Available-to-Promise (ATP) and Capable-to-Promise (CTP)

Available-to-Promise (ATP) and Capable-to-Promise (CTP): A Comprehensive Guide for CPIM Exam Success

Why Are ATP and CTP Important?

In today's competitive supply chain environment, customers expect fast, accurate, and reliable delivery commitments. Available-to-Promise (ATP) and Capable-to-Promise (CTP) are critical tools that enable organizations to make realistic delivery promises to customers while optimizing inventory and production resources. Without these mechanisms, companies risk overpromising and underdelivering — damaging customer relationships and increasing costs through expediting, overtime, and missed shipments.

From a CPIM exam perspective, ATP and CTP are foundational concepts within the planning and execution framework. They connect master scheduling, material planning, capacity planning, and order management — making them a frequent topic in exam questions.

What Is Available-to-Promise (ATP)?

ATP is the uncommitted portion of a company's inventory or planned production that can be promised to incoming customer orders. It represents the quantity of product that is available to be sold or allocated without disrupting existing commitments.

Key characteristics of ATP:
- ATP looks at existing inventory and scheduled receipts (from the Master Production Schedule or MPS) that have not yet been committed to customer orders.
- It is calculated from the Master Production Schedule.
- ATP does not consider creating new production plans or acquiring additional materials — it works only with what is already planned or on hand.
- ATP is a time-phased calculation, meaning it tells you how much is available in each planning period.

How ATP Is Calculated

There are two common methods for calculating ATP:

1. Discrete ATP (Period-by-Period):
For the first period:
ATP = On-hand inventory + MPS quantity − Customer orders (booked) before the next MPS receipt

For subsequent periods (only in periods where there is an MPS quantity):
ATP = MPS quantity − Customer orders (booked) before the next MPS receipt

2. Cumulative ATP:
This approach accumulates ATP across periods, giving a running total of uncommitted supply. Cumulative ATP can sometimes show negative values in certain periods, which indicate that existing commitments exceed available supply in those periods.

Important ATP Rules:
- ATP is only calculated in periods where there is an MPS receipt or in the first period (which includes beginning on-hand inventory).
- Customer orders (also called booked orders or committed orders) consume ATP.
- Forecast does not reduce ATP — only actual customer orders do.
- If an ATP calculation yields a negative value in discrete ATP, it is typically set to zero, and the deficit is subtracted from the previous period's ATP.

Example of ATP Calculation:

Assume: On-hand = 50, Lot size = 100

Period: 1    2    3    4
MPS: 100   0   100   0
Customer Orders: 70   20   40   10

Period 1 ATP = On-hand (50) + MPS (100) − Customer Orders before next MPS (70 + 20) = 50 + 100 − 90 = 60
Period 3 ATP = MPS (100) − Customer Orders before next MPS (40 + 10) = 100 − 50 = 50

Total ATP = 60 + 50 = 110

What Is Capable-to-Promise (CTP)?

CTP goes beyond ATP by determining whether the organization can produce or procure the requested product by a specific date, even if no current inventory or scheduled production exists. CTP extends the promise-making capability by checking:

- Material availability (Are the raw materials and components available or can they be obtained in time?)
- Capacity availability (Is there sufficient production capacity — labor, machines, tooling — to manufacture the product?)

Key characteristics of CTP:
- CTP is used when ATP is insufficient or zero — meaning there is no uncommitted stock or planned production to promise.
- CTP performs a real-time check of materials and capacity to see if a new production order can be created to fulfill the customer request.
- CTP may involve running an MRP explosion and a capacity requirements check on the fly.
- CTP provides a reliable promise date based on the organization's actual capability, not just existing plans.
- It is more computationally intensive than ATP.

How CTP Works:

1. A customer requests a quantity by a specific date.
2. The system first checks ATP. If ATP can fulfill the order, the process stops, and a promise is made.
3. If ATP is insufficient, CTP is triggered.
4. CTP checks whether raw materials and components are available (or can be procured in time) by running an MRP-like explosion.
5. CTP simultaneously checks whether production capacity is available to manufacture the product within the required timeframe.
6. If both material and capacity are available, CTP confirms the promise date.
7. If either material or capacity is lacking, CTP calculates the earliest possible date when the order can be fulfilled and communicates this to the customer.

Key Differences Between ATP and CTP

Scope:
- ATP checks existing inventory and planned production (the MPS).
- CTP checks the ability to create new production by evaluating materials and capacity.

Complexity:
- ATP is relatively simple — a time-phased arithmetic calculation.
- CTP is more complex — it requires MRP explosion and capacity analysis.

Timing:
- ATP is typically used first; CTP is used as a fallback when ATP cannot satisfy the request.

Data Requirements:
- ATP requires the MPS, on-hand inventory, and customer order data.
- CTP requires bills of material, inventory records, routing data, capacity data, and supplier lead times in addition to MPS data.

Planning Horizon:
- ATP operates within the MPS planning horizon.
- CTP can extend beyond the MPS horizon by evaluating new production possibilities.

How ATP and CTP Fit into the Planning Hierarchy

ATP and CTP sit at the intersection of master scheduling and demand management/order entry. They serve as the bridge between what the customer wants and what the supply chain can deliver.

- Sales & Operations Planning (S&OP) sets aggregate production and inventory targets.
- Master Production Scheduling (MPS) disaggregates these into specific product-level plans.
- ATP uses the MPS to determine what can be promised from existing plans.
- CTP goes deeper into MRP and capacity planning to determine if new production can be initiated.
- Order promising uses ATP/CTP results to commit delivery dates to customers.

Relationship to Internal Supply Sources

ATP and CTP are classified under internal supply sources because they focus on the organization's own inventory, production plans, and manufacturing capabilities. They answer the question: Can we fulfill this order from our own resources? This contrasts with external supply sources (e.g., outsourcing, subcontracting) which involve third parties.

Within internal supply, ATP leverages:
- Finished goods inventory
- Planned production from the MPS

CTP leverages:
- Raw material and component inventory
- Production capacity (work centers, labor, equipment)
- Lead time data
- Bills of material and routings

Practical Business Benefits

- Improved customer service: Accurate delivery promises increase customer satisfaction and loyalty.
- Reduced expediting costs: By promising only what can realistically be delivered, there is less need for costly last-minute changes.
- Better inventory management: ATP prevents over-commitment of inventory, reducing stockouts and excess.
- Enhanced planning visibility: ATP/CTP provide real-time visibility into supply chain capabilities.
- Competitive advantage: Organizations that can accurately promise and deliver gain market share.

Common Pitfalls and Misconceptions

- Confusing ATP with projected available balance (PAB): PAB includes forecast consumption and shows expected inventory levels. ATP only considers committed customer orders against supply — forecast does NOT reduce ATP.
- Assuming ATP means the product is physically in stock: ATP may include future MPS receipts that have not yet been produced.
- Forgetting that CTP requires both material AND capacity checks: It is not enough to have materials if capacity is unavailable, and vice versa.
- Ignoring the time-phased nature of ATP: ATP is period-specific. Having a total ATP of 100 does not mean 100 units are available in period 1.

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Exam Tips: Answering Questions on Available-to-Promise (ATP) and Capable-to-Promise (CTP)

1. Master the ATP Calculation
Practice the discrete ATP calculation method until it becomes second nature. Remember: ATP is only calculated in periods with an MPS receipt (or the first period with on-hand). Sum customer orders from that period forward until the next MPS receipt. Subtract these from the MPS quantity (plus on-hand for the first period). If you get a negative ATP, set it to zero and borrow from the previous period's ATP.

2. Know the Trigger Point for CTP
If an exam question describes a situation where existing inventory and planned production are insufficient to meet a customer request, the answer likely involves CTP. The keyword clue is the need to evaluate material and capacity availability for new production.

3. Distinguish ATP from PAB
Exam questions may try to confuse you. Remember: PAB uses the greater of forecast or customer orders to calculate expected inventory. ATP uses only customer orders (booked demand) against supply. If a question asks what is available to promise to new customers, you need ATP, not PAB.

4. Remember the Hierarchy: ATP First, Then CTP
When answering scenario-based questions, always check ATP first. CTP is only triggered when ATP is insufficient. This sequence is important and may be directly tested.

5. Link CTP to Both Materials and Capacity
If a question asks what CTP checks, the answer must include both material availability and capacity availability. An answer mentioning only one is incomplete.

6. Watch for Keyword Clues
- "Uncommitted inventory" or "uncommitted portion of the MPS" → ATP
- "Can we make it?" or "Is there capacity and material?" → CTP
- "What can we promise from existing plans?" → ATP
- "What is the earliest we can deliver if we produce a new batch?" → CTP

7. Understand That Forecast Does NOT Consume ATP
This is a classic exam trap. Only actual customer orders (booked orders) reduce ATP. Forecast is used for PAB and planning purposes but does not affect what is available to promise.

8. Be Careful with Negative ATP Values
In discrete ATP, if a period's calculation goes negative, set it to zero and reduce the ATP in the preceding period. In cumulative ATP, negative values can carry forward. Know which method the question is asking about.

9. Practice with Sample Problems
ATP calculation questions are among the most common quantitative problems on the CPIM exam. Work through multiple examples with different lot sizes, varying customer order patterns, and different on-hand quantities. Speed and accuracy matter on exam day.

10. Connect ATP/CTP to Demand Management and Order Promising
Understand that ATP and CTP are tools used during the order entry and order promising process. They are part of demand management and ensure alignment between customer expectations and supply chain reality. Questions may frame ATP/CTP within a broader order fulfillment or demand management context.

11. Remember the Data Requirements
- ATP needs: MPS, on-hand inventory, customer orders
- CTP needs: All of the above PLUS bills of material, routings, capacity data, component inventory, and supplier lead times

If a question asks what additional data CTP requires compared to ATP, focus on BOM, routing, and capacity information.

12. Use Process of Elimination
If you encounter a multiple-choice question about ATP/CTP and are unsure, eliminate answers that:
- Mention forecast reducing ATP (incorrect)
- Suggest CTP only checks materials but not capacity (incomplete)
- Confuse ATP with safety stock or reorder point calculations (different concepts)
- Imply ATP can create new production plans (that is CTP's role)

By mastering these concepts and practicing calculations, you will be well-prepared to confidently answer any ATP or CTP question on the CPIM exam.