Operations Management

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I can effeiciently explain the difference between "make-to-order" and "make-to-stock". Make to stock firms are those that sell finished goods to customers. Make to order firms are those that assemble a customer's product from raw material and parts. 

An example of a make to stock firm would be a clothing company. The clothing firm will analyze the market and make forecasts about the amount of products they will need to buy to meet the demands. Make to Stock operations are for companies who are mass producing products and have a consumer market that can easily be forcasted. The company could produce and stock unlimited amounts and variations of their products, but the cost to do this would diminish the funds going into customer services. This would be a tradeoff, deciding more inventory over quality customer service.

Make to order firms are those that do not manufacture or stock an item until there is a customer putting in an order. A customer will put in a customized order that is usually of small quantity or expensive pricing. The firm will then manufacture the product and have it sent for delivery. The important difference of make to order firms is that they manufacture goods from raw materials, not purchased parts and components.

CITATION:

Jacobs, F. R., & Chase, R. B. (2021). Section 2 - Manufacturing Service Processes. In Operations and supply chain management (pp. 164–164). essay, McGraw-Hill Education.