A Customer Requests a New Order in a Period Where

question 16

Multiple Choice

A customer requests a new order in a period where there is inadequate material available in the available-to-promise (ATP) for that period, and the period is within the planning time fence. Which of the following is the best first course of action to take in such a situation?

• A) Increase the master schedule quantity for that period by enough to cover the order
• B) Shift the planning time fence inward
• C) Tell the customer they cannot have the order in that period
• D) Look for additional material in an earlier ATP quantity

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Definitions:

Variable Overhead

Costs that vary with production volume but are not directly tied to specific production units, such as utilities for the manufacturing plant.

Direct Labor-Hours

The total hours worked by employees that are directly involved in the manufacturing process or providing a service, used in costing and operational efficiency analyses.

Direct Material

Primary raw materials directly incorporated into a finished product, an essential component in calculating the cost of goods sold.

Work in Process

Inventory that includes partially finished goods which are still in the production process.