The Northridge Company tends to keep the inventory low. At the same time, it is important to
respond to demand quickly, since a customer who wants a product K is very likely to get one from a
competitor if Northridge Company doesn’t have one available immediately. Northridge Company’s
current policy to produce the product K is to produce 100 per week, which is the average demand.
Even this is a problem, as the production manager has pointed out, since the equipment is also used
for other products and the lot size of 300 would be much more efficient. He said he is currently set up
the production for product K for the next week and states that he has capacity available to produce
300 at a time next week.
The following lists the forecasts and actual customer orders for the next 12 weeks.
Week 1 2 3 4 5 6 7 8 9 10 11 12
Forecast 90 120 110 80 85 95 100 110 90 90 100 110
Customer Orders 105 97 93 72 98 72 53 21 17 6 2 5
The president of Northridge Company has said that he wants to consider using a formal MPS with
ATP logic to try to meet demand more effectively without a large impact on inventory. The
Northridge Company has decided to use a demand time fence at the end of week 3 and has also found
out that its current inventory is 25 units. Assume Northridge Company will use the MPS lot size of
300 and that it will produce the first of those lots in week 1.

A customer has just requested a major order of 100 units of product K for delivery in week 5. What would you tell the customer about having such an order? Why? What, if anything, would such an order do to the operation?

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