Which production approach manufactures products for stock based on demand forecasts (Push system)?

• A. Make to Stock
• B. Make to Order
• C. Assemble to Order
• D. Engineer to Order

Answer: (A)

Producing goods in advance of customer orders, based on forecasted demand, is a push system. In this approach, items are manufactured to stock according to a forecast and pushed through the supply chain so they’re ready when customers order. Make to Stock embodies this idea: you plan production around anticipated demand and hold inventory to meet that forecast, which can shorten customer lead times and allow bulk production efficiencies.

The upside is quicker fulfillment and better use of capacity when forecasts are accurate. The downside is the risk of over- or under-stocking if demand diverges from forecasts, which ties up capital and can lead to obsolescence.

In contrast, Make to Order starts production only after a customer order is received, making it a pull system; Assemble to Order prepares standard components and only completes the final product after the order is placed; Engineer to Order designs and builds from scratch to meet unique specifications.