Make-to-stock
The stock production , also called build-to-floor, distinguished by the fact that products are made, even before the customer they commissioned. It is the counterpart to contract manufacturing . The advantage for the manufacturer is the even utilization of production, the customer can buy the product without waiting. Make-to-stock production is mainly found in the consumer goods sector.
The disadvantage is the higher storage costs for the finished products .
Furthermore, the capital tied up in the warehouse through make-to-stock production poses a problem as it deteriorates the manufacturer's liquidity. Even the determination of the necessary stock level poses a risk, since on the one hand only the historical demand for the articles and a forecast of the future demand quantity can be used. Seasonal fluctuations, trend developments from the life cycle of the article as well as the behavior of customers can either not or not completely be shown here, or - in order to achieve delivery reliability as close to 100% as possible - lead to extremely high safety stocks.