CPIM Practice Exam

How is projected available inventory calculated?

1. Scheduled Receipts + Planned Order Receipts - Available Inventory

2. Prior Projected Available + Scheduled Receipts - Gross Requirements

3. Prior Projected Available + Scheduled Receipts + Planned Order Receipts

4. Gross Requirements - Scheduled Receipts + Planned Order Releases

The correct answer is: Prior Projected Available + Scheduled Receipts + Planned Order Receipts

Projected available inventory is an important concept in inventory management, specifically within the context of materials planning and control. The calculation allows companies to forecast the amount of inventory expected to be available at a future date, taking into account various inputs and outputs. The correct method to calculate projected available inventory is to take the prior projected available inventory, add the scheduled receipts, and add the planned order receipts. This approach combines what you start with (the prior projection), what is coming in (scheduled and planned receipts), ensuring that you account for all incoming inventory that contributes to the total available stock for future activities. This calculation is critical for determining if there will be enough inventory to meet upcoming demands or if there may be shortages that need to be addressed through additional orders or production. The focus on prior projected availability acknowledges the ongoing nature of inventory management, where forecasts and adjustments are continually being made based on changing demands and supply circumstances. Adding scheduled receipts incorporates orders that have already been confirmed and will be received in the future, while including planned order receipts accounts for inventory that is anticipated but not yet officially scheduled, providing a more comprehensive view of future inventory levels. Other methods mentioned do not capture the cumulative incoming inventory accurately. For instance, considering gross requirements would overlook essential incoming