Developing a Make-to-Stock Production Plan

•  Developing a make to stock production plan

Developing a Make-to-Stock Production Plan

What is make-to-order?

The manufacturers wait until an order are received from a customer before starting to make the goods. As clear, the custom tailored clothing will do a product when the order are received follow the customer specification. Usually, firms make to order when:

•     Good are production from customer specification
•     The customer are willing to wait while the order is being made
•     The product are expensive to make and to store
•     Several product option are offered

How is the developing a make-to-stock production plan?

In order for a make-to-stock environment, product are made and put into inventory before an order is received from a customer. Sale and delivery of the goods are made from inventory. Generally firms make to stock when:

•     Demand is fairly constant and predictable
•     There are few product options
•     Delivery times demanded by the marketplace are much shorter than the time  needed to make the product.
•     Product had a long shelf life

Level production plan

General procedure for developing a plan for level production

• .     Total the forecast demand for the planning horizon
• .     Determine the opening inventory
• .     Calculate the total production required as follow:

Total production = total forecast + back orders + ending inventory – opening inventory

• .    Calculate the production required each period by dividing the total production by the number of period
• .     Calculate the ending inventory for each period.