Manufacturing Production

AAA

DEFINITION of 'Manufacturing Production'

The creation and assembly of components and finished products for sale. Three common types of manufacturing production are make-to-stock (MTS), make-to-order (MTO) and make-to-assemble (MTA).

BREAKING DOWN 'Manufacturing Production'

The MTS strategy is based on demand forecasts, so it makes the most sense when demand can be predicted with reasonable accuracy. Companies can lose money with this strategy if they manufacture too much or too little.





MTO allows customers to order products built to their specifications. Companies alleviate inventory problems with MTO, but customer wait time is usually longer.





MTA is a hybrid of the two: companies stock basic parts based on demand predictions, but do not assemble them until customers place their orders and can offer customization.



RELATED TERMS
  1. Capacity Requirements Planning ...

    An accounting method used to determine the available production ...
  2. Cost Of Revenue

    The total cost of manufacturing and delivering a product or service. ...
  3. Production Rate

    In manufacturing, the number of goods that can be produced during ...
  4. Make To Assemble - MTA

    A manufacturing production strategy where a company stocks the ...
  5. Make To Order - MTO

    A business production strategy that typically allows consumers ...
  6. Make To Stock - MTS

    A traditional production strategy used by businesses to match ...
Related Articles
  1. Stock Analysis

    Who Will Be the Tesla of the Airline Industry?

    Explore the move toward producing electric-powered airplanes and learn what companies are in the forefront for developing the necessary technology.
  2. Stock Analysis

    What's the Secret Behind Ambarella's Success?

    Learn more about Ambarella, and understand some the primary reasons behind the company's continuing high level of growth and success.
  3. Fundamental Analysis

    Vital Link: Manufacturing And Economic Recovery

    Manufacturing output is one of the clearest signs that an economy is recovering from a recession.
  4. Investing

    Doing More With Less: The Sales-Per-Employee Ratio

    If used properly, this ratio can give you insight into a company's productivity and financial health.
  5. Economics

    Overseas Investing No Protection Against Downturn

    The U.S. economy affects many other countries. Find out what this can mean for overseas investments.
  6. Entrepreneurship

    World's Top 10 Serial Entrepreneurs

    There are entrepreneurs, and then there are serial entrepreneurs. Investopedia takes a look at who they are and how they keep making it big.
  7. Economics

    Explaining Strategic Alliances

    A strategic alliance is a business relationship between two or more entities that share recourses for a common goal.
  8. Economics

    Understanding Organic Growth

    Organic growth is the increase in a company’s revenue and value due to internal operations.
  9. Economics

    Explaining the Balanced Scorecard

    A balanced scorecard is a metric that measures a business’ performance.
  10. Investing

    The Rise of Corporate Venture Capital

    After the success of Google Ventures, corporate venture capital is an increasingly popular diversification and hedging tool for many large corporations.
RELATED FAQS
  1. How does the risk of investing in the industrial sector compare to the broader market?

    There is increased risk when investing in the industrial sector compared to the broader market due to high debt loads and ... Read Full Answer >>
  2. What is usability testing, and why is it so important in the Internet sector

    Usability testing is the evaluation of a product or service by testing it with users who represent the consumer segment the ... Read Full Answer >>
  3. Who are Tesla's (TSLA) main suppliers?

    A relative newcomer to the automotive sector, Tesla Motors (TSLA), headquartered in California, is an auto manufacturer and ... Read Full Answer >>
  4. What are some of the most prominent companies in the electronics sector?

    The electronics industry is part of the technology sector. This sector covers companies that are responsible for researching, ... Read Full Answer >>
  5. Why are microeconomic models different in the short run than the long run

    In microeconomics, the short run and long run refer to two very different perspectives on the production process and costs. ... Read Full Answer >>
  6. What are the primary advantages of forming a joint venture?

    As an alternative to a business merger or acquisition, forming a joint venture is a common business strategy used among companies ... Read Full Answer >>
  7. What's the difference between outsourcing and insourcing?

    The primary difference between outsourcing and insourcing is the method in which work is divided between various companies ... Read Full Answer >>
  8. Does gross profit include labor and overhead costs?

    Companies calculate gross profit by deducting the expenses directly related to the production of their goods (listed as "cost ... Read Full Answer >>

You May Also Like

Hot Definitions
  1. Election Period

    The period of time during which an investor who owns an extendable or retractable bond must indicate to the issuer whether ...
  2. Shanghai Stock Exchange

    The largest stock exchange in mainland China, the Shanghai Stock Exchange is a nonprofit organization run by the China Securities ...
  3. Dead Cat Bounce

    A temporary recovery from a prolonged decline or bear market, followed by the continuation of the downtrend. A dead cat bounce ...
  4. Bear Market

    A market condition in which the prices of securities are falling, and widespread pessimism causes the negative sentiment ...
  5. Alligator Spread

    An unprofitable spread that occurs as a result of large commissions charged on the transaction, regardless of favorable market ...
  6. Tiger Cub Economies

    The four Southeast Asian economies of Indonesia, Malaysia, the Philippines and Thailand. Tiger cub economy indicates that ...
Trading Center
×

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!