5.6 Production planning questions for IB Business Management

Okanagan Cedarworks

[1] Okanagan Cedarworks Ltd (OCW) is a private limited company in Kelowna, Canada. It makes garden tables, chairs and loungers from western red cedar and sells them to garden centres and home-improvement retailers across western Canada. Retailers are given 30 days’ credit. Most sales are made between March and June.

[2] In 2025 OCW’s managing director, Daniel Tremblay, increased the range from 40 to 75 designs, hoping to attract younger customers. Several of the new designs sold slowly, and by December the warehouse was full of finished furniture. Two large retailers have also started to pay later than agreed.

[3] OCW’s finance manager, Aiko Sato, is worried that too much cash is tied up in stock. She has suggested two strategies: making the slow-selling designs only to order, and holding a clearance sale of the unsold designs at a 25 % discount before the next spring season.

Table 1: Extracts from OCW’s final accounts for the years ending 31 December (C$000)

Table 2: Selected efficiency ratios for OCW, 2024

Ayo Pads

Ayo Pads (AP) is a social enterprise in Gulu, northern Uganda, founded in 2019 by Grace Akello. Many girls in rural northern Uganda miss school during menstruation because disposable pads are too expensive. AP employs 24 women, most of them single mothers, who cut and sew washable cloth pads that last about a year. AP sells packs of four pads to families and small shops, and to non-governmental organizations (NGOs) that give them to schoolgirls. All surpluses are reinvested.

Resource 1: Extract from a regional newspaper article

“Before Ayo Pads came to our school, some girls missed five days of school every month,” says head teacher Santa Lamwaka. Attendance among older girls has risen noticeably. But not all is well: several parents say the stitching on some pads came apart after a few washes, and one shop owner has stopped stocking them.

Resource 2: AP production data, 2025

Resource 3: Email from an international NGO to Grace Akello

We would like to buy 200 000 packs a year for schools across northern Uganda from 2027. However, our donors require all suppliers to hold the national quality certification mark for sanitary products and to keep their defect rate below 2 %. Please let us know whether AP can meet these conditions by the end of 2026.

Resource 4: Social media post by Okello Denis, a local tailor

Ayo Pads does great work, but their machines are old and nobody checks the seams. I could train their team in proper stitching techniques for a small fee. #GuluMade

Resource 5: Information on certification

Gaining the national certification mark costs about UGX 25 million, including product testing and an audit of the production process. Producers must show documented quality procedures at every stage of production. Certification is reviewed every year.

Vida Farmácias is a chain of four pharmacies in Porto Alegre, Brazil. It sells prescription medicines, many of which have expiry dates, as well as cosmetics and baby products. For 2025 its cost of sales was R$4 015 000. Its stock was valued at R$410 000 on 1 January 2025 and at R$470 000 on 31 December 2025. The owner, Beatriz Costa, wants to reduce the amount of stock the pharmacies hold.

Enat Nutrition PLC (EN)

Read the resources and answer the questions that follow.

Enat Nutrition PLC (EN) is a social enterprise in Addis Ababa, Ethiopia, founded in 2018 by Dr Meron Tesfaye, a children’s nutrition specialist. Enat means “mother” in Amharic. EN makes a fortified porridge flour for babies and young children from teff, chickpeas and barley, with an imported vitamin and mineral mix (premix). It sells single-serving 50 g sachets for ETB 15 through small shops and a network of women sales agents, and 1 kg bags in bulk to non-governmental organizations (NGOs) and health programmes that treat malnourished children. The flour keeps for nine months. EN reinvests all its profit.

In Ethiopia a private limited company is often called a “PLC”; its shares are not sold to the public.

Image: a small orange sachet printed with a smiling mother feeding a baby from a spoon, next to a bowl of creamy porridge. Text on the sachet: “Enat – strong start, bright future. 50 g, ETB 15”.

Resource 1 – News article from the *Addis Business Review*

Dollar shortage squeezes local manufacturers

Ethiopian manufacturers that rely on imported inputs say it can take months to obtain foreign currency from banks. Many buy large quantities whenever dollars become available, tying up cash in stock. “We cannot make a single sachet without the premix,” says EN’s finance manager, Dawit Alemu. Meanwhile, stunting caused by poor nutrition still affects more than a third of Ethiopian children under five.

Resource 2 – Social media posts from Hirut, a mother in Adama

My son was so thin the clinic was worried. The health worker gave us Enat bags for three months and now he is running everywhere! Now I buy the sachets from our corner shop. [1/2]

But last month the shop had none for two weeks, and one sachet I bought was past its date. I hope Enat can make more – every mother in my area wants it. [2/2]

Resource 3 – Extract from EN’s accounts (ETB million)

Table 1: Selected financial information

In 2025, 60 % of sales revenue came from NGOs and health programmes (on credit) and 40 % from sachets (cash sales).

Resource 4 – Internal email from Dawit Alemu, finance manager, to Dr Meron

From: Dawit Alemu, Finance Manager

To: Dr Meron Tesfaye, Managing Director

Subject: Before we sign for the new line

You want a second production line (ETB 20 million) to double output. The bank will lend it at 18 % a year, but our ratios worry me:

• the NGOs take more than three months to pay us;

• we hold six months of premix because we never know when we will get dollars again, and ETB 1.4 million of finished flour expired in our warehouse last year;

• our gearing is already high for a business of our size.

A large NGO, Hope for Children International, has offered a two-year contract that would use most of the new line’s output, at our normal price, but on 120-day payment terms. Should we sign?

CONFIDENTIAL: this email and any attachments are intended only for the named recipients.

Resource 5 – Letter from Selam Pharma Imports

“We hold foreign-currency import licences and keep stocks of vitamin and mineral premix in Addis Ababa. We can supply EN every two weeks at a price 6 % higher than EN pays when it imports directly. EN would pay us in birr, 30 days after delivery.”

Resource 6 – Survey of shopkeepers who sell EN sachets (120 replies)

Andes Motor Parts

[1] Andes Motor Parts S.A. (AMP) distributes spare parts for cars and trucks to about 1 500 independent garages across Chile, from a central warehouse in Santiago. Garages buy on 45 days’ credit. AMP buys most of its parts from manufacturers in Brazil and China.

[2] Since 2023 AMP has added a large range of parts for hybrid and electric vehicles, few of which have been sold so far. To win business from a new competitor, it also began allowing its largest garage customers to pay after 60 days. AMP’s suppliers have recently shortened the credit they give it.

Table 1: Financial information for AMP, year ending 31 December 2025 (CLP million)

Table 2: AMP’s efficiency ratios, 2023–2025

Dugub Délice SARL (DD)

Read the resources and answer the questions that follow.

Dugub Délice SARL (DD) is a social enterprise in Thiès, Senegal, founded in 2014 by Aïssatou Ndiaye. Dugub means millet in Wolof. DD buys millet from 900 smallholder farmers, paying 10 % above the market price, and its 40 women employees clean, grind, steam and dry it into traditional products – thiéré (millet couscous), arraw and sankhal – sold in hygienic 1 kg packs in shops and supermarkets. Preparing these foods from raw grain takes hours, so DD saves families time. Its mission is “to keep Senegal’s grains on Senegal’s tables”.

Image: a row of colourful 1 kg packs of millet couscous with a pattern of woven baskets, next to a steaming bowl of thiéré with a vegetable sauce. Label: “Dugub Délice – le goût de chez nous” (the taste of home).

Resource 1 – News article from *Dakar Économie Hebdo*

Bread or millet? The battle for Senegal’s plate

Senegal imports almost all of its wheat. Young people in Dakar increasingly eat baguettes for breakfast and pasta at lunch, while the traditional millet dishes of their grandparents take too long to prepare. After world wheat prices rose sharply, the government launched a “Consume Local” campaign and is considering a rule that bakeries must mix 15 % local cereal flour into bread.

Table 1: Market for packaged local-cereal products in Senegal

XOF = West African CFA francs. USD 1 ≈ XOF 600.

Resource 2 – Social media posts from Fatou, a 26-year-old office worker in Dakar

My grandmother makes the best thiéré in the world, but it takes her half a day. I tried Dugub Délice and it was ready in 15 minutes – almost as good as hers! Proud to eat local. [1/2]

But why is it only sold in big 1 kg bags with old-fashioned packaging? I live alone. Give me small packs, quick recipes, maybe a millet breakfast cereal – then I’ll stop buying croissants. #ConsommonsLocal [2/2]

Resource 3 – Internal email from Aïssatou Ndiaye to DD’s management team

From: Aïssatou Ndiaye, Founder and Managing Director

To: Management team

Subject: Two ways to grow

Boulangeries Sunugal, a chain of 60 bakeries, wants to buy 1 200 tonnes a year of fine millet flour to blend into bread if the 15 % rule is introduced. This would more than double our volume and make us a major player in local flour. But the margin is small and our mill can handle only 1 500 tonnes a year in total; a new mill would cost XOF 150 million.

The alternative is to grow our own consumer brands: smaller packs, ready-to-cook flavoured couscous and a millet breakfast cereal for young city people. That would need market research and new marketing.

We have always made the products we know how to make. Perhaps it is time to start with what customers want.

CONFIDENTIAL: this email and any attachments are intended only for the named recipients.

Resource 4 – DD’s product and cost information

Resource 5 – Market research: survey of 400 consumers aged 18–35 in Dakar

Resource 6 – Interview with Moussa Diouf, president of a farmers’ group supplying DD

“DD pays us more and pays on time – our children are in school because of it. If DD sells to the bakeries, we can grow more millet; we have land. But the bakeries will push the price down every year. I would rather see our millet on supermarket shelves with our story on the pack than hidden inside a baguette.”