Gross to Net Explosion Example (MRP and Supply Chain Planning Help)


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Gross to Net Explosion Example

In the following diagram, the suggested planned orders for the end assembly are offset by the lead time, one period, and passed down to the component during the planning process.

The planned order for the end assembly in period 2 becomes the gross requirements for the component in period 1.

In period 1, the gross requirements (100) and the safety stock level (50) represent the total demand. The scheduled receipts (110) and quantity on hand (20) represent the total supply. The net requirements, total demand (150) minus total supply (130), equals 20.

The planning process suggests a planned order in period 1 of 20 to meet the net requirements.

There is no recommendation for safety stock in each period unless the demand in that period is driven less than the safety stock level.

Note: Planned orders in period 4 are not suggested since the projected on hand is at the safety stock level.

Gross to Net Explosion Example

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