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About the Author
In the last 25 years, Eli Schragenheim has taught, spoke at conferences, and consulted in more than 15 countries, including the United States, Canada, India, China, and Japan. He has also developed software simulation tools especially designed to experience the thinking of TOC, and consulted to several application software companies to develop the right TOC functionally in their own packages.
Mr. Schragenheim was a partner in the A.Y. Goldratt Institute and he is now a Director in The Goldratt Schools.
He is the author of Management Dilemmas. He collaborated with H. William Dettmer in writing Manufacturing at Warp Speed. He also collaborated with Carol A. Ptak on ERP, Tools, Techniques, and Applications for Integrating the Supply Chain, and with Dr. Goldratt and Carol A. Ptak on Necessary But Not Sufficient. In March 2009, a new book titled Supply Chain Fulfillment at Warp Speed, with H. William Dettmer and Wayne Patterson was published. The new book contains much of the new developments of TOC in operations.
Mr. Schragenheim holds an MBA from Tel Aviv University, Israel, and a BSc in Mathematics and Physics from the Hebrew University in Jerusalem. In-between his formal studies, he was a TV director for almost 10 years. He is a citizen of Israel.
CHAPTER 10
Managing Make-to-Stock and the Concept of Make-to-Availability
Eli Schragenheim
Introduction
Is there a basic difference between producing an order for a specific customer order and producing an order in anticipation of future demand? From a business perspective, there is an obvious difference: producing in anticipation of demand means risk, while producing to a firm order looks safe enough. However, once there is a decision to produce to stock, either based on formal forecasting or on a hunch, should there be a difference in the rules behind production planning and execution?
The traditional approach does not see much of a difference between make-to-stock (MTS) and make-to-order (MTO) for production management. Thus, mixing within the same work order a quantity that is covered by firm orders with a quantity based on anticipation is very common.
When Drum-Buffer-Rope (DBR) (Goldratt and Cox, 1984; Goldratt and Fox, 1986) was developed in the 1980s, it did not challenge the assumption that there is no difference in planning the shop floor for firm orders and planning it for anticipation of future demand. In addition, Buffer Management (BM) did not see any difference between MTO and MTS.
This chapter argues that there should be a difference. It is designed to explain the logic of why different rules, both in the planning and in the execution, are required and goes on to detail the method itself and its ramifications.
While dealing with the topic of MTS and how it is different from MTO, another insight by Dr. Goldratt has emerged that led to a new term called make-to-availability