We have created the following Planned Production Orders over the planning period: 130 Product A We have the following Raw Materials on hand and available to be dedicated to these Planned Production Orders: Enough Raw Materials to product 70 Product A There are Purchase Orders at our suppliers for the following Raw Materials: 40 Product A How many products should we order on New Purchase Orders with our suppliers

20

Explanation:

The computation of the no of products that should be ordered on the new purchased is shown below

We know that

New purchase order = Planned Production Order - Raw material available - purchase order for planned production

In this if the value is in negative, so it will be zero  

So,

New Purchase Order (POnew) = maximum(0, PP - RM - SR)

Here,

PP = 130 Product A

RM = 70 Product A

SR = 40 Product A

Therefore POnew is

= maximum (0, 130-70-40)

= maximum (0, 20)

= 20

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