What does "Available To Promise" refer to in inventory management?

"Available To Promise" (ATP) is a key concept in inventory management that helps businesses manage customer orders and inventory allocation effectively. ATP specifically refers to the uncommitted portion of inventory that is available to be promised to customers. This means it represents the inventory that is not already allocated to existing orders and can be safely promised to new customers.

When businesses receive orders from customers, they need to determine how much of their inventory can still be promised to fulfill these new demands without compromising existing commitments. This is where ATP comes into play; it allows companies to provide accurate delivery dates to customers while ensuring they do not overpromise or underdeliver based on their available stock.

Understanding ATP is essential for effective planning and customer service, as it helps in balancing order fulfillment with inventory management. It allows a business to keep a healthy relationship with customers by providing clear and realistic information regarding product availability. This makes "the uncommitted portion of inventory for customer orders" the correct definition of "Available To Promise."

In contrast, the other options focus on aspects of inventory that do not fully capture the essence of ATP. The portion of inventory committed to existing orders and the inventory that has not been sold yet look at inventory in a broader sense but do not address its