The Bill of Material for End Item a Is Shown

question 67

Essay

The bill of material for end item A is shown below:
a. If A has a gross requirement to build 250 units and an on-hand inventory for A of 40, determine the net requirement for D if its current on-hand inventory balance for D is 20 all other components have no current inventory).
b. Determine the net requirement for F if the gross requirement for A is still 250 and current on-hand inventory balance for A is 40, D is 20 and F is 60.

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Definitions:

Dependent Demand

Refers to the demand for components or raw materials that is driven by, and directly related to, the demand for the finished goods they contribute to.

Independent Demand

The need for a product or service that is not influenced by the demand for other products, often applied in inventory management and forecasting.

Inventory

The raw materials, work-in-process products, and finished goods considered to be part of a business's assets that are ready or will be ready for sale.

Inventory Carrying Cost

The total expenses associated with holding inventory, including storage, insurance, taxes, opportunity costs, and potential obsolescence.