Make to Stock (Manufacture to Stock)

In the context of logistics, Make to Stock (MTS) is a manufacturing process strategy where the finished product is continually held in plant or warehouse inventory to fulfill expected incoming orders or releases based on a forecast.

The main goal of MTS is to maintain a high level of customer service by having finished goods readily available when the demand arises. In order to do this, manufacturers need to have an accurate forecast of future demand. When demand exceeds supply, backorders will occur and customers may be dissatisfied. On the other hand, if too much product is manufactured and there is little demand, then excessive inventory levels will tie up working capital and result in higher storage and opportunity costs.

Advantages of MTS include:

  • Reduced production lead times.
  • Reduced setup costs.
  • Increased flexibility to respond to changes in demand.

Disadvantages of MTS include:

  • High inventory levels and associated costs.
  • Difficulty responding to sudden changes in demand.

Make to stock manufacturing is a type of manufacturing process where finished products are stocked in anticipation of customer orders. The main advantage of this system is that it reduces production lead times. Customers may be dissatisfied if backorders occur, however, and excessive inventory can tie up working capital.

Related Links

Make To Stock – MTS Definition
MTS (Make to Stock) – Lean Manufacturing
MTS — Made to Stock — Definition & Example – InvestingAnswers
Make to Stock – MTS – Logistiikan Maailma
What is Make-to-Order? Definition and examples – Market Business News

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