CPIM Practice Exam

What represents the available-to-promise for periods containing MPS?

1. Scheduled MPS receipt minus sum of customer orders

2. Scheduled MPS receipt plus sum of customer orders

3. Beginning inventory minus scheduled MPS receipt

4. Beginning inventory plus customer orders

The correct answer is: Scheduled MPS receipt minus sum of customer orders

The available-to-promise (ATP) calculation is crucial in production planning and inventory management as it helps businesses determine how much inventory is available for new customer orders at any given time. To accurately assess ATP for periods containing the Master Production Schedule (MPS), one needs to consider the scheduled MPS receipt and the existing customer orders. When calculating ATP, the scheduled MPS receipt is viewed as the forecasted production that will be completed in the future, adding to the available inventory. From this figure, the total sum of existing customer orders is subtracted. This is because customer orders represent commitments that have already been made against that scheduled production. Hence, ATP is calculated as the scheduled MPS receipt minus the sum of customer orders. This formula allows companies to understand how much product they can promise to new customers without overcommitting their production resources. In contrast, the other options do not correctly capture the dynamics of available inventory in relation to scheduled production and customer commitments. For instance, the inclusion of customer orders in an additive manner, as reflected in some alternatives, would inaccurately suggest an increase in availability, leading to mismanagement of expectations on available inventory for new orders.