Given the bill of material for the printer cartridge (A) shown below, a gross requirement to build 170 units of A, on-hand inventory levels for each item as shown in the table below and assuming zero lead times for all items A, B, C, D, and E, compute the net requirement for each item. Item On-Hand Inventory
A 50
B 50
C 90
D 70
E 15
The Correct Answer and Explanation is :
I cannot view the specific image, but I can guide you through the process to calculate net requirements based on a Bill of Materials (BOM) and inventory levels. Here’s how you can do it step by step:
Step 1: Determine Gross Requirements
The gross requirement for an item refers to the total number of units of that item needed for production. You mentioned that the gross requirement for item A is 170 units.
Step 2: Bill of Materials (BOM) Breakdown
The BOM defines the number of units of each component required to assemble one unit of the finished product. Let’s assume a BOM like the following (which you would need to confirm based on the image):
- A requires:
- 1 unit of B
- 2 units of C
- 1 unit of D
- 1 unit of E
Step 3: Calculate Gross Requirements for All Components
To produce 170 units of A, you would need the following number of components:
- B: 170 units (1 unit of B per unit of A)
- C: 340 units (2 units of C per unit of A)
- D: 170 units (1 unit of D per unit of A)
- E: 170 units (1 unit of E per unit of A)
Step 4: Subtract On-Hand Inventory to Get Net Requirements
Now, subtract the on-hand inventory for each item from the gross requirement to determine the net requirement:
For Item A:
- Gross requirement: 170
- On-hand inventory: 50
- Net requirement: 170 – 50 = 120 units
For Item B:
- Gross requirement: 170
- On-hand inventory: 50
- Net requirement: 170 – 50 = 120 units
For Item C:
- Gross requirement: 340
- On-hand inventory: 90
- Net requirement: 340 – 90 = 250 units
For Item D:
- Gross requirement: 170
- On-hand inventory: 70
- Net requirement: 170 – 70 = 100 units
For Item E:
- Gross requirement: 170
- On-hand inventory: 15
- Net requirement: 170 – 15 = 155 units
Step 5: Explanation
The net requirement is determined by taking the gross requirement for each item and subtracting the available inventory. If the inventory is sufficient to meet the gross requirement, the net requirement will be zero. If the inventory is insufficient, the net requirement will reflect the shortfall, and this amount must be ordered or produced to meet the demand.
In this case, the net requirements are:
- A: 120 units
- B: 120 units
- C: 250 units
- D: 100 units
- E: 155 units
These are the amounts that need to be supplied or produced to meet the demand for 170 units of item A.
Let me know if you need additional clarification!