Make-to-stock productions

The classical production strategies are make-to-stock, which determine the planning to great extent. In make-to-stock productions there is no direct connection between a customer’s order and a manufacturing order.

Generally a manufacturing order does not cover the requirements of the customer order that triggers it; rather the customer’s order is filled from existing stock.

The replenishment process at the production facility of an make-to-stock system is governed by a replenishment policy, which typically sets the size of the replenishment order so as to attain a prescribed inventory position, defined as the inventory level minus the backorder level and plus all the pending order level en route to the inventory facility.

In a typical make-to-stock environment planning is triggered only by independent requirements and therefore demand planning has a great significant.

Forecast should be considered a control aid. The forecast can give a sense of whether current replenishment levels are adequate.

Typical industries were make-to-stock strategy is applied are commodities and consumer goods, since the same products are usually sold to many customers and the lead time of the sales order is usually very short.

Make-to-stock allows fast reactions to changes in market demand. Make-to-stock lends itself as a very good control mechanism that can signal when a problem is emerging.

One such problem may be that the demand increases sharply, and the current replenishment level may be insufficient.
Make-to-stock productions