Which statement best describes make-to-order production?

Which statement best describes make-to-order production?

• A. Products are manufactured only after a customer order is received.
• B. Production runs are scheduled in advance by forecast.
• C. Products are produced in large quantities for stock.
• D. All products are customized with no standard components.

Answer: (A)

Make-to-order production starts manufacturing only after a customer order is received. This approach reduces finished-goods inventory because production is tied to actual demand, and it fits well with highly customized or variable products where predicting demand is difficult. Lead times are typically longer than forecast-driven production, since setup, design, and production are triggered by each specific order, but you gain flexibility and lower carrying costs. Scheduling production in advance by forecast describes forecast-driven make-to-stock, where products are built based on predicted demand. Producing in large quantities for stock is the essence of make-to-stock. Even in make-to-order, there can be some standard components or configurations, so stating that all products are customized with no standard components is too absolute and doesn't reflect common practice.

Make-to-order production starts manufacturing only after a customer order is received. This approach reduces finished-goods inventory because production is tied to actual demand, and it fits well with highly customized or variable products where predicting demand is difficult. Lead times are typically longer than forecast-driven production, since setup, design, and production are triggered by each specific order, but you gain flexibility and lower carrying costs.

Scheduling production in advance by forecast describes forecast-driven make-to-stock, where products are built based on predicted demand. Producing in large quantities for stock is the essence of make-to-stock. Even in make-to-order, there can be some standard components or configurations, so stating that all products are customized with no standard components is too absolute and doesn't reflect common practice.