What is Make-to-Stock (MTS)?

What is Make-to-Stock (MTS)?

• A. Products are made in advance based on forecasts
• B. Products are only made after an order is received
• C. Components are assembled after order
• D. Products are customized for each customer

Answer: (A)

Make-to-Stock is producing goods in advance based on forecasted demand and keeping finished products in inventory so they can be shipped quickly when customers order. This works well for high-volume, standardized items where demand is relatively predictable, because it shortens delivery times and lets the manufacturer achieve economies of scale. The trade-off is carrying costs and the risk of overstock or obsolescence if actual demand differs from the forecast. The other scenarios describe different production approaches: making products only after an order is received, assembling components after an order, or customizing items for individual customers. Those strategies focus on reducing or delaying production until there is a specific customer demand, rather than stocking ready-to-ship goods.

Make-to-Stock is producing goods in advance based on forecasted demand and keeping finished products in inventory so they can be shipped quickly when customers order. This works well for high-volume, standardized items where demand is relatively predictable, because it shortens delivery times and lets the manufacturer achieve economies of scale. The trade-off is carrying costs and the risk of overstock or obsolescence if actual demand differs from the forecast.

The other scenarios describe different production approaches: making products only after an order is received, assembling components after an order, or customizing items for individual customers. Those strategies focus on reducing or delaying production until there is a specific customer demand, rather than stocking ready-to-ship goods.