Question

Using the information given in the master schedule below, answer the following:

1. Determine the Projected Ending Inventory in each week as well as the Available to Promise quantities in weeks 2, 4, 6, and 8.
2. What does a negative projected ending inventory value mean? How does it differ from a negative available to promise value?
3. Which do you think would be easier for a manger to deal with – a negative projected inventory value or a negative ATP? Why?

On-hand inventory at end of week 1	100
Week	2	3	4	5	6	7	8	9
Forecasted demand	250	250	300	300	350	350	250	250
Booked orders	265	255	270	245	260	235	180	100
Projected ending inventory
Master production schedule	500		600		600		500
Available to promise

Answer 1

a)

MPS showing the Project ending Inventory (POHI) and Available To Promise (ATP) is as follows:

b)

Projected ending inventory considers both forecast and orders. So, negative ending inventory value means actual shortage in particular week. Whereas negative ATP value means MPS is insufficient to meet the actual orders.

c)

It would be easier to deal with a negative ATP value, because it gives more accurate picture, about availability or inventory based on actual customer orders