Dynamic modeling of a manufacturer: A unified theory of make-to-order and make-to-stock supply chains

Abstract

Our parsimonious model is general enough to capture the rich dynamics of both make-to-stock and make-to-order settings. The case of AR(1) demand reveals how the three lead times influence the value stream dynamics. We reflect on how our findings relate to our existing understanding of supply chain dynamics. Finally, we conduct an analysis of the economic impact the lead time has on inventory costs.