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Operations: Make-to-Stock, Assemble-to-Order, and Make-to-Order

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Can you provide a business example from one of the three operations strategies: make-to-stock, assemble-to-order, and make-to-order. Explain how the strategy works. Is it effective? What it would take for a company to move from a make-to-stock strategy to make-to-order, and vice versa.

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This response looks at the three different operations strategies: make-to-stock, assemble-to-order, and make-to-order.

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The make-to-stock (MTS) method uses predicted demand to decide how much stock the business should produce. If demand can be predicted accurately, MTS is a good option. The difficulty in using MTS is that it depends on how accurate the predicted demand is.

The make to order (MTO) business production strategy lets customers customize products to their specifications. The end product is manufactured only after the customer places the order. This adds to the consumer's waiting time to receive the product, but allows for customization to the customer's specifications. The MTO strategy reduces inventory that is often seen with MTS.

The assemble-to-order (ATO) production strategy is a combination of MTS and MTO. In ATO, the ...

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J Pye, MSc
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  • MSc, California State Polytechnic University, Pomona
  • MBA, University of California, Riverside
  • BSc, California State Polytechnic University, Pomona
  • BSc, California State Polytechnic University, Pomona
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