CPIM Practice Exam

What is the formula to calculate available-to-promise (ATP) for the first period?

1. Beginning inventory plus sum of customer orders

2. Beginning inventory minus sum of customer orders

3. Scheduled MPS receipt plus sum of customer orders

4. Scheduled MPS receipt minus sum of customer orders

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

To determine the available-to-promise (ATP) for the first period, the correct formula involves assessing the scheduled Master Production Schedule (MPS) receipt and adjusting for the customer orders that have already been committed. ATP provides a measure of the inventory that can be promised to customers for future orders without compromising existing commitments. Using the scheduled MPS receipt captures the amount of inventory that will be available at the start of the period due to production planned to occur. However, this figure alone does not reflect true availability since some of this inventory may already be allocated to outstanding orders. Therefore, it is necessary to subtract the total of any customer orders that have been received and committed. This approach ensures that ATP reflects only the inventory that can realistically be promised to new customer orders, making option D the appropriate formula: Scheduled MPS receipt minus the sum of customer orders. This calculation gives businesses the ability to manage their commitments effectively, ensuring they do not promise more than they can fulfill. The other options do not provide a sufficient calculation for ATP, as they either add customer orders to the inventory (which would inflate available quantities inaccurately) or use beginning inventory figures that do not account for the scheduled production updates in the MPS.