We are preparing a master production schedule for a given it

We are preparing a master production schedule for a given item. For this item the demand forecast and booked orders are as follows:

Our Week 0 projected on-hand is 132 units. Lead time for this item is 2 weeks, and the order policy for this item is a fixed quantity of 300 units. Having completed this master schedule, how many units will be available to promise in Week 3?

Solution

Explanation:

Projected on-hand inventory for week 1= Initial Inventory (units) + MPS for week 1 – demand forecast for week 1                     [As the demand forecast is more than the booked orders]

= 132 + 0 – 60 = 72

Projected on-hand inventory for week 2 = Projected on-hand inventory for week 1 + MPS for week 2 – booked orders for week 2                     [As the booked orders is more than the demand forecast]

= 72 + 0 – 63 = 9

Projected on-hand inventory for week 3 = Projected on-hand inventory for week 2 + MPS for week 3 – demand forecast for week 3                     [As the booked orders is more than the demand forecast]

= 9 + 300 – 80 = 229

(MPS we have to plan according to projected on-hand inventory for the week)

Available to promise (ATP) in week 1 = On-hand quantity (initial) + MPS quantity in week 1 – booked order up to next MPS arrival

= 132 + 0 – (58+63) =11

Available to promise (ATP) in week 3 = MPS quantity in week 3 - order booked (committed) up to next MPS arrival

= 300 – (52+20+4) = 224

Therefore 224 units will be available to promise in Week 3.