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When a VPC tier is created, the user shall configure an IPv4 CIDR and the IPv4 gateway. The tier IPv4 CIDR should be within the super IPv4 CIDR configured for its VPC. In this case it would be /27 prefix. If the user does not configure any value, Cloudstack automatically picks an unused /27 CIDR and assigns it to the VPC tier. 

In general for selecting CIDRs for the VPC user will enter the netmask for his VPS and various tiers. Management server will verify the mask and will look for a available range corresponding to that mask. If a range is available MS will use that or else will flag an error.

The workflow for VPC creation will look as below:

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