How available to promise is calculated
The basic form is straightforward: take the quantity physically on hand, add supply that is confirmed to arrive before the promise date, and subtract the quantity already allocated to open sales orders due on or before that date. What is left is what you can commit without breaking an existing promise.
The subtraction is the part most spreadsheets skip. A warehouse holding 300 units with 240 of them spoken for across four open orders has 60 available to promise, not 300, and quoting the larger number is how a business ends up telling two customers the same units are theirs.
Incoming supply only counts when it is genuinely confirmed and dated. A purchase order the supplier has acknowledged for the 14th is supply; a purchase order sitting in draft with no acknowledgement is a hope, and building a customer promise on it moves the supplier's risk onto your delivery date.
- On hand: units physically in stock right now
- Plus incoming: confirmed, dated supply arriving before the promise date
- Minus allocated: units already committed to open sales orders
- Equals available to promise for that date
Why on-hand quantity is the wrong number to quote from
Quantity on hand answers a warehouse question: what is on the shelf. Available to promise answers a commercial question: what can I sell without disappointing someone. They diverge the moment a business has open orders, which is to say immediately.
The gap widens with backorders and partial shipments. Stock that arrived this morning may already be fully consumed by orders that went on backorder last week, so a shipment landing does not automatically make anything newly sellable.
Safety stock complicates it further. Many businesses deliberately hold a buffer that should not be promised away, which means the honest available figure is on hand minus allocations minus the buffer you have decided to protect.
Time-phased ATP and capable to promise
A single availability number is only useful for immediate shipment. For any promise with a future date, availability has to be projected forward across the dates supply arrives and demand consumes it, which is why ATP is normally shown as a series of buckets rather than one figure.
Capable to promise goes one step further and asks whether you could make the units in time, not just whether they exist. For a manufacturer that means checking component availability and production capacity before committing, which is a bill of materials and work order question rather than a warehouse one.
Keeping the number honest day to day
The practical requirement is that confirming a sales order immediately reduces what everyone else sees as available. If allocation lives in someone's head or in a separate document, two people will sell the same units on the same afternoon and neither will have done anything wrong.
Multi-location businesses need the same discipline per location. Stock available in one warehouse is not available for a promise shipping from another unless a transfer is genuinely planned, and treating total company stock as one pool is a reliable way to promise units that are 400 kilometres away.
In StockFlow, sales orders hold stock against the location they ship from and low-stock alerts fire on what is actually left, so the figure staff quote from reflects existing commitments rather than raw shelf count.
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