In my previous three posts, I made a few examples, using different Reordering Police for the same cases when we use Replenishment System as Purchase. When we use Replenishment System as Prod. Order, we have two different options:
- Manufacturing Policy = Make-to-Stock
- Manufacturing Policy = Make-to-Order
When I created examples for purchase, I used Requisition Worksheets, but now for manufacturing, I will use Planning Worksheets.
When we use both of Manufacturing Policies, results are the same as we use Replenishment System – Purchase for the all of cases of finish goods on Sales Order or Inventory stock. There are some difference for materials in BOM planning.
Manufacturing Policy = Make-to-Stock
The program considers just the first level of the bill of materials (BOM) and allows only one item per production order.
A make-to-stock item is produced to inventory levels. Typically, these are standard items with a relatively short manufacturing lead time or items that are used as required subassemblies for other items.
This manufacturing policy is generally used with the reordering policies of Fixed Reorder Quantity and Maximum Quantity.
Manufacturing Policy = Make-to-Order
The program explodes the BOM, and creates an additional production order line (or production order proposal line) for each level in the BOM structure where that item's manufacturing policy has also been defined as make-to-order. This means that if you want to make multilevel production orders, then the manufacturing policy for the parent item, as well as the component items at all levels, must be make-to-order.
When you use make-to-order, the program will create an automatic reservation between the requirement and the corresponding replenishment order proposal. This will preserve the customized information on the relevant orders and link them for inventory and costing purposes.
This manufacturing policy is generally used with the reordering policy of Order and possibly, Lot-for-Lot.