ITPEC IP October 2025 Question 87
ITPEC IP October 2025 — Question 87 of 100
Build-to-order production avoids excessive finished-goods inventory but cannot usually ship immediately — manufacturing begins after the customer order is received.
Because demand is known before production, the company reduces the risk of unsold completed products and may support customization. The tradeoff is customer lead time while materials are prepared and the item is manufactured.
Answer (a)
Why not others:
- (b) accurate demand forecasting and optimal finished-goods inventory are central concerns of build-to-stock
- (c) lost sales from insufficient completed inventory is a build-to-stock risk
- (d) production from a forecast-based plan directly describes build-to-stock
Key rule: Build-to-order starts from actual demand and trades delivery speed for low finished inventory; build-to-stock starts from forecast demand.
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