The 60-Unit Favor: ATP and the Frozen Zone at a Valve Assembly Line
A maker of hydraulic valve bodies runs one assembly line rated at 60 units per week and maintains an eight-week MPS for model BV-200 in weekly buckets. MPS receipts are currently W1 40, W2 40, W3 0, W4 60; on-hand is 30, safety stock 5, and the lot size is a fixed 40. Booked customer orders are W1 35, W2 20, W3 45, W4 10, while the statistical forecast is W1 20, W2 30, W3 25, W4 40. The frozen zone is two weeks; the next two weeks are slushy and need supply-chain manager approval. On Tuesday a distributor requests 60 additional units in W2 under a contract with a penalty clause. The master scheduler proposes simply editing the W2 receipt to 100, arguing 'the line can run 100 with overtime and we have castings.' Castings are purchased with a 12-week lead time, and no casting order has been released for any extra units.
1. Calculate available-to-promise for W1, W2 and W4. Should the 60-unit request be accepted as dated? Set out the decision path and who must authorize it.
Read the worked answer
Discrete ATP, first bucket: on-hand + MPS receipt - customer orders until the next receipt = 30 + 40 - 35 = 35.
W2: the next MPS receipt is W4, so W2 ATP must cover W2 and W3: 40 - 20 - 45 = -25. The schedule is already overpromised by 25 units before the new request.
W4: 60 - 10 = 50.
Total ATP in the horizon is 35 + 50 = 85 units, but it sits in the wrong weeks. The requested 60 in W2 cannot be promised from ATP; it must be created by changing supply, i.e. pulling the 60-unit W4 lot into W2. That crosses the two-week frozen zone, so it needs supply-chain manager plus operations sign-off, and it must be validated against components: a 12-week casting lead time means the W4 castings may not even be on order, so editing the receipt to 100 converts an unsupported edit into a paper promise that MRP will explode into an impossible component plan.
Defensible options, in order: (1) commit 35 units in W1/W2 from true ATP and offer the remainder in W4; (2) authorize a pull-in of the W4 lot only after confirming casting availability and line overtime within policy; (3) split shipments. Never let a master scheduler edit the MPS inside the frozen zone without documented supply and capacity validation - that is precisely what ATP and time fences exist to prevent.
2. The W3 forecast is 25 but 45 units are booked. How should forecast consumption work here, and what goes wrong if it is not configured?
Read the worked answer
Customer orders consume forecast so that the same demand is not planned twice. Standard behavior: within a period, booked orders reduce remaining forecast to zero once they exceed it. In W3, orders of 45 exceed the forecast of 25, so remaining forecast = 0 and MRP gross requirement for W3 is 45, not 70. In W1, orders of 35 exceed forecast 20, so remaining forecast is 0 and gross requirement is 35. W4 has orders 10 against forecast 40, leaving 30 of forecast as the gross requirement.
Systems differ in where consumption is taken - same period only, backward into prior periods, or forward into later periods. The choice matters: with forward consumption, a large early order can wipe out next week's forecast and make a genuine seasonal build look like excess, while backward consumption can cancel forecast that already drove a planned order and trigger a spurious reschedule-out message.
If consumption is switched off or the forecast is loaded as if it were independent demand alongside the order book, the horizon is inflated by roughly the overlap between the two - here 30-45 units per bucket, which flows straight into overstated MPS, inflated lot sizes (fixed at 40, so an extra 40-unit lot appears), premature component purchases, and a planner who learns to ignore exception messages.
3. What governance change would prevent this negative-ATP situation recurring next quarter?
Read the worked answer
Negative ATP is a symptom of promise-making outside the planning process, not a math error. Three controls:
- Promise only against ATP. Sales and customer service should quote from the ATP display in the ERP, bucket by bucket, rather than from the total on-hand or from a spreadsheet. If ATP is negative, the answer is a later date, not a schedule edit.
- Enforce the time fence rules in the system, not in a policy memo. Inside the frozen zone, only authorized roles should be able to change MPS quantities, with an audit trail. Slushy-zone changes require supply-chain manager approval. If anyone can type over a bucket, the freeze does not exist.
- Close the loop in S&OP. The MPS is presumably 20-25 units per week above what the order book supports in W2-W3 while W4 has 50 units of uncommitted supply, which suggests the MPS was built from a forecast that is not tracking the order pattern. Review family-level demand vs supply monthly, and check that the MPS is inside the demonstrated capacity of 60 units per week.
A useful measure: count of negative-ATP buckets per week and the number of unauthorized frozen-zone edits. Both should trend to zero, and both are visible before the missed shipment rather than after it.