AIF-C01 - Applications of foundation models - Section 3.3

Describe the training and fine-tuning process for foundation models.

Distinguish pre-training, fine-tuning, and instruction tuning, and understand the data and cost implications of each. Recognise when fine-tuning is justified and when prompting or retrieval is enough.

Pre-trainingFine-tuningInstruction tuning

Practice question for this objective

Free sampleApplications of foundation modelsmedium

A product team runs a customer assistant on a fluent general-purpose foundation model and is deciding whether to invest in fine-tuning. Prompt engineering and retrieval are already on the table as cheaper alternatives. Which two situations most strongly justify the added data and compute cost of fine-tuning rather than relying on prompting or retrieval alone? Select TWO.

  • AThe reference facts the assistant cites change several times each week and must always be current.
  • BA few thousand labelled in-house examples of the desired behaviour exist that can be used to adapt the model. Correct
  • CThe team simply wants to feed a few worked examples into the prompt to steer answers at request time.
  • DThe assistant must consistently adopt a specialised output style that prompting alone fails to hold across varied inputs. Correct
  • EThe model needs occasional access to a single internal document that a person could paste into the request.
Fine-tuning is justified when a labelled dataset exists and a durable behaviour or style is needed, whereas changing facts or one-off context favour retrieval or prompting. Fine-tuning pays off when the goal is a stable change in how the model behaves and there is labelled data to teach it. A specialised, consistent output style that prompting cannot hold, backed by a few thousand in-house examples, is exactly that case. By contrast, knowledge that changes weekly belongs in a retrieval store because retraining to refresh it is slow and costly, and steering with a handful of prompt examples or pasting a single document are jobs for prompting, not weight updates. The distractors each describe a need that a cheaper method already covers.

Why A is wrong: Frequently changing facts favour retrieval, since fine-tuning bakes knowledge into weights that go stale the moment the data changes.

Why B is correct: Having a curated labelled dataset of the target behaviour is what makes fine-tuning feasible and worthwhile over prompting.

Why C is wrong: Supplying examples in the prompt is few-shot prompting, a lighter approach that avoids fine-tuning's data and compute cost entirely.

Why D is correct: A durable behaviour or style the base model will not reliably reproduce from instructions is a classic case where fine-tuning earns its cost.

Why E is wrong: Pasting one document into context is trivially handled by prompting or retrieval, so it gives no reason to fine-tune anything.

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