Question

Hello Professors, please help me about this question below, thanks so much!

1. Provide actual business examples of the three operations strategies:

A. make-to-stock,

B. assemble-to-order

C. make-to-order.

Explain what it would take for a company to move:

A. from a make-to-stock strategy to make-to-order

B. from a make-to-order strategy to make-to-stock

What are the advantages and disadvantages of each strategy?

Answer 1

1. Real-world business examples:

• Make to stock: Target uses the principle of MTS to prepare its inventory for the peak periods of demand.
• Assemble to order: Dell follows the ATO principle. It keeps its range of processors, monitors, keyboards, etc. ready. The assembly of the final computer is done based on the order of the consumer
• Make to order: BMW follows the principle of MTO as they offer the consumers, the option of customization. Based on the customization request, the cars are manufactured.

2A. A company will move from make to stock to make to order if it stops its mass production process and wants to initiate customization of its products.

B. A company will move from make to order strategy to make to stock if its products are witnessing less demands for customization and a mass production process would be much profitable.

3.

• Make to stock:
  • Advantage: Offers smooth production process
  • Disadvantage: Leads to too much of inventory which requires inventory management; Dependency on demand forecast is too high
• Assemble to order:
  • Advantage: Cost effective as there is no need of inventory management
  • Disadvantage: Lead time quite high
• Make to order:
  • Advantage: Cost effective as there is no need of inventory management
  • Disadvantage: Intermittent production