Demand Management: Assignment

Satisfactory Essays
MGO631:

Production & Inventory Planning

Assignment 2: Demand Management (DM)

Question I:
What advantages do you see in moving from make-to-stock to assemble-to-order or make-to-order?
What challenges are likely to be present with assemble-to-order or make-to-order?
Answer:
The main advantage of ATO/MTO over MTS is its capability of offering a large range of varieties to customers. As such, flexibility is the key feature of ATO/MTO. However, time will be the most critical element to the success of ATO/MTO because in this case the company must keep its promise to get the product delivered to the customer on time.

Question II:
When a firm is able to move to an assemble-to-order capability from a make-to-stock approach, there can be a substantial reduction in the number of things that must be tracked and stored. For example, the Northland Computer Shop had decided to stop stocking assembled computers and moved to an assemble-to-order approach. Northland even invited customers to the work area to see their computer being assembled, a great customer relations ploy. The company estimated that there were seven hard disk choices, six mother boards (including the processor), five CD/DVD alternatives, three operating systems, and four other options.
a. What was the total number of potential finished products?
b. If it cost $10 per item to make a forecast each week, what is the weekly savings from forecasting just the components and options as compared to the potential number of finished products?
Answer:
a. The number of potential finished products is the product of all the components and options.
The total number of finished products possible is: 7 * 6 * 5 * 3 * 4 = 2520 potential finished products.
b. To get the difference we need the total number of components and options which is 7 + 6 + 5 + 3 + 4 = 25 components. Therefore, at $10 per forecast we can save $24,950/week (=10*(2520-25)).

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