Make to order, stock, assembly

1. Different Production Types

2. 4-2
Classification by Type of Customer
Order
•Make to Stock (MTS)
•Make to Order (MTO)
•Assemble to Order (ATO)

3. 4-3
Make to Stock (MTS)
•Produce finished goods; customer buys
from inventory
•Advantage: smooth production
•Disadvantage: inventory
•Key performance measures (next slide)

4. 4-4
MTS Performance Measures
•Service level (orders filled when requested)
•Inventory turnover (sales/avg. inventory)
•Back order fill rate
•Inventory accuracy
•Time to replenish
•Others, such as shrinkage rate

5. 4-5
Make to Order (MTO)
•Start production when customer orders.
•Advantage: no finished goods inventory
•Disadvantage: intermittent production
•Key performance measures
–Lead time
–Orders completed on time (or late)
–Quality measures

6. 4-6
Assemble to Order (ATO)
•Make parts and subassemblies; finish when
customer places order.
•Advantages: less inventory, faster service
•Disadvantage: some WIP inventory
•Key performance measures
–speed of service
–inventory levels
–quality of product and service

7. 4-7
Make-to-Stock (Figure 4-3)
customer
Forecast orders
Production
Finished Goods
Inventory
Product
Customer Order
Product

8. 4-8
Make-to-Order (Figure 4-3)
customer
Production
Product
Customer Order

9. 4-9
Assemble-to-Order (Figure 4-3)
customer
Forecast orders
Production of
Subassemblies
Inventory
of Subassemblies
Customer order
Product
Assembly of the
Order
Subassembly

10. 4-10
Customization Point (Figure 4-4)
DistributionAssemblyFabricationSupplier
MTO MTO ATO MTS
∇------------------∇ ∇ ∇

11. 4-11
Process Selection Decisions
•Process characteristics matrix
•Factors affecting process choice

12. 4-12
Process Characteristics Matrix (Table 4.3)
Characteristics Make-to-Stock
Make-to-Order
Assemble-to-Order
Continuous and
Assembly
Line Flow
Auto Assembly Line
Oil refinery
Cannery
Cafeteria
Auto assembly line
Dell Computers
Motorola Pager
Batch and Job Shop
Machine shop
Fast food
Glassware factory
Costume Jewelry
Machine shop
Restaurant
Hospital
Custom jewelry
Project
Speculation homes
Commercial painting
Buildings
Movies
Ships
Portraits