CPIM Practice Exam

In operations, what does available-to-promise (ATP) represent?

1. The percentage of inventory available for immediate sale

2. The portion of inventory that can be promised for delivery without commitments

3. The total inventory expected to arrive from suppliers

4. The planned production quantities for the next period

The correct answer is: The portion of inventory that can be promised for delivery without commitments

Available-to-promise (ATP) is a crucial concept in operations and supply chain management. It represents the portion of inventory that can be promised to customers for delivery without jeopardizing existing commitments. This metric allows a business to assess how much inventory can still be allocated to new orders while ensuring that obligations to previous orders are satisfied. By providing a clear assessment of what can be promised to customers, ATP helps in managing customer expectations and optimizing inventory levels. This focus on the portion of inventory available for new commitments, while accounting for pending orders, is essential in maintaining effective customer relations and inventory management. Understanding ATP helps companies plan their production and supply chain operations more effectively, ensuring that they can meet customer demands without overcommitting their resources.