Types of operations systems - variations in demand, Operation Management

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Types of Operations Systems - Variations in Demand

Make-to-order versus make-for-stock 

Particularly in production systems, a key decision must be made as to whether or not finished products will be made in advance of specific orders. The choice will largely depend on the nature of the product and its market. 

Make for stock 

In this case, products are made in advance of orders, typically based on a forecast of eventual demand, and held in stock ready to supply customers off-the-shelf. If the customer's expectations is less than the supply lead time, then make for stock. This is the case in most shops where the customer expects to purchase on the spot.


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