Question

Typically, McDonald’s produces menu items in advance of customer orders based

on anticipated demand. In contrast, Burger King produces menu items only in re-
sponse to customer orders. Which system (MRP-II or lean manufacturing) does

each company use? What are the relative advantages and disadvantages of each
system?

Answer 1

McDonald's case

The type of production method that McDonalds use is called MAKE TO STOCK model. In this type of production model, you create a demand forecast for the type of product you are serving, and then accordingly create a manufacturing plan. This is also a part of demand planning, where you create a manufacturing plan according to the demand of a particular product, and then store the produce as inventory

Burger King's case-

Burger King uses a "MAKE TO ORDER PRODUCTION MODEL". In this type of production model, you have a standard set of raw materials ready, but the raw materials are converted into the final product only on the demand of the customer. This type of technique is generally used TO MAKE THE SUPPLY CHAIN AGILE, and more responsive to the customer's demand.

Discussion on "Make to stock" and "Make to Order" Production model

Make to stock

When to use it-

1. When the products that you sell are similar for every period and there is no change

2. There is an accurate and efficient sales data available

Advantages-

1. Customers demand are likely to be satisfied most of the times

2. Standard schedule makes management of production easier

3. Most of the times, inventory is well utilized and there is no under and over inventory situations, thus leading to better inventory management

Disadvantages-

1. Inventory can build up to huge numbers in case of low sales, thus causing huge CARRYING COSTS

2. Product- specially perishable items can get damaged easily

Make to Order

When to use it-

1. When you want to increase customer satisfaction and responsiveness

Advantages-

1. Customer gets what it wants, and hence the business is more responsive

2. No situation like UNDER SALES or OVER SALES

Disadvantages-

1. Inventory build up for raw materials can be huge most of the times, as the firm has to be prepared to fill an order any time

Actually both McDonalds and Burger King use both MRP-II and Lean manufacturing

This is because both these concepts are not comparable or contradictory, but go hand in hand. MRP-II is Manufacturing Resource Planning, where you plan the resources that are required to complete a manufacturing order or a manufacturing schedule. These resources can be - Raw Material, Labours, Human Resources, Technology etc.

What is Lean Manufacturing -

Lean manufacturing is a process where you minimize the waste in manufacturing. Therefore there has to be an MRP-II, but the work of Lean manufacturing is to remove the waste out of MRP-II. According to the concept of Lean manufacturing, waste can be of following types-

1. Delays in raw material arrival

2. Delays in manufacturing schedule

3. Delays in taking the finished product to the markets

4. Extra inventory produced

5. Under-produced Inventory

6. Extra labour used

7. Extra machines used

There can be several other such wastes, which lean manufacturing aims to remove. Hence both the concepts- MRP-II and Lean manufacturing go hand in hand and should not e compared/

We can discuss how Lean Manufacturing helps removing the waste, but that is alogether a different thing to discuss and if you want any clearance on that, i can provide it.

Thank you