Our discussions in class and our cases refer currently to the topic of process and time. We also talked about the P:D ratio and although this is a more theoretical topic, it is interesting to see what is behind it.
The production lead-time P describes how long it takes to manufacture a product and the demand lead-time D could be referred to as the lead time quoted by the firm to the customer. The comparison of P and D helps a company to select a suited strategic order fulfillment option (order fulfillment is the process a company responds to a customer’s order). The main difference between the options is the way that final users’ requirements are taken into consideration.
* Pull-type production:
- production is based on actual demand
- assembly / manufacturing process after receiving customer order à pulled by demand
- quantity to produce per product specification is one / only a few
* Push-type production:
- production is not based on actual demand
- quantity to produce per product specification is high