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Push type" means Make to Stock in which the production is not based on actual demand. "Pull type" means Make To Order in which the production is based on actual demand.
Push Pull systems in manufacturing and stock and parts movement is a manufacturing system where parts and supplies are either pushed into production or assembly where car bodies are pushed forward and parts are assembled into these bodies .or pulled forward based on demand of assembly or manufacturing from the source or inventory.which means required supplies and parts are pulled based on demand,.
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A Push System is based on foretasted demand that is completed and send to the next work station or in the case of final work station it goes to finished good inventory...in it all information moves from managers to market.
In Pull System the movement of work (sales) based on the demand of following work station.in this system information flows from market to managers.
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An inventory manager must be able to develop an effective inventory control system to manage customer demand. The demand for the product will control inventory costs, carrying costs, ordering costs and storage costs. Inventory control systems are generally categorized as push or pull models. Knowing the definitions, advantages and disadvantages of each system will help a company establish which inventory control method works best for their organization.
Push System
The push system of inventory control involves forecasting inventory needs to meet customer demand. Companies must predict which products customers will purchase along with determining what quantity of goods will be purchased. The company will in turn produce enough product to meet the forecast demand and sell, or push, the goods to the consumer. Disadvantages of the push inventory control system are that forecasts are often inaccurate as sales can be unpredictable and vary from one year to the next. Another problem with push inventory control systems is that if too much product is left in inventory. This increases the company's costs for storing these goods. An advantage to the push system is that the company is fairly assured it will have enough product on hand to complete customer orders, preventing the inability to meet customer demand for the product.
An example of a push system is Materials Requirements Planning, or MRP. MRP combines the calculations for financial, operations and logistics planning. It is a computer-based information system which controls scheduling and ordering. It's purpose is to make sure raw goods and materials needed for production are available when they are needed.
Pull System
The pull inventory control system begins with a customer's order. With this strategy, companies only make enough product to fulfill customer's orders. One advantage to the system is that there will be no excess of inventory that needs to be stored, thus reducing inventory levels and the cost of carrying and storing goods. However, one major disadvantage to the pull system is that it is highly possible to run into ordering dilemmas, such as a supplier not being able to get a shipment out on time. This leaves the company unable to fulfill the order and contributes to customer dissatisfaction.
An example of a pull inventory control system is the just-in-time, or JIT system. The goal is to keep inventory levels to a minimum by only having enough inventory, not more or less, to meet customer demand. The JIT system eliminates waste by reducing the amount of storage space needed for inventory and the costs of storing goods.
Pull system is (just in time ) JIT system cause its take the customer order first and then produce . and we can consider process costing as a push system .
Push System Mean Production depends on Sales forecasting and this way may result in buildup inventory
Pull System its mean the department in production produce based on actual demand ( Just in Time method)
push system = production of merchandise then sell it ( biscuits manufacture )
pull system = ordering from customers first first then production ( planes production )
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in simple way depend on the market demand pull or our active to make market demand on our product push
