A firm has 56 units of product X on hand. Forecasts of demand are for 20 units per week. An MPS quantity of 100 units is planned to arrive in period 3. Customer orders are 24 for period 1, 18 for period 2, and 15 for period 3.
What quantity is available for commitment to new customers prior to the receipt of the MPS quantity in week 3?
A)14
B)32
C)12
D)20
E)impossible to say without more information

Question

Quizplus · Accepted Answer

The available quantity for new customers is calculated by subtracting the forecasted demand and customer orders from the on-hand inventory until the MPS quantity arrives. For period 1, the available quantity is 56 - 24 (customer orders) = 32. For period 2, it's 32 (remaining from period 1) - 18 (customer orders) = 14. Since the MPS quantity arrives in period 3, the available quantity before its arrival for new customers is 14 units.

A Firm Has 56 Units of Product X on Hand