The document discusses three main types of production: make-to-stock (MTS), make-to-order (MTO), and assemble-to-order (ATO). MTS involves producing finished goods to stock inventory for customer orders. MTO starts production when a customer order is placed, avoiding finished goods inventory. ATO makes parts and subassemblies ahead of time and finishes production when an order is placed, allowing for less inventory but some work-in-process inventory. Key performance measures are outlined for each type.

1. Different Production Types

2. Classification by Type of Customer
Order
• Make to Stock (MTS)
• Make to Order (MTO)
• Assemble to Order (ATO)
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3. Make to Stock (MTS)
• Produce finished goods; customer buys
from inventory
• Advantage: smooth production
• Disadvantage: inventory
• Key performance measures (next slide)
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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
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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
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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
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7. Ma e o ok(Fig r 4 )
k-t-Stc ue -3
Forecast orders
customer Production
Customer Order
Product
Product
Finished Goods
Inventory
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8. Ma e o de (Fig r 4 )
k-t-Or r ue -3
customer
Customer Order
Product
Production
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9. Ase be o de (Figur 4-3)
sml-t-Or r e
Forecast orders
customer Production of
Subassemblies
Customer order
Subassembly
Product
Assembly of the Inventory
Order of Subassemblies
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10. Cutm aio Po (Figure4-4)
so izt n int
MTO MTO ATO MTS
∇------------------∇ ∇ ∇
Supplier Fabrication Assembly Distribution
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11. Process Selection Decisions
• Process characteristics matrix
• Factors affecting process choice
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12. Process Characteristics Matrix (Table 4.3)
Make-to-Order
Characteristics Make-to-Stock
Assemble-to-Order
Auto Assembly Line Auto assembly line
Continuous and Oil refinery Dell Computers
Assembly Cannery Motorola Pager
Line Flow Cafeteria
Machine shop Machine shop
Fast food Restaurant
Batch and Job Shop Glassware factory Hospital
Costume Jewelry Custom jewelry
Speculation homes Buildings
Commercial painting Movies
Project Ships
Portraits
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