2. 11 Material Management Class Note # 2 MPS Practices – Available-to-Promise ( ATP ) Prof. Yuan-Shyi Peter Chiu Feb. 2012

3. 22 ~ MPS Practices ~ Order Promising : The process of making order delivery commitments  The delivery date is negotiated  Whether we can promise delivery on certain date or not ?! Extended MPS Record  Forecast  Customer orders (actual received)  Projected Available  Available–To–Promise (ATP)  MPS (scheduled shipments)

4. 33 Projected Available = (Beginning inventory) + (MPS shipment) — max. [ (the period’s forecast),(actual customer orders) ] Period 1 2 3 4 5 6 7 8 9 10 11 12 Forecast 50 50 50 50 75 75 75 75 50 50 50 50 Customer orders 35 25 25 20 0 15 0 0 10 0 0 10 Projected available Available – to – promise MPS (shipments Received) 125 125 125 125 125 ＊ the beginning inventory is 110 Then using formula, we obtain projected available as shown in red eg.

5. 44 eg. (with projected available) Period 1 2 3 4 5 6 7 8 9 10 11 12 Forecast 50 50 50 50 75 75 75 75 50 50 50 50 Customer orders 35 25 25 20 0 15 0 0 10 0 0 10 Projected available 110 60 10 85 35 85 10 60 110 60 10 85 35 ATP MPS (shipments) 125 0 125 0 125 125 0 0 125 Projected Available

6. 55 ATP (Available–To–Promise) ： The uncommitted portion of a company’s inventory and planned production, maintained in the MPS to support order promising  ATP action bucket : for current period  ATP future : for future replenishment periods

7. 66  ATP action bucket = (beginning inventory ) + (MPS shipment) — (Customer orders before next replenishment)  ATP future = (MPS shipment) — (Customer orders between current MPS shipment and next scheduled replenishment) Period 1 2 3 4 5 6 7 8 9 10 11 12 Forecast 50 50 50 50 75 75 75 75 50 50 50 50 Customer orders 35 25 25 20 0 15 0 0 10 0 0 10 Projected available 110 60 10 85 35 85 10 60 110 60 10 85 35 ATP 50 80 110 125 115 115 MPS (shipments) 125 125 125 125 125 ＊ ATP action bucket = 110 + 0 – (35 + 25) = 50 ＊ ATP 3 = 125 – (25 + 20) = 80

8. 77 ＊ ATP 5 = 125 – (15) = 110 ＊ ATP 7 = 125 – 0 = 125 ＊ ATP 8 = 125 – (10) = 115 ＊ ATP 11 = 125 – (10) = 115  The ATP records show how much inventory is available to satisfy customer demand, to support order promising

9. 88 ＊ update customer order in period 5 to 200, below ： Period 1 2 3 4 5 6 7 8 9 10 11 12 Forecast 50 50 50 50 75 75 75 75 50 50 50 50 200 Customer orders 35 25 25 20 0 15 0 0 10 0 0 10 Projected available 110 60 10 85 35 85 10 60 110 60 10 85 35 -40 -115 -65 -15 -65 -115 -40 -90 ATP 50 80 110 125 115 115 -90 MPS (shipments) 125 125 125 125 125 ＊ update projected available & ATP PA 5 = (35 + 125) – max {75, 200 } = – 40 ATP 5 = 125 – (200 + 15 ) = – 90 & PA 6 = (– 40) – max {75,15} = – 115 & so on. Using ATP practices Can you promise a customer’s purchase  Example ＃ 1 ： Can you promise a customer’s purchase of 200 units delivery set in period 5 ？ of 200 units delivery set in period 5 ？

10. 99  TWO rules to remember here ◇ rule #1 : A negative number in the projected available row is sometimes a problem ◇ rule #2 : A negative number in the ATP row is always a problem

11. 10 Period 1 2 3 4 5 6 7 8 9 10 11 12 Forecast 50 50 50 50 75 75 75 75 50 50 50 50 45 105 110 Customer orders 35 25 25 20 200 15 0 0 10 0 0 10 Projected available 110 60 10 85 35 -5 - 80 -30 20 -30 - 80 -5 -55 30 -20 ATP 50 80 -90 125 115 115 40 0 0 MPS (shipments) 125 125 125 125 125 ＊ Use uncommitted units in period 3, ATP 3 = 80 – 80 = 0 and in period 1, ATP 1 = 50 – 10 = 40 i.e. mark 10 boxes in period 1 & 80 boxes in period 3 & 110 boxes in period 5 with the same client’s name  Example ＃ 1Can you promise a customer’s purchase  Example ＃ 1 ： Can you promise a customer’s purchase of 200 units delivery set in period 5 ？ of 200 units delivery set in period 5 ？ ∴ we can promise a customer’s purchase of 200 units, delivering in period 5 delivering in period 5

12. 11 Using ATP practices  Example ＃ 2 ： Can you promise next order for 50 units for period 4 delivery ? for period 4 delivery ? Period 1 2 3 4 5 6 7 8 9 10 11 12 Forecast 50 50 50 50 75 75 75 75 50 50 50 50 Customer orders 45 25 105 20 110 15 0 0 10 0 0 10 Projected available 110 60 10 30 -20 -5 -80 -30 20 -30 -80 -5 -55 ATP 40 0 0 125 115 115 MPS (shipments) 125 125 125 125 125

13. 12  Example ＃ 2 ： Can you promise next order for 50 units for period 4 delivery ? Period 1 2 3 4 5 6 7 8 9 10 11 12 Forecast 50 50 50 50 75 75 75 75 50 50 50 50 70 Customer orders 45 25 105 20 110 15 0 0 10 0 0 10 Projected available 110 60 10 30 -20 -5 -80 -30 20 -30 -80 -5 -55 -40 -25 -100 -50 0 -50 -100 -25 -75 ATP 40 0 0 125 115 115 -50 MPS (shipments) 125 125 125 125 125 ＊ Entering 70 in period 4 instead of 20; ∴ ATP 3 = 125 – (105 + 70) = -50 & PA 4 = 30 – max { 50,70} = -40 & so no for PA 5 ……PA 12 By rule #2 : A negative number on ATP is always a problem ! But No prior available–to-promise units can satisfy this 50 units. (although APT 1 =40) Means, everything else has been promised. ∴ We can not accept this purchase order for period 4 ∴ We can not accept this purchase order for period 4 the earliest is in period 7 (why?) the earliest is in period 7 (why?)

14. 13 Using ATP practices  Example ＃ 3 ： Can you promise an additional order for 50 units to be delivered in period 8 ?  Example ＃ 4 ： An additional 30 units for period 12 ? Period 1 2 3 4 5 6 7 8 9 10 11 12 Forecast 50 50 50 50 75 75 75 75 50 50 50 50 Customer orders 45 25 105 20 110 15 0 0 10 0 0 10 Projected available 110 60 10 30 -20 -5 -80 -30 20 -30 -80 -5 -55 ATP 40 0 0 125 115 115 MPS (shipments) 125 125 125 125 125

15. 14  Example ＃ 3 ： Can you promise an additional order for 50 units to be delivered in period 8 ?  Example ＃ 4 ： An additional 30 units for period 12 ? Period 1 2 3 4 5 6 7 8 9 10 11 12 Forecast 50 50 50 50 75 75 75 75 50 50 50 50 40 Customer orders 45 25 105 20 110 15 0 50 10 0 0 10 Projected available 110 60 10 30 -20 -5 -80 -30 20 -30 -80 -5 -55 ATP 40 0 0 125 115 115 65 85 MPS (shipments) 125 125 125 125 125 Yes, we can accept these orders ! Yes, we can accept these orders ! (see above)

16. 15 §. Class Problems & Discussion Period 1 2 3 4 5 6 7 8 9 10 11 12 Forecast 50 50 50 50 75 75 75 75 50 50 50 50 Customer orders 45 25 105 20 110 15 0 0 10 0 0 10 Projected available 110 60 10 30 -20 -5 -80 -30 20 -30 -80 -5 -55 ATP 40 0 0 125 115 115 MPS (shipments) 125 125 125 125 125  Problem #1 : Can you accept an order of 80 units for period 7 ?  Problem #2 : Continues on problem #1 ( using the result from #1 ) Can an additional order for 90 units, to be delivered at period 10, be accepted ?  Problem #3 : Continues on problem #2 ( using the result from #2 ) Can you accept an additional purchase order of 75 units for period 9 delivery ?

17. 16 Period 1 2 3 4 5 6 7 8 9 10 11 12 Forecast 50 50 50 50 75 75 75 75 50 50 50 50 Customer orders 45 25 105 20 110 15 80 0 10 0 0 10 Projected available 110 60 10 30 -20 -5 -80 -30 20 -30 -80 -5 -55 -35 15 -35 -85 -10 -60 ATP 40 0 0 125 115 115 45 MPS (shipments) 125 125 125 125 125 Accept the order {i.e. 80 units for period 7 }  Problem #1 : Can you accept an order of 80 units for period 7 ?

18. 17 Period 1 2 3 4 5 6 7 8 9 10 11 12 Forecast 50 50 50 50 75 75 75 75 50 50 50 50 Customer orders 45 25 105 20 110 15 80 0 10 90 0 10 Projected available 110 60 10 30 -20 -5 -80 -35 15 -35 -85 -10 -60 -125 - 50 -100 ATP 40 0 0 45 115 115 25 MPS (shipments) 125 125 125 125 125  Problem #2 : Continues on problem #1 (using the result from #1) Can an additional order for 90 units, to be delivered at period 10, be accepted ? Accept the order {i.e. 90 units for period 10 }

19. 18 Period 1 2 3 4 5 6 7 8 9 10 11 12 Forecast 50 50 50 50 75 75 75 75 50 50 50 50 50 125 85 Customer orders 45 25 105 20 110 15 80 0 10 90 0 10 Projected available 110 60 10 30 -20 -5 -80 -35 15 -35 -125 -50 -100 -80 -30 -80 -170 -95 -145 ATP 40 0 0 45 25 115 35 0 - 50 MPS (shipments) 125 125 125 125 125 ＊ Violates rule #2 ATP 8 = – 50, need to be solved ＊ using 45 units from ATP 7, ∴ ATP 7 = 45 – 45 = 0 5 units from ATP 1, ∴ ATP 1 = 40 – 5 = 35 ＊ Marking : 5 units at period 1 & 45 units at period 7 & 25 units at period 9 for this client’s name.  Problem #3 : Continues on problem #2 (using the result from #2) Can you accept an additional purchase order of 75 units for period 9 delivery ? 0 35

20. 19 Period 1 2 3 4 5 6 7 8 9 10 11 12 Forecast 50 50 50 50 75 75 75 75 50 50 50 50 50 125 35 Customer orders 45 25 105 20 110 15 80 0 85 90 0 10 Projected available 110 60 10 30 -20 -5 -80 -35 15 -35 -125 -50 -100 -80 -30 -80 -170 -95 -145 ATP 40 0 0 45 -50 115 35 0 0 MPS (shipments) 125 125 125 125 125 Accept the order {i.e. 75 units for period 9 }  Problem #3 : Can you accept an additional purchase order of 75 units for period 9 delivery ?

21. 20 The End