Question

A firm has 56 units of product X on hand. Forecasts of demand are for 20 units per week. An MPS quantity of 100 units is planned to arrive in period 3. Customer orders are 24 for period 1, 18 for period 2, and 15 for period 3. What quantity is available for commitment to new customers prior to the receipt of the MPS quantity in week 3?a. 14 b. 32 c. 12 d. 20

Answer 1

correct option is a. 14

Step-by-step explanation:

given data

Beginning inventory = 56 units

Forecast Weekly demand = 20 units

Period 1 orders (P1) = 24 units

Period 2 orders (P2) = 18 units

Period 3 orders (P3) = 15 units

solution

we find here Quantity before receipt of MPS in week 3 is calculated here as

Required Quantity = Beginning inventory - Order fulfill till end of period 2 ............................1

so here

Orders fulfilled till end period 2 = Period 1 + Period 2

Orders fulfilled till end period = 24 + 18

Orders fulfilled till end period = 42 units

so from equation 1

required quantity before week 3 is

Required Quantity = 56 - 42

Required Quantity = 14 units

so correct option is a. 14