Proposal for cost reduction in MTS-MTO

In a dynamic industry with many items where fast delivery to the customer is essential the balance between stock costs and available quantities is crucial. The goal is to reduce these costs and if possible improve customer service. Thus the study aims to develop a more rational approach to the production and storage of items seeking to reduce stocks at least for the vast majority while improving the quality of customer service. A methodology for integrated production and inventory management differentiated by item classes is proposed using a hybrid logic of make-to-stock (MTS) and make-to-order (MTO) production as well as a restructuring of the storage area to reduce wasted time and physical load in the handling and transportation of production components. It was concluded that the use of hybrid MTS-MTO production combined with dynamically updated analysis of the ABC classification of items is a strategy that tends to reduce stock shortages in relation to sales volume and therefore improve the company's service quality thus improving customer satisfaction.