A risk management-based evaluation of inventory allocations for make-to-order production

Todayʹs manufacturing companies offer products catered to customers’ needs within tight schedules and stringent cost control. Commonly make-to-order strategies are employed for which production is frequently scheduled ahead of order commitment while considering the stochastic nature of modern manufacturing systems. Inventory at the right stage may reduce the entailed risk of tardiness. But todayʹs inventory planning approaches don’t fully consider scheduling risk. This paper addresses this shortcoming, presenting an evaluation of inventory allocations along the risks of production schedule and stock out allowing identification of critical items to mitigate delays. A case study in the machine tools industry verifies applicability.