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Questions and Answers
What is the primary objective of increasing production quantity when customer orders exceed forecasted quantity?
What is the primary objective of increasing production quantity when customer orders exceed forecasted quantity?
- To optimize production schedules
- To reduce inventory levels
- To minimize production costs
- To meet the extra demand (correct)
What type of production planning strategy is used when producing a finished good based on a forecast?
What type of production planning strategy is used when producing a finished good based on a forecast?
- Planning with final assembly
- Make-to-stock production (correct)
- Make-to-order production
- Assembly line production
What happens when customer orders exceed the forecasted quantity in a make-to-stock production strategy?
What happens when customer orders exceed the forecasted quantity in a make-to-stock production strategy?
- The production schedule is changed to prioritize other products
- The extra demand is ignored
- Production quantity is increased to try to meet the extra demand (correct)
- Production quantity is decreased to reduce inventory
Which of the following is NOT a characteristic of make-to-stock production?
Which of the following is NOT a characteristic of make-to-stock production?
What is the potential consequence of not increasing production quantity when customer orders exceed forecasted quantity in a make-to-stock production strategy?
What is the potential consequence of not increasing production quantity when customer orders exceed forecasted quantity in a make-to-stock production strategy?
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Study Notes
Production Planning Strategy
- The company produces a finished good based on a forecast and holds it in stock until customers place orders.
- When customer orders exceed the forecasted quantity, the production quantity is increased to attempt to meet the additional demand.
- The production planning strategy used in this scenario is Make-to-Stock production.
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