CPIM Practice Exam

What term describes the portion of inventory or production that has not been assigned to specific customer orders?

1. Anticipation inventory

2. Available-to-promise

3. Excess production

4. Capable-to-promise

The correct answer is: Available-to-promise

The term that describes the portion of inventory or production that has not been assigned to specific customer orders is referred to as "Available-to-promise" (ATP). This concept is critical in supply chain management and inventory control, as it helps organizations determine how much of their available inventory can be promised to customers for future orders. Available-to-promise essentially reflects the inventory that is on hand and not currently allocated to existing orders. By understanding ATP, companies can make informed decisions about fulfilling new customer requests while managing their current commitments effectively. It serves as a crucial metric for planning and ensuring customer satisfaction by providing accurate delivery information based on what is actually available. The other terms do not capture this specific aspect of inventory allocation as accurately as ATP does. Anticipation inventory, for example, refers to stock that is built up in anticipation of expected demand increases, rather than simply what is unallocated. Excess production indicates surplus items produced beyond what is required without directly relating to customer orders or commitments. Capable-to-promise, while related to production capacity to meet orders, is more focused on a company's ability to produce items within a certain timeframe rather than the current inventory that remains unassigned.