Master Planning and Scheduling, 4th Edition

8Planning Bills

An assumption is the first step toward a screwup.

Imagine a company that sells conference center chairs off‐the‐shelf. To remain competitive, the company determines that it must expand its product line—customers want a variety of colors beyond the current black‐only model. To accomplish this product expansion, the company must evaluate both its marketing and manufacturing strategies. Under its current make‐to‐stock (MTS) strategy for conference center chairs, the customer simply asks for a chair, and that item is shipped from finished goods. This system works fine for a product family with a limited number of members.

However, if a company is going to offer greater product variety without a change in its manufacturing strategy, it can and most likely will be very expensive to maintain a finished‐goods inventory for all items expected to ship off‐the‐shelf with minimal lead time. The company's forecasting job will become more difficult, too; if it guesses wrong on demand for its variety of products, it risks having obsolete inventory. As the company continues to offer more options to the customer and marketplace in order to remain competitive, the problem becomes more significant. Therefore, it may be necessary to choose adding additional manufacturing strategies.

Using the MTS manufacturing strategy for make‐to‐stock products has already been discussed. This chapter deals with an alternative strategy—make‐to‐order (MTO). First, though, we review the potential ...