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Chapter 3: Problem 5

How do you convert gross requirements to net requirements? What is this procedure called?

Short Answer

Expert verified
Answer: Gross requirements refer to the total amount of a resource or item needed to fulfill a specific demand or production schedule, while net requirements represent the actual amount needed after subtracting any available stock or on-order resources from the gross requirements. To calculate net requirements, use the formula: Net Requirements = Gross Requirements - Available Stock - On-order 91影视.

Step by step solution

01

Understand Gross Requirements

Gross requirements refer to the total amount of a resource or item needed to fulfill a specific demand or production schedule. They usually include the current demand and any future demand.
02

Understand Net Requirements

Net requirements represent the actual amount of a resource or item needed by subtracting any available stock or on-order resources from the gross requirements. This is to ensure that any existing stock can be utilized before any new orders or allocations are made.
03

Procedure to Convert Gross Requirements to Net Requirements

The procedure is called "Net Requirements Planning". Here's how to perform it: 1. Identify the gross requirements for a given time period or production schedule. 2. Determine the available stock or on-order resources at the beginning of the time period. 3. Calculate the net requirements by using the following formula: Net Requirements = Gross Requirements - Available Stock - On-order 91影视
04

Example Solution

Let's assume the following data for a manufacturing company: - Gross Requirements: 5,000 units - Available Stock: 1,000 units - On-order 91影视: 500 units Now, calculate the net requirements using the formula mentioned above: Net Requirements = 5,000 units (Gross Requirements) - 1,000 units (Available Stock) - 500 units (On-order 91影视) Net Requirements = 3,500 units Therefore, to meet the manufacturing demand, the company needs to have an additional 3,500 units.

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