ITPEC IP April 2021 Question 92
ITPEC IP April 2021 — Question 92 of 100
Build-to-order begins production after receiving an order, so shipment is not immediate but excess finished-product inventory is avoided. Actual demand triggers production, reducing reliance on forecasts and the risk of unsold completed goods, while customers accept a manufacturing lead time.
Answer (a)
Why not others:
- forecast accuracy and optimal finished-goods stock are central concerns of build-to-stock
- stockout-based lost sales concern insufficient build-to-stock inventory
- producing according to a forecast plan describes build-to-stock
Key rule: Build-to-order trades immediate delivery for lower finished-goods inventory and overproduction risk.
AI-generated — may contain errors
The original exam layout is preserved in the image so diagrams, formulas, tables, and code remain accurate.
This question comes from an official ITPEC past paper. ITPEC Practice is an independent study tool and is not affiliated with ITPEC. See the official IP past-paper collection or Report an issue.