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Make-to-order is when a company builds the customer order from raw materials. Make-to-stock is when the product the customer wants is already finished and taken from an inventory. Make-to-order requires costly inventories of raw materials, semi-finished products, and final products (Meisel and Bierwirth, 2014). I work in a make-to-order aerospace company. The customer places an order well in advance and the master scheduler plans accordingly. In an article written by Germs and Van Foreest, it is explained that the make-to-order character requires that orders must be produced in time (Germs and Foreest, 2013). Timing is very important in supply chain management and inventory is costly. We try to have just enough materials in to satisfy the customer’s order and right on time. A company must decide which is best for them and their customer’s needs.
Germs, R., & van Foreest, N. D. (2013). Order acceptance and scheduling policies for a make-to-order environment with family-dependent lead and batch setup times. International Journal of Production Research, 51(3), 940–951. https://doi-org.ezproxy.uwa.edu/10.1080/00207543.2012.693638
Meisel, F., & Bierwirth, C. (2014). The design of Make-to-Order supply networks under uncertainties using simulation and optimisation. International Journal of Production Research, 52(22), 6590–6607. https://doi-org.ezproxy.uwa.edu/10.1080/00207543.2014.904533