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Question 214 - CSCP discussion

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Which of the following manufacturing strategies would run the greatest risk of increasing obsolete inventory costs?

A.
Make-to-stock
Answers
A.
Make-to-stock
B.
Assemble-to-order
Answers
B.
Assemble-to-order
C.
Make-to-order
Answers
C.
Make-to-order
D.
Engineer-to-order
Answers
D.
Engineer-to-order
Suggested answer: A

Explanation:

Make-to-stock (MTS) is a manufacturing strategy where products are produced based on anticipated customer demand and then held in inventory until sold. The primary risk associated with MTS is the possibility of overestimating demand, which can lead to excess inventory. If the forecasted demand does not materialize, the unsold inventory may become obsolete, leading to increased costs associated with storage, depreciation, and potential disposal. In contrast, the other strategies---assemble-to-order (ATO), make-to-order (MTO), and engineer-to-order (ETO)---are more demand-driven, producing goods in response to actual customer orders, thus reducing the risk of holding obsolete inventory.

Reference:

Chopra, S., & Meindl, P. (2016). Supply Chain Management: Strategy, Planning, and Operation. Pearson.

Stevenson, W. J. (2021). Operations Management. McGraw-Hill Education.

asked 16/09/2024
Luca Bombelli
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