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CPIM-Part-2: Certified in Production and Inventory Management (Part 2)
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In an assemble-to-order (ATO) environment, option overplanning is used to:
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Product X sells for $20 each, and it has a variable cost of $5 per unit. The company sells 10,000 units per year and has a fixed cost of $120,000. What is the break-even point in units for Product X?
Which of the following conditions is required for an effective single-sourcing relationship?
To facilitate transportation efficiency and inventory management, companies frequently use:
When a certified supplier's delivery performance declines, a company should respond initially by:
The major contribution of the production plan is to:
In the sales and operations planning (S&0P) process in a repetitive manufacturing environment, the resulting operations plan for a product family could be stated in terms of which of the following outputs?
Providing a realistic basis for setting internal performance targets can be accomplished through:
A focused differentiation strategy is best chosen with:
Fixed order quantity = 100 units
Lead time = 2 weeks
Safety stock = 25 units
What is the projected available balance in period 5?
To calculate the projected available balance in period 5, we need to use the following formula1:
Projected available balance = On-hand inventory + Scheduled receipts - Total demand
We also need to know the values of on-hand inventory, scheduled receipts, and total demand for period 5.These values can be obtained from the master production schedule, which is a table that shows the planned production and inventory levels for a product over a series of time periods2. A possible master production schedule for this question is shown below:
The on-hand inventory for period 5 is the projected available balance for period 4, which is -85 units. This means that there is a shortage of 85 units at the end of period 4. The scheduled receipts for period 5 are zero, as there are no planned order releases in period 4. The total demand for period 5 is the greater of forecast or customer orders, which is 60 units. Therefore, the projected available balance for period 5 can be calculated as:
Projected available balance = -85 + 0 - 60 = -145 units
However, this does not take into account the safety stock, which is the minimum level of inventory that must be maintained to avoid stockouts3. The safety stock for this question is given as 25 units. Therefore, we need to add the safety stock to the projected available balance to get the final answer:
Projected available balance with safety stock = -145 + 25 = -120 units
However, this is still a negative value, which means that there is still a shortage of inventory in period 5. To eliminate the shortage, we need to release an additional order of fixed order quantity, which is given as 100 units. Therefore, we need to add the fixed order quantity to the projected available balance with safety stock to get the final answer:
Projected available balance with safety stock and fixed order quantity = -120 + 100 = -20 units
This is still a negative value, which means that there is still a shortage of inventory in period 5. However, this is the lowest possible value of projected available balance that can be achieved with the given data. Therefore, we need to round up this value to zero, as we cannot have a negative inventory level. Therefore, the final answer is:
Projected available balance in period 5 = max(-20,0) =0 units
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