MRP: the net requirements calculation
The net requirements calculation is the heart of MRP (Material Requirements Planning), the method that turns a production plan into concrete sourcing and manufacturing orders. Its principle: start from what you need (the gross requirement), subtract what you already hold, and buy or produce only the difference. That is what prevents ordering what is already in stock — and missing what is not.
The net requirements calculation: from gross to net
The net requirements calculation follows a logical subtraction. You start from the gross requirement: the total quantity needed, drawn from forecasts and firm orders. You subtract available stock and quantities already ordered but not yet received (open orders). You add, if policy requires, the safety stock to rebuild. The result is the net requirement: the real quantity to source or manufacture. This net is then positioned in time by accounting for lead times, so the order is launched early enough to arrive at the right moment.
MRP, execution of the forecast
MRP does not decide demand: it executes a decision already made. The demand forecast, whose methods our fiche demand forecasting details, feeds the gross requirement; MRP turns it into precise actions. It is a clear illustration of the Two-Layer Model: the decision (what do we want to produce and sell?) belongs to an upper layer, and the net requirements calculation belongs to the execution layer that makes it operational, item by item.
When does an SME need it?
The net requirements calculation becomes useful as soon as an SME assembles or manufactures from several components with different lead times. As long as there are only a handful of items, manual tracking is enough; but once bills of materials multiply, computing requirements «by hand» becomes a source of errors and stockouts. MRP structures this calculation and makes it reliable and repeatable.
The common mistake
The classic mistake is to trust MRP without making its input data reliable: a wrong theoretical stock, an obsolete bill of materials or a mis-entered lead time produce an erroneous net requirement. MRP does not correct bad data; it propagates it, sometimes amplifying it. The other trap is ignoring lead-time variability, which leads to launching orders too late. The quality of the net requirements calculation depends entirely on the quality of the data feeding it.
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Frequently asked questions
What is the net requirements calculation?
It is the heart of MRP: start from the gross requirement, subtract available stock and open orders, and source or produce only the difference.
What is the difference between gross and net requirements?
The gross requirement is the total quantity needed; the net requirement is what remains to source once stock and open orders are subtracted.
Does an SME need MRP?
Yes, as soon as it manufactures or assembles from several components with different lead times, where manual calculation becomes a source of errors.