Homework Answers
Solution
Determination of the gross requirements and the net requirements of components B, C and D, respectively:
Gross Requirements -
A – order of 250 units
A requires 2 units of B and 1 unit of C
An order of 250 units indicates (250 x 2) 500 units of B and (250 x 1) 250 units of C.
Gross Requirement of B = 500 units
Gross Requirement of C = 250 units
Gross requirement of D –
Each unit of B requires 2 units of D
Hence, 500 units of B require (500 x 2) 1,000 units of D
Each unit of C requires 3 units of D
Hence, 250 units of C require (250 x 3), 750 units of D
Total gross requirement of D = 1,000 + 750 = 1,750 units
Now, determination of net requirements,
50 units of A are in inventory.
To meet the order, required A units = 250 – 50 = 200 units
200 units of A require, (200 x 2), 400 units of B and (200 x 1), 200 units of C
Available units of B in inventory = 120 units
Net requirement of B = 400 – 120 = 280 units
Available units of C in inventory = 60 units
Net requirement of C = 200 – 60 = 140 units
Now, net requirement of B, 280 units needs, (280 x 2) = 560 units of D
Net requirement of C, 140 units require (140 x 3) = 420 units of D
Total requirement of D = 560 + 420 = 980 units
Less: units of D in inventory = 350
Net requirement of D = 630 units
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