Make-to-Stock (MTS) and Make-to-Order (MTO) are two competing production policies over the lead-time and inventory level performance measures. Unless one of these production policies is necessary due to technological means and/or product's nature, one has to choose among them to reduce the inventory and lead-time related costs.  Popp showed in 1965 that when both of these performance measures are considered a hybrid production policy is the optimum, even in the case of single product.

In this study, we consider a single production facility with multiple-item production portfolio, and for each product type it is possible to apply either production policy. A setup process might be needed at product type switches, but not necessarily. Our aim is to minimize the production and inventory holding costs. In the literature besides the production policy, other system rules are also studied, e.g., pricing, production scheduling, due date setting and order acceptance rules. We assume that each order is accepted at the standard price, and a cyclic production scheme is chosen by the facility. For each product type, we want to answer the following questions:
i.What is the best production policy?
ii.For MTS items, what is the best base-stock level?