What planning strategy should be used when producing goods based on customer orders exceeding forecasts?

Prepare for the SAP Production Planning and Manufacturing Exam. Study with expertly crafted flashcards and multiple-choice questions, each question complete with hints and detailed explanations. Boost your confidence and get ready for your certification!

The correct choice is to use "Planning with final assembly" when producing goods in response to customer orders that exceed forecasts. This strategy is particularly advantageous in cases where specific customer demands are not fully predicted, allowing businesses to remain flexible and responsive to actual order trends.

By utilizing planning with final assembly, production can be organized so that components are manufactured and held in inventory, but the final assembly of the product occurs only after a customer order is received. This method allows companies to customize the final output according to actual customer requirements while still benefiting from some level of inventory efficiency. This approach reduces the risk of excess inventory since products are not fully completed until there is a confirmed demand.

Contrastingly, other strategies may not effectively capitalize on actual customer orders. For instance, make-to-order production can also be suitable for unique orders, yet it requires starting production only once an order is placed, which can lead to longer lead times. Planning without final assembly can create challenges in managing inventory levels, especially if demand fluctuates widely. Make-to-stock production runs the risk of overproduction, resulting in surplus inventory that may not align with actual consumer demand.

In summary, planning with final assembly strikes an optimal balance between preparation and flexibility, making it the best approach

Subscribe

Get the latest from Examzify

You can unsubscribe at any time. Read our privacy policy