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9. Given the following information shown below, what is the projected on-hand in

ID: 365379 • Letter: 9

Question

9. Given the following information shown below, what is the projected on-hand inventory at the end of week 4? The MPS rule is to schedule production if the projected on-hand inventory at the end of a week would be negative without it. Use a fixed production lot-size of 75 units. Note, there is no beginning inventory for week one and you have been provided the demand forecasts and currently booked (committed) customer orders as shown below. Week Forecast Customer Orders Projected On-Hand (0) MPS 50 50 50 50 52 35 20 12 a. 23 units b. 25 units c. 48 units d. 50 units e. 75 units f. some other value 10. Given the following information shown below, what is the available to promise (ATP) inventory at the end of week 1? The MPS rule is to schedule production if the projected on-hand inventory at the end of a week would be negative without it. Use a fixed production lot-size of 100 units. Note, there is a beginning inventory for week one of 30 units and you have been provided the demand forecasts and currently booked (committed) customer orders as shown below. Week Forecast Customer Orders Projected On-Hand (30) MPS Avail to promise (ATP) 40 40 30 30 42 39 32 15 a. -13 units b.-1 0 units c. 2 unitsd. 17 units e. 20 units f.some other value

Explanation / Answer

Part 9:

1. Determine the Week requirement, which is equal to maximum among forecast or customer requirements.

2. Determine MPS quantity:

MPS quantity is ordered when projected on-hand inventory becomes negative.

Projected on-hand (POH) or net inventory before MPS = previous week inventory – Week requirements

For week 1, POH = 0 – 52 = -52

MPS quantity should satisfy this net inventory before MPS. Here, the lot size is 100 units. Thus, MPS quantity = 100 units.

Ending inventory or projected on-hand will change to:

Projected on-hand after MPS = Previous week Inventory + MPS – Week Requirements

For week 1, projected on-hand after MPS = 0 + 100 – 52 = 48 units

Similar computation is done for determining MPS and POH as follows:

Period

1

2

3

4

A

Forecasted Sales

50

50

50

50

B

Customer Orders

52

35

20

12

C = MAX (A,B)

Week Requirement

52

50

50

50

D

Beginning Inventory

0

23

48

73

F = D-C

Net Inventory Before MPS

-52

-27

-2

23

G

MPS

75

75

75

0

H=G+D-C

Ending Inventory/Project On-Hand

23

48

73

23

Ans: Projected On-hand Inventory at the end of week 4 = 23 units

Correct Option: a. 23

Part 10:

Period

1

2

3

4

A

Forecasted Sales

40

40

30

30

B

Customer Orders

42

39

32

15

C = MAX (A,B)

Week Requirement

42

40

32

30

D

Beginning Inventory

30

88

48

16

F = D-C

Net Inventory Before MPS

-12

48

16

-14

G

MPS

100

0

0

100

H=G+D-C

Ending Inventory/Project On-Hand

88

48

16

86

Determine available-to-promise:

Available-to-promise (ATP) is the quantity that is available after satisfying the customer requirement till next MPS is scheduled.

For week 1, , ATP = Previous week inventory + MPS of the week – Sum of Customer Orders till the week MPS is scheduled

ATP for week 1 = 30 + 100 – (42 + 39 + 32) = 17 units

Beyond Week 1, ATP = MPS of the week – Sum of Customer Orders till the week MPS is scheduled

ATP for week 4 = 100 – (15) = 85 units

ATP for week 4 = 500 – (268+275) = -43 units

Period

1

2

3

4

Forecasted Sales

40

40

30

30

Customer Orders

42

39

32

15

Proj-on-hand (30)

30

ATP

17

85

MPS

100

100

ANS: d. 17

Period

1

2

3

4

A

Forecasted Sales

50

50

50

50

B

Customer Orders

52

35

20

12

C = MAX (A,B)

Week Requirement

52

50

50

50

D

Beginning Inventory

0

23

48

73

F = D-C

Net Inventory Before MPS

-52

-27

-2

23

G

MPS

75

75

75

0

H=G+D-C

Ending Inventory/Project On-Hand

23

48

73

23