Operations Management: An Integrated Approach, 5th Edition

USING THE MPS

One use of the authorized MPS is order promising. When a customer places an order for a product but does not expect immediate delivery, the delivery date is negotiated. The customer typically requests delivery at a future date and the company decides whether it can promise delivery on that date. This is called order promising. For example, your parents order a new car custom-built for you at the factory for delivery on graduation day. The company is order promising when it decides whether it can produce the car and deliver it on that date. By extending the MPS records we began using in Table D-1, we can do order promising. Let's look at an extended MPS record in Table D-11.

Order promising

The process of making order-delivery commitments.

The table now has two additional rows, one for customer orders and the other for available-to-promise quantity. The customer orders row has orders promised to customers for delivery in that time period. For example, the company has promised 35 units to be delivered in period 1, 25 units for delivery in period 2, and so forth.

The available-to-promise (ATP) row shows how many uncommitted units the company has available for delivery at a given time. Next, we look at an example of how to calculate the ATP quantity and the projected available balances.

Available-to-promise (ATP)

The uncommitted portion of a company's inventory and planned ...