, and operating leverage (AO2, AO4)

• Cost to buy (CTB) and Cost to make (CTM) (AO3, AO4)

 Teacher only box

Note to teachers

Please note the following changes to the syllabus (first exams 2024).

• The difference between JIT and just-in-case (JIC) was formerly taught to AO2 (final exams N23) but has been elevate to AO3 in the new guide.

• Defect rate (AO2, AO4) has been added to the new syllabus.

• Whilst productivity rate (AO2, AO4) feature in the previous syllabus, three additional measures have been added to the new specifications: Labour productivity, Capital productivity, and Operating leverage (AO2, AO4).

• Cost to buy (CTB) and Cost to make (CTM) were previously AO2, AO4 but have been elevated to AO3, AO4 in the new guide.

Please be aware of the above when using or referring to past IB exam papers and mark schemes.

• Also, note production planning was formerly in Unit 5.5 of the previous guide, but is now in Unit 5.6 (as break-even analysis is now Unit 5.5).