CPIM Practice Exam

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Prepare for the CPIM Exam. Study with flashcards and multiple choice questions, each question has hints and explanations. Get ready for your exam!

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What is the formula for calculating the ending projected available balance?

Beginning PAB - scheduled MPS receipt + demand
Beginning PAB + scheduled MPS receipt - demand
Beginning PAB + demand - planned orders
Beginning PAB - demand + planned orders

The correct answer is: Beginning PAB + scheduled MPS receipt - demand

To determine the ending projected available balance, the formula incorporates the beginning projected available balance (PAB) as a starting point, then adjusts for scheduled Master Production Schedule (MPS) receipts and demand. When you begin with the beginning PAB, you first add any scheduled MPS receipts, which represent inventory that is expected to arrive and thus increases available balance. Following that, it is crucial to subtract the demand, reflecting the outflow of inventory that must be fulfilled. This sequence accurately reflects the changes in available inventory over a specified period, ultimately resulting in the ending projected available balance. This detailed calculation ensures that all factors affecting inventory availability are considered, thereby helping in effective inventory management and planning.