Chapter 14, Problem 12P

a)

Summary Introduction

To develop: A net requirements plan for items.

Introduction:

Net requirements plan:

The net requirements plan is the plan which is established on the gross requirements plan formed by deducting the stock on and the scheduled receipts. If the total requirement is below the safety stock levels, a planned order is made based on the given lot sizing technique.

Explanation of Solution

Given information:

Product structure:

Period	8	9	10	11	12
Gross requirements: A	100		50		150
Gross requirements: H		100		50

Inventory and lead time:

Item	A	B	C	D	E	F	G	H	J	K
Lead time	1	2	2	1	2	2	1	1	2	2
On hand	0	100	50	50	75	75	75	0	100	100

• 1 assembly for each item

Item A:

	Week
Item A	1	2	3	4	5	6	7	8	9	10	11	12
Gross requirements								100		50		150
Scheduled  receipt
On hand (0)								0		0		0
Net requirement								100		50		150
Planned order receipt								100		50		150
Planned order release							100		50		150

Week 8:

The gross requirement is 100 (1 assembly). The on hand inventory is 0. Hence, the net requirement is 100. The lead time is 1 week. Therefore, the planned order release will be 100 in week 7 which will be the planned order receipt in week 8.

Week 10:

The gross requirement is 50 (1 assembly). The on hand inventory is 0. Hence, the net requirement is 50. The lead time is 1 week. Therefore, the planned order release will be 50 in week 9 which will be the planned order receipt in week 10.

Week 12:

The gross requirement is 150 (1 assembly). The on hand inventory is 0. Hence, the net requirement is 150. The lead time is 1 week. Therefore, the planned order release will be 150 in week 11 which will be the planned order receipt in week 12.

Item H:

	Week
Item H	1	2	3	4	5	6	7	8	9	10	11	12
Gross requirements									100		50
Scheduled  receipt
On hand (0)									0		0
Net requirement									100		50
Planned order receipt									100		50
Planned order release								100		50

Week 9:

The gross requirement is 100 (1 assembly). The on hand inventory is 0. Hence, the net requirement is 1000. The lead time is 1 week. Therefore, the planned order release will be 100 in week 8 which will be the planned order receipt in week 10.

Week 11:

The gross requirement is 50 (1 assembly). The on hand inventory is 0. Hence, the net requirement is 50. The lead time is 1 week. Therefore, the planned order release will be 50 in week 9 which will be the planned order receipt in week 11.

Item B:

	Week
Item B	1	2	3	4	5	6	7	8	9	10	11	12
Gross requirements							100		50		150
Scheduled  receipt
On hand (100)							100		0		0
Net requirement							0		50		150
Planned order receipt									50		150
Planned order release							50		150

Week 7:

The gross requirement is 100 (1 assembly) derived from planned order release of A. The on hand inventory is 100. Hence, the net requirement is 0. Therefore, there will be no planned order release.

Week 9:

The gross requirement is 50 (1 assembly) derived from the planned order release of A. The on hand inventory is 0. Hence, the net requirement is 50. The lead time is 2 weeks. Therefore, the planned order release will be 50 in week 7 which will be the planned order receipt in week 9.

Week 11:

The gross requirement is 150 (1 assembly) derived from planned order release of A. The on hand inventory is 0. Hence, the net requirement is 150. The lead time is 2 weeks. Therefore, the planned order release will be 150 in week 9 which will be the planned order receipt in week 11.

Item C:

	Week
Item C	1	2	3	4	5	6	7	8	9	10	11	12
Gross requirements							100	100	50	50	150
Scheduled  receipt
On hand (50)							50	0	0	0	0
Net requirement							50	100	50	50	150
Planned order receipt							50	100	50	50	150
Planned order release					50	100	50	50	150

Week 7:

The gross requirement is 100 (1 assembly) derived from planned order release of A. The on hand inventory is 50. Hence, the net requirement is 50. The lead time is 2 weeks. Therefore, the planned order release will be 50 in week 5 which will be the planned order receipt in week 7.

Week 8:

The gross requirement is 100 (1 assembly) derived from planned order release of H. The on hand inventory is 0. Hence, the net requirement is 100. The lead time is 2 weeks. Therefore, the planned order release will be 100 in week 6 which will be the planned order receipt in week 8.

Week 9:

The gross requirement is 50 (1 assembly) derived from the planned order release of A. The on hand inventory is 0. Hence, the net requirement is 50. The lead time is 2 weeks. Therefore, the planned order release will be 50 in week 7 which will be the planned order receipt in week 9.

Week 10:

The gross requirement is 50 (1 assembly) derived from planned order release of H. The on hand inventory is 0. Hence, the net requirement is 50. The lead time is 2 weeks. Therefore, the planned order release will be 50 in week 8 which will be the planned order receipt in week 10.

Week 11:

The gross requirement is 150 (1 assembly) derived from planned order release of A. The on hand inventory is 0. Hence, the net requirement is 150. The lead time is 2 weeks. Therefore, the planned order release will be 150 in week 9 which will be the planned order receipt in week 11.

Item J:

	Week
Item J	1	2	3	4	5	6	7	8	9	10	11	12
Gross requirements								100		50
Scheduled  receipt
On hand (100)								100		0
Net requirement								0		50
Planned order receipt								0		50
Planned order release								50

Week 8:

The gross requirement is 100 (1 assembly) derived from planned order release of H. The on hand inventory is 100. Hence, the net requirement is 0. Therefore, there will be no planned order release.

Week 10:

The gross requirement is 50 (1 assembly) derived from the planned order release of H. The on hand inventory is 0. Hence, the net requirement is 50. The lead time is 2 weeks. Therefore, the planned order release will be 50 in week 8 which will be the planned order receipt in week 10.

Item K:

	Week
Item K	1	2	3	4	5	6	7	8	9	10	11	12
Gross requirements								100		50
Scheduled  receipt
On hand (100)								100		0
Net requirement								0		50
Planned order receipt										50
Planned order release								50

Week 8:

The gross requirement is 100 (1 assembly) derived from planned order release of H. The on hand inventory is 100. Hence, the net requirement is 0. Therefore, there will be no planned order release.

Week 10:

The gross requirement is 50 (1 assembly) derived from the planned order release of H. The on hand inventory is 0. Hence, the net requirement is 50. The lead time is 2 weeks. Therefore, the planned order release will be 50 in week 8 which will be the planned order receipt in week 10.

Item D:

	Week
Item D	1	2	3	4	5	6	7	8	9	10	11	12
Gross requirements							50		150
Scheduled  receipt
On hand (50)							50		0
Net requirement									150
Planned order receipt									150
Planned order release								150

Week 7:

The gross requirement is 50 (1 assembly) derived from planned order release of B. The on hand inventory is 500. Hence, the net requirement is 0. Therefore, there will be no planned order release.

Week 9:

The gross requirement is 150 (1 assembly) derived from the planned order release of B. The on hand inventory is 0. Hence, the net requirement is 150. The lead time is 1 week. Therefore, the planned order release will be 150 in week 8 which will be the planned order receipt in week 9.

Item E:

	Week
Item E	1	2	3	4	5	6	7	8	9	10	11	12
Gross requirements							50	100	150
Scheduled  receipt
On hand (75)							75	25	0
Net requirement							0	75	150
Planned order receipt								75	150
Planned order release						75	150

Week 7:

The gross requirement is 50 (1 assembly) derived from planned order release of B. The on hand inventory is 75. Hence, the net requirement is 0. Therefore, there will be no planned order release.

Week 8:

The gross requirement is 100 (1 assembly) derived from the planned order release of J and K. The on hand inventory is 25. Hence, the net requirement is 75. The lead time is 2 weeks. Therefore, the planned order release will be 75 in week 6 which will be the planned order receipt in week 8.

Week 9:

The gross requirement is 150 (1 assembly) derived from planned order release of B. The on hand inventory is 0. Hence, the net requirement is 150. The lead time is 2 weeks. Therefore, the planned order release will be 150 in week 7 which will be the planned order receipt in week 9.

Item F:

	Week
Item F	1	2	3	4	5	6	7	8	9	10	11	12
Gross requirements					50	100	50	100	150
Scheduled  receipt
On hand (75)					75	25	0	0	0
Net requirement					0	75	50	100	150
Planned order receipt						75	50	100	150
Planned order release				75	50	100	150

Week 5:

The gross requirement is 50 (1 assembly) derived from planned order release of C. The on hand inventory is 75. Hence, the net requirement is 0. Therefore, there will be no planned order release.

Week 6:

The gross requirement is 100 (1 assembly) derived from planned order release of C. The on hand inventory is 25. Hence, the net requirement is 75. The lead time is 2 weeks. Therefore, the planned order release will be 75 in week 4 which will be the planned order receipt in week 6.

Week 7:

The gross requirement is 50 (1 assembly) derived from the planned order release of C. The on hand inventory is 0. Hence, the net requirement is 50. The lead time is 2 weeks. Therefore, the planned order release will be 50 in week 5 which will be the planned order receipt in week 7.

Week 8:

The gross requirement is 100 (1 assembly) derived from planned order release of C and J. The on hand inventory is 0. Hence, the net requirement is 100. The lead time is 2 weeks. Therefore, the planned order release will be 100 in week 6 which will be the planned order receipt in week 8.

Week 9:

The gross requirement is 150 (1 assembly) derived from planned order release of C. The on hand inventory is 0. Hence, the net requirement is 150. The lead time is 2 weeks. Therefore, the planned order release will be 150 in week 7 which will be the planned order receipt in week 9.

Item G:

	Week
Item G	1	2	3	4	5	6	7	8	9	10	11	12
Gross requirements					50	100	50	100	150
Scheduled  receipt
On hand (75)					75	25	0	0	0
Net requirement					0	75	50	100	150
Planned order receipt						75	50	100	150
Planned order release					75	50	100	150

Week 5:

The gross requirement is 50 (1 assembly) derived from planned order release of C. The on hand inventory is 75. Hence, the net requirement is 0. Therefore, there will be no planned order release.

Week 6:

The gross requirement is 100 (1 assembly) derived from planned order release of C. The on hand inventory is 25. Hence, the net requirement is 75. The lead time is 1 week. Therefore, the planned order release will be 75 in week 5 which will be the planned order receipt in week 6.

Week 7:

The gross requirement is 50 (1 assembly) derived from the planned order release of C. The on hand inventory is 0. Hence, the net requirement is 50. The lead time is 1 week. Therefore, the planned order release will be 50 in week 6 which will be the planned order receipt in week 7.

Week 8:

The gross requirement is 100 (1 assembly) derived from planned order release of C and K. The on hand inventory is 0. Hence, the net requirement is 100. The lead time is 1 week. Therefore, the planned order release will be 100 in week 7 which will be the planned order receipt in week 8.

Week 9:

The gross requirement is 150 (1 assembly) derived from planned order release of C. The on hand inventory is 0. Hence, the net requirement is 150. The lead time is 1 week. Therefore, the planned order release will be 150 in week 8 which will be the planned order receipt in week 9.

b)

Summary Introduction

To develop: A net requirements plan for all items.

Introduction:

Net requirements plan:

The net requirements plan is the plan which is established on the gross requirements plan formed by deducting the stock on and the scheduled receipts. If the total requirement is below the safety stock levels, a planned order is made based on the given lot sizing technique.

Explanation of Solution

Given information:

Product structure:

Period	8	9	10	11	12
Gross requirements: A	100		50		150
Gross requirements: H		100		50

Inventory and lead time:

Item	A	B	C	D	E	F	G	H	J	K
Lead time	1	2	2	1	2	2	1	1	2	2
On hand	0	100	50	50	75	75	75	0	100	100

• 1 assembly for each item
• 2 assemblies for item B, C and F.

Item A:

	Week
Item A	1	2	3	4	5	6	7	8	9	10	11	12
Gross requirements								100		50		150
Scheduled  receipt
On hand (0)								0		0		0
Net requirement								100		50		150
Planned order receipt								100		50		150
Planned order release							100		50		150

Week 8:

The gross requirement is 100 (1 assembly). The on hand inventory is 0. Hence, the net requirement is 100. The lead time is 1 week. Therefore, the planned order release will be 100 in week 7 which will be the planned order receipt in week 8.

Week 10:

The gross requirement is 50 (1 assembly). The on hand inventory is 0. Hence, the net requirement is 50. The lead time is 1 week. Therefore, the planned order release will be 50 in week 9 which will be the planned order receipt in week 10.

Week 12:

The gross requirement is 150 (1 assembly). The on hand inventory is 0. Hence, the net requirement is 150. The lead time is 1 week. Therefore, the planned order release will be 150 in week 11 which will be the planned order receipt in week 12.

Item H:

	Week
Item H	1	2	3	4	5	6	7	8	9	10	11	12
Gross requirements									100		50
Scheduled  receipt
On hand (0)									0		0
Net requirement									100		50
Planned order receipt									100		50
Planned order release								100		50

Week 9:

The gross requirement is 100 (1 assembly). The on hand inventory is 0. Hence, the net requirement is 1000. The lead time is 1 week. Therefore, the planned order release will be 100 in week 8 which will be the planned order receipt in week 10.

Week 11:

The gross requirement is 50 (1 assembly). The on hand inventory is 0. Hence, the net requirement is 50. The lead time is 1 week. Therefore, the planned order release will be 50 in week 9 which will be the planned order receipt in week 11.

Item B:

	Week
Item B	1	2	3	4	5	6	7	8	9	10	11	12
Gross requirements							200		100		300
Scheduled  receipt
On hand (100)							100		0		0
Net requirement							100		100		300
Planned order receipt							100		100		300
Planned order release					100		100		300

Week 7:

The gross requirement is 200 (2 assembly) derived from planned order release of A. The on hand inventory is 100. Hence, the net requirement is 100. Therefore, the planned order release will be 100 in week 5 which will be the planned order receipt in week 7.

Week 9:

The gross requirement is 100 (2 assembly) derived from the planned order release of A. The on hand inventory is 0. Hence, the net requirement is 100. The lead time is 2 weeks. Therefore, the planned order release will be 100 in week 7 which will be the planned order receipt in week 9.

Week 11:

The gross requirement is 300 (2 assembly) derived from planned order release of A. The on hand inventory is 0. Hence, the net requirement is 300. The lead time is 2 weeks. Therefore, the planned order release will be 300 in week 9 which will be the planned order receipt in week 11.

Item C:

	Week
Item C	1	2	3	4	5	6	7	8	9	10	11	12
Gross requirements							200	200	100	100	300
Scheduled  receipt
On hand (50)							50	0	0	0	0
Net requirement							150	200	100	100	300
Planned order receipt							150	200	100	100	300
Planned order release					150	200	100	100	300

Week 7:

The gross requirement is 200 (2 assembly) derived from planned order release of A. The on hand inventory is 50. Hence, the net requirement is 150. The lead time is 2 weeks. Therefore, the planned order release will be 150 in week 5 which will be the planned order receipt in week 7.

Week 8:

The gross requirement is 200 (2 assembly) derived from planned order release of H. The on hand inventory is 0. Hence, the net requirement is 200. The lead time is 2 weeks. Therefore, the planned order release will be 200 in week 6 which will be the planned order receipt in week 8.

Week 9:

The gross requirement is 100 (2 assembly) derived from the planned order release of A. The on hand inventory is 0. Hence, the net requirement is 100. The lead time is 2 weeks. Therefore, the planned order release will be 100 in week 7 which will be the planned order receipt in week 9.

Week 10:

The gross requirement is 100 (2 assembly) derived from planned order release of H. The on hand inventory is 0. Hence, the net requirement is 100. The lead time is 2 weeks. Therefore, the planned order release will be 100 in week 8 which will be the planned order receipt in week 10.

Week 11:

The gross requirement is 300 (2 assembly) derived from planned order release of A. The on hand inventory is 0. Hence, the net requirement is 300. The lead time is 2 weeks. Therefore, the planned order release will be 300 in week 9 which will be the planned order receipt in week 11.

Item J:

	Week
Item J	1	2	3	4	5	6	7	8	9	10	11	12
Gross requirements								100		50
Scheduled  receipt
On hand (100)								100		0
Net requirement								0		50
Planned order receipt								0		50
Planned order release								50

Week 8:

The gross requirement is 100 (1 assembly) derived from planned order release of H. The on hand inventory is 100. Hence, the net requirement is 0. Therefore, there will be no planned order release.

Week 10:

The gross requirement is 50 (1 assembly) derived from the planned order release of H. The on hand inventory is 0. Hence, the net requirement is 50. The lead time is 2 weeks. Therefore, the planned order release will be 50 in week 8 which will be the planned order receipt in week 10.

Item K:

	Week
Item K	1	2	3	4	5	6	7	8	9	10	11	12
Gross requirements								100		50
Scheduled  receipt
On hand (100)								100		0
Net requirement								0		50
Planned order receipt										50
Planned order release								50

Week 8:

The gross requirement is 100 (1 assembly) derived from planned order release of H. The on hand inventory is 100. Hence, the net requirement is 0. Therefore, there will be no planned order release.

Week 10:

The gross requirement is 50 (1 assembly) derived from the planned order release of H. The on hand inventory is 0. Hence, the net requirement is 50. The lead time is 2 weeks. Therefore, the planned order release will be 50 in week 8 which will be the planned order receipt in week 10.

Item D:

	Week
Item D	1	2	3	4	5	6	7	8	9	10	11	12
Gross requirements						100		100		300
Scheduled  receipt
On hand (50)						50		0		0
Net requirement						50		100		300
Planned order receipt						50		100		300
Planned order release					50		100		300

Week 6:

The gross requirement is 100 (1 assembly) derived from the planned order release of B. The on hand inventory is 50. Hence, the net requirement is 50. The lead time is 1 week. Therefore, the planned order release will be 50 in week 5 which will be the planned order receipt in week 6.

Week 8:

The gross requirement is 100 (1 assembly) derived from the planned order release of B. The on hand inventory is 0. Hence, the net requirement is 100. The lead time is 1 week. Therefore, the planned order release will be 100 in week 7 which will be the planned order receipt in week 8.

Week 8:

The gross requirement is 300 (1 assembly) derived from the planned order release of B. The on hand inventory is 0. Hence, the net requirement is 300. The lead time is 1 week. Therefore, the planned order release will be 300 in week 9 which will be the planned order receipt in week 10.

Item E:

	Week
Item E	1	2	3	4	5	6	7	8	9	10	11	12
Gross requirements					100		100	100	300
Scheduled  receipt
On hand (75)					75		0	0	0
Net requirement					25		100	100	300
Planned order receipt					25		100	100	300
Planned order release			25		100	100	300

Week 5:

The gross requirement is 100 (1 assembly) derived from planned order release of B. The on hand inventory is 75. Hence, the net requirement is 25. The lead time is 2 weeks. Therefore, the planned order release will be 25 in week 3 which will be the planned order receipt in week 5.

Week 7:

The gross requirement is 100 (1 assembly) derived from planned order release of B. The on hand inventory is 0. Hence, the net requirement is 100. The lead time is 2 weeks. Therefore, the planned order release will be 100 in week 5 which will be the planned order receipt in week 7.

Week 8:

The gross requirement is 100 (1 assembly) derived from the planned order release of J and K. The on hand inventory is 0. Hence, the net requirement is 100. The lead time is 2 weeks. Therefore, the planned order release will be 100 in week 6 which will be the planned order receipt in week 8.

Week 9:

The gross requirement is 300 (1 assembly) derived from planned order release of B. The on hand inventory is 0. Hence, the net requirement is 300. The lead time is 2 weeks. Therefore, the planned order release will be 300 in week 7 which will be the planned order receipt in week 9.

Item F:

	Week
Item F	1	2	3	4	5	6	7	8	9	10	11	12
Gross requirements					300	400	200	300	600
Scheduled  receipt
On hand (75)					75	0	0	0	0
Net requirement					225	400	200	300	600
Planned order receipt					225	400	200	300	600
Planned order release			225	400	200	300	600

Week 5:

The gross requirement is 300 (2 assembly) derived from planned order release of C. The on hand inventory is 75. Hence, the net requirement is 225. The lead time is 2 weeks.  Therefore, the planned order release will be 225 in week 3 which will be the planned order receipt in week 5.

Week 6:

The gross requirement is 400 (2 assembly) derived from planned order release of C. The on hand inventory is 0. Hence, the net requirement is 400. The lead time is 2 weeks. Therefore, the planned order release will be 400 in week 4 which will be the planned order receipt in week 6.

Week 7:

The gross requirement is 200 (2 assembly) derived from the planned order release of C. The on hand inventory is 0. Hence, the net requirement is 200. The lead time is 2 weeks. Therefore, the planned order release will be 200 in week 5 which will be the planned order receipt in week 7.

Week 8:

The gross requirement is 300 (2 assembly) derived from planned order release of C and J. The on hand inventory is 0. Hence, the net requirement is 300. The lead time is 2 weeks. Therefore, the planned order release will be 300 in week 6 which will be the planned order receipt in week 8.

Week 9:

The gross requirement is 600 (2 assembly) derived from planned order release of C. The on hand inventory is 0. Hence, the net requirement is 600. The lead time is 2 weeks. Therefore, the planned order release will be 600 in week 7 which will be the planned order receipt in week 9.

Item G:

	Week
Item G	1	2	3	4	5	6	7	8	9	10	11	12
Gross requirements					150	200	100	150	300
Scheduled  receipt
On hand (75)					75	0	0	0	0
Net requirement					75	200	100	150	300
Planned order receipt					75	200	100	150	300
Planned order release				75	200	100	150	300

Week 5:

The gross requirement is 150 (1 assembly) derived from planned order release of C. The on hand inventory is 75. Hence, the net requirement is 75. The lead time is 1 week. Therefore, the planned order release will be 75 in week 4 which will be the planned order receipt in week 5.

Week 6:

The gross requirement is 200 (1 assembly) derived from planned order release of C. The on hand inventory is 0. Hence, the net requirement is 200. The lead time is 1 week. Therefore, the planned order release will be 200 in week 5 which will be the planned order receipt in week 6.

Week 7:

The gross requirement is 100 (1 assembly) derived from the planned order release of C. The on hand inventory is 0. Hence, the net requirement is 100. The lead time is 1 week. Therefore, the planned order release will be 100 in week 6 which will be the planned order receipt in week 7.

Week 8:

The gross requirement is 150 (1 assembly) derived from planned order release of C and K. The on hand inventory is 0. Hence, the net requirement is 150. The lead time is 1 week. Therefore, the planned order release will be 150 in week 7 which will be the planned order receipt in week 8.

Week 9:

The gross requirement is 300 (1 assembly) derived from planned order release of C. The on hand inventory is 0. Hence, the net requirement is 300. The lead time is 1 week. Therefore, the planned order release will be 300 in week 8 which will be the planned order receipt in week 9.