Which production strategy minimizes lead times by producing inventory in advance based on forecasts?

Unlock all questions

This demo includes only 20 questions. Upgrade to access hundreds of questions, flashcards, exam simulations, and disable ads.

Full question bankExam simulationsFlashcards
From $24.99Unlock all

Prepare for the FBLA Introduction to Supply Chain Management Test with flashcards and multiple-choice questions. Each question includes hints and detailed explanations. Maximize your success rate!

Multiple Choice

Which production strategy minimizes lead times by producing inventory in advance based on forecasts?

Explanation:
Minimizing lead times by producing inventory in advance based on forecasts is Make-to-Stock. In this approach, demand is forecasted and goods are manufactured ahead of customer orders, then kept as finished inventory so orders can be filled quickly. Because the product is already produced, the customer delivery time is greatly reduced, which is ideal for high-volume, predictable demand. The trade-off is the risk of excess or obsolete inventory if forecasts are off. Other strategies delay production until an order is received or involve customization, which tends to lengthen lead times.

Minimizing lead times by producing inventory in advance based on forecasts is Make-to-Stock. In this approach, demand is forecasted and goods are manufactured ahead of customer orders, then kept as finished inventory so orders can be filled quickly. Because the product is already produced, the customer delivery time is greatly reduced, which is ideal for high-volume, predictable demand. The trade-off is the risk of excess or obsolete inventory if forecasts are off. Other strategies delay production until an order is received or involve customization, which tends to lengthen lead times.

More Multiple Choice Questions
Subscribe

Get the latest from Examzify

You can unsubscribe at any time. Read our privacy policy