Given the forecast and booked orders shown in the table, and a beginning inventory of 20, what is the available to promise inventory for the first period? There are no LOT quantity constraints. $$\begin{array} { | l | c | c | c | c | }
\hline \text { Period } & 1 & 2 & 3 & 4 \
\hline \text { Forecasted Demand } & 200 & 220 & 240 & 200 \
\hline \text { Booked Orders } & 190 & 80 & 30 & 10 \
\hline \text { Projected ending inventory } & & & & \
\hline \text { Master production schedule } & & & & \
\hline \text { Available to Promise } & & & & \
\hline
\end{array}$$

Question

Given the forecast and booked orders shown in the table, and a beginning inventory of 20, what is the available to promise inventory for the first period? There are no LOT quantity constraints. $$\begin{array} { | l | c | c | c | c | } 
\hline \text { Period } & 1 & 2 & 3 & 4 \
\hline \text { Forecasted Demand } & 200 & 220 & 240 & 200 \
\hline \text { Booked Orders } & 190 & 80 & 30 & 10 \
\hline \text { Projected ending inventory } & & & & \
\hline \text { Master production schedule } & & & & \
\hline \text { Available to Promise } & & & & \
\hline
\end{array}$$

Quizplus · Accepted Answer

The available to promise (ATP) inventory for the first period is calculated by subtracting the higher of the forecasted demand or booked orders from the beginning inventory plus any planned production. Since there's no planned production mentioned, we use the beginning inventory of 20. The higher value between forecasted demand (200) and booked orders (190) for the first period is 200. Therefore, ATP = 20 - 200 = -180. However, since ATP cannot be negative for the purpose of this calculation, it indicates that all of the beginning inventory will be used to meet the demand, leaving an ATP of 0 for the first period. But, since the question seems to be asking for the amount of inventory that is available to promise beyond the existing bookings, we consider the difference between booked orders and forecasted demand. Since the booked orders are 190 and the beginning inventory is 20, the available to promise for any additional orders beyond the booked orders is 0 because the beginning inventory is not enough to cover the forecasted demand or even the booked orders. However, the correct interpretation based on the usual ATP calculation method would consider any excess of beginning inventory over booked orders as ATP. Since there's no excess inventory (20 units of inventory will be entirely allocated to cover part of the 190 booked orders), the ATP is effectively 0, indicating a misunderstanding in the explanation process. The correct approach to calculate ATP in this context, considering the beginning inventory and the booked orders, would indeed result in a calculation of how much inventory is left for additional orders after considering the booked orders. Given this, the ATP would be calculated as the beginning inventory minus the booked orders if the booked orders are less than the beginning inventory, which is not the case here. The explanation mistakenly suggested an ATP calculation that doesn't align with the standard approach of comparing beginning inventory directly with booked orders when there's no additional production specified. Therefore, the correct interpretation should focus on the fact that all beginning inventory is allocated to meet part of the booked orders, leaving no additional inventory available for promise, which aligns with an ATP of 0. However, the initial explanation failed to accurately apply the ATP calculation principles to the provided data, leading to confusion. The correct answer, considering the standard approach to ATP calculation, would indeed reflect the amount of inventory available after accounting for the higher of forecasted demand or booked orders, which in this scenario, without additional production, results in no inventory being available beyond the booked orders, aligning with an ATP of 0. This corrects the initial incorrect explanation and aligns with the standard ATP calculation methodology.

Given the Forecast and Booked Orders Shown in the Table