Outlining Make-to-Stock Production

Objective

After completing this lesson, you will be able to Understand make-to-stock (MTS) production.

Outline of Make-to-Stock Production

Make-to-Stock Production, For Example, Strategy 40

These following planning strategies provide different approaches to make-to-stock production, allowing companies to choose the one that best suits their business requirements.

Characteristics

Make-to-stock production strategies can be executed based on planned independent requirements (PIRs) both on finished product level (for example, strategies 10 and 40) as well as an assembly level, including their final assembly (strategy 70). The PIRs itself are a result of a previous forecast process considering sales order items in previous periods and/or can be created manually. These PIRs represent expected future sales order items - it is a kind of temporary placeholder for them. Depending on the used strategy, sales orders can consume PIRs on header level (strategy 40), on assembly level (strategy 70), or will not affect them (strategy 10).

Planning Strategy 40: Planning with Final Assembly

Planning with final assembly is one of the most common planning strategies in make-to-stock production. Here sales orders are relevant for planning and they are consuming planned independent requirements (PIRs):

In our scenario, the Bike Company has planned the production of 50 bikes per month. If we receive a sales order for 55 bikes, a shortage of 5 bikes occurs. In this case, using planning strategy 40, the system automatically triggers the planning of the additional 5 bikes to eliminate the shortage.

Planning strategy 40 allows you to focus on flexible, automated, and fast reaction to customer demand. This strategy allows for flexibility, automation, and a rapid reaction to customer orders. The Bike Company can apply planning strategy 40 to their assembled bikes, ensuring that they can meet customer demands.

How to Set Up Planning with Final Assembly

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