Integral Logistics Management — Operations Management and Supply Chain Management Within and Across Companies

12.1.2 Projected Available Inventory Calculation

Intended learning outcomes: Differentiate between the spreadsheet representation and the graphical representation (or inventory curve) of the projected available inventory calculation.

As described above, projected available inventory changes with every transaction, so there are as many projected available inventory figures as there are transactions for one item.

The projected available inventory calculation considers future changes in the projected available inventory, beyond a time horizon that incorporates at least the cumulative lead time.
The inventory curve is another term for the graphical representation of the projected available inventory calculation.

Figure shows the conventional graphical representation, the spreadsheet, depicting the availability of an item along the time axis. It generally takes the following form:

Fig.       Projected available inventory calculation (spreadsheet representation).

  • The first row provides the current physical inventory.
  • The other rows list the various transactions one after the other, in ascending order of transaction date. Quantities received and issued are recorded in the second and third columns. The fourth column shows the balance, that is, the quantity available after the transaction. The other columns describe the transactions.

Example problem: Using the spreadsheet in Figure describing a possible actual situation for projected available inventory calculation, find an answer for the following important questions:

  • What partial quantity is available on a particular date? The aim here is to determine the minimum available quantity — starting from the specified date.
  • When will the entire quantity be available? Identify the earliest date after which the available quantity will no longer be smaller than the required quantity.

The contents of the graph shown in Figure are exactly the same as in Figure This qualitative view, however, allows fast, intuitive answers to the two questions addressed above. The necessary planning decisions can be made in a fraction of the time required when viewing the spreadsheet version.

Fig.       Projected available inventory calculation (graph) or inventory curve.

The projected available inventory calculation presented in this section corresponds to the calculation of the ATP quantity (available-to-promise) presented in Section 5.3.5.

Course section 12.1: Subsections and their intended learning outcomes