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

Question

How do you convert gross requirements to net requirements? What is this procedure called? Answer: You convert gross requirements into net requirements by subtracting on-hand inventory and scheduled receipts from net requirements. This is called netting. Answer: You convert gross requirements into net requirements by subtracting on-hand inventory and scheduled receipts from gross requirements. This is called netting. Answer: You convert gross requirements into net requirements by subtracting on-hand inventory from net requirements. This is called netting. Answer: You convert gross requirements into net requirements by adding on-hand inventory and scheduled receipts from gross requirements. This is called netting.

Explanation / Answer

ans =option 2=We convert 'gross requirements' to 'net requirements' by subtracting the scheduled receipts & the on-hand inventory from the gross requirements.

We obtain a planned order receipt for our net requirements thru ‘netting’. It is measured thru combining the amount on-hand with the scheduled receipts minus the gross requirements. The output of the computation is projected available. Dependent upon projected available; planned order is developed. If the projected available is more than 0/ if the projected available equals 0; there is no net requirement . If the projected available is lesser than 0.Then there is requirement for replenishment.

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