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. 32

B. 12

C. 20

D. 14

correct option is D. 14

Explanation:

given data

on hand 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

to find out

what quantity is available for commitment to new customers prior to the receipt of the MPS quantity in week3

solution

we get here Quantity before receipt of MPS in week 3 is express as

Quantity required = Beginning on hand inventory - Orders fulfilled till period 2 end ... 1

here Orders fulfilled till period 2 end = Period 1 orders + Period 2 orders ... 2

Orders fulfilled till period 2 end = 24 + 18

Orders fulfilled till period 2 end = 42 units

so from equation 1 we get

Quantity required = 56 - 42

Quantity required = 14 units

so correct option is D. 14