Key takeaways
Short answer: Gross and net requirements are two steps in working out what to order. Gross requirements are the total quantity of an item needed to meet the production plan — the full demand. Net requirements are what you still need to acquire after subtracting what you already have (on-hand inventory and scheduled receipts). The difference is netting: gross is what you need in total, net is the shortfall you must actually order. MRP computes gross requirements by exploding the bill of materials, then nets them against inventory to decide what to order. For the demand that drives gross requirements, see dependent vs independent demand.
Gross requirements are the total quantity of an item needed to meet the production plan over a period, before considering what you already have. They are the full demand for the item — for a component, the gross requirement is the total number needed across all the parent products scheduled to be made, calculated by exploding the bills of materials against the master production schedule. Gross requirements answer how much of this item do we need in total. They are the starting point of the requirements calculation, the raw demand figure derived purely from the production plan and the BOM. But gross requirements alone do not tell you what to order, because you may already have some of the item on hand or arriving — ordering the full gross quantity regardless would over-order by whatever you already have. Gross requirements are the total need; turning that into an order quantity requires the next step, netting.
Net requirements are what you still need to acquire after subtracting what you already have or have coming — the actual shortfall you must order or produce. You calculate net requirements by taking the gross requirements and subtracting the available on-hand inventory and any scheduled receipts (orders already placed and due to arrive), often adding back any safety stock you want to maintain. The result is the net amount you genuinely need to get. Net requirements answer how much do we still need to order, as opposed to how much we need in total. This is the figure MRP actually acts on — net requirements drive the planned orders, because there is no point ordering quantity you already have. Netting is the step that turns total demand (gross) into the real acquisition need (net), preventing the over-ordering that taking gross requirements at face value would cause.
The clean distinction is total need versus shortfall: gross requirements are the total quantity needed, net requirements are the part of that total you still have to acquire. The relationship is a simple subtraction — net requirements equal gross requirements minus available inventory minus scheduled receipts, plus any safety stock — but it is the crucial step that makes requirements planning work. Gross requirements describe demand; net requirements describe action. Confusing them, or ordering against gross requirements without netting, means systematically over-ordering by whatever inventory you already hold — tying up cash and space in stock you did not need to buy. Netting against on-hand and on-order inventory is exactly what prevents that, ensuring you acquire only the genuine shortfall. The two figures are sequential steps in the same calculation: compute the total need, then net it down to what you actually have to get.
A product needs a component, and the production plan generates a gross requirement of 500 units of that component next month — the total needed across all scheduled parent products. Before ordering 500, MRP nets: there are 120 units on hand in inventory, and a previously-placed order for 80 units is scheduled to arrive in time. So the available supply is 200 units. The net requirement is 500 gross minus 200 available, which is 300 units — that is what actually needs to be ordered or produced. If the plant wanted to keep a safety stock of 50, the net requirement would rise to 350. Either way, the order is for the net shortfall, not the full 500 gross — ordering 500 would have over-ordered by the 200 already available, wasting cash on stock not needed. Gross said the total need; net said what to actually get.
Netting is one of the core mechanics that makes MRP valuable. MRP's job is to work out exactly what to order and produce, and when — and it does this by computing gross requirements (exploding the BOM against the schedule) and then netting them against inventory and scheduled receipts to get the net requirements that drive planned orders. Without netting, the system would order the full gross requirement every time, ignoring everything already in stock or on order — a recipe for massive over-inventory. With netting, MRP orders only the genuine shortfall, time-phased so it arrives when needed. The netting logic, repeated level by level down the bill of materials, is what lets MRP coordinate a complex product's whole material needs efficiently — each level's net requirements become the demand that drives the level below. Understanding gross-versus-net is understanding the heart of how MRP avoids both stockouts and excess.
The requirements calculation rests on a production plan whose feasibility depends on OEE. Gross requirements are derived from the master production schedule — the parent products you plan to make — and that schedule is only achievable if the floor can produce at the assumed rate. If real OEE is well below assumption, the parent production falls short, and both the gross requirements (which assumed full production) and the netting that flowed from them are out of step with reality, the same capacity reality that affects all planning. There is also a scrap link: net requirements should account for expected yield loss, because if the process scraps part of what it makes, you net to a quantity that does not cover the good output actually needed — connecting to the yield and scrap that the OEE quality factor measures.
Fabrico grounds the production plan that requirements are calculated from in real capacity, and surfaces the scrap that netting must account for. Its live OEE reveals whether the schedule driving gross requirements is achievable, and its quality data shows the real yield loss that net requirements should cover so you order enough to hit the good-output target, not just the nominal one. That keeps the gross-and-net calculation matched to what the floor actually produces. Book a demo to align requirements planning with real production.
Gross requirements are the total quantity of an item needed to meet the production plan. Net requirements are what you still need to acquire after subtracting on-hand inventory and scheduled receipts. Gross is the total need; net is the shortfall you actually order.
Net requirements equal gross requirements minus available on-hand inventory minus scheduled receipts, plus any safety stock you want to maintain. The result is the genuine shortfall to order or produce. For example, 500 gross minus 200 available is a net requirement of 300.
To avoid over-ordering. Without netting, the system would order the full gross requirement every time, ignoring stock already on hand or on order — causing massive excess inventory. Netting ensures you acquire only the genuine shortfall, time-phased to arrive when needed.
Scheduled receipts are orders already placed and due to arrive. They count as available supply in the netting calculation, so they are subtracted from gross requirements along with on-hand inventory. Ignoring them would double-order the quantity already coming.
Gross requirements come from the production schedule, which is only achievable if OEE supports the assumed rate. Poor OEE makes the schedule and its requirements optimistic. Net requirements should also account for yield loss, connecting to the scrap the OEE quality factor measures.
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