1) Your organization has opted for make-to-stock production strategy.

Which of the following

are the reasons for choosing this strategy?
Note: There are more than one correct answers to this question.
a) The cost of the finished good has to be visible at a sales order level
b) The demand for the material is consistent and with less changes in specification
c) The material do not have to be stored separately or are assigned to a specific sales order
d) Sales order are filled from the production stock
Answer: b, c
Explanation:
Make-to-stock strategies are aimed at planning the procurement of components
(procurement or purchasing) by planning the finished product. If it is easier to plan at
component level, we can use planning at assembly level. We choose make-to-order
production strategy if
The materials do not have to be stored separately or are assigned to a specific sales
order;
The costs have to be visible at material level, in other words not at sales order level.
We use make-to-stock production when we produce stock independently of an order,
because we want to supply our customers with goods from this stock later. We may want to
produce goods without a sales order if we expect a demand for them in future. Make-to-
stock strategies thus support very close customer-supplier relationships, since their purpose
is to supply the customer with goods from stock as quickly as possible.

2) You have been asked to explain the feature of make-to-stock production with net
requirement planning according to strategy 10. Which of the following features are
correct?
Please choose the correct answer.
a) Sales order are relevant for MRP
b) Sales order are fulfilled from stock
c) Goods withdrawals against sales order reduce the respective planned independent
requirements
d) The planned independent requirement is reduced in accordance with the LIFO principle
using the requirement date
Answer: b
Explanation:
In pure make-to-stock production (net requirements planning according to strategy 10),
the demand program is determined without reference to sales order
Sales orders are not relevant for MRP, but we can display them for information purposes.
Sales orders are fulfilled from stock. No consumption with planned independent
requirements occurs. We can carry out the availability check with ATP logic in Sales and
Distribution. Goods withdrawals against a sales order reduce the respective sales order.

Reduction of the demand program, that is, of the planned independent requirements, is
carried out at goods issue. The oldest planned independent requirement is reduced first, in
according with the FIFO (first in first out) principle using the requirement date. Future
planned independent requirements are also reduced by goods issues, provided this is
allowed by the forward consumption period in the material master.


3) Your organization is using forward/backward consumption mode to determine the
direction on the time axis in which incoming sales orders are to consume planned
independent requirement. So which consumption you would choose to support this type
of consumption mode?
Please choose the correct answer.
a) Consumption mode 1
b) Consumption mode 2
c) Consumption mode 3
d) Consumption mode 4
Answer: d
Explanation:
We can use consumption mode to determine the direction on the time axis in which
incoming sales orders are to consume planned independent requirements.
In backward consumption (consumption mode 1), the sales order consumes planned
independent requirements from before the customer requirement.
In forward consumption (consumption mode 3), the sales order consumes planned
independent requirements from after the customer requirement.
We can combine backward and forward consumption provided that we take the
consumption periods into account (consumption mode 2 or 4).