Gross requirements represent the total quantity of a component or material needed across all sources of demand before accounting for on-hand inventory or scheduled receipts. In Material Requirements Planning (MRP), gross requirements are the first step in calculating how much to order — the starting point before netting.
At User Solutions we find that understanding gross versus net requirements is essential for any planner who wants to interpret MRP output and make intelligent decisions.
How Gross Requirements Are Calculated
Gross requirements accumulate from multiple demand sources:
- BOM explosion — When MRP processes a parent order, it multiplies the parent quantity by the quantity-per from the BOM. This dependent demand is the primary source of gross requirements.
- Independent demand — Some components are sold directly as spare parts or service items. This forecasted demand adds to gross requirements.
- Safety stock requirements — If the planning parameters specify a safety stock level, MRP treats any shortfall below that level as additional demand.
The Netting Calculation
Once gross requirements are established, MRP applies the netting formula:
Net Requirements = Gross Requirements - On-Hand Inventory - Scheduled Receipts + Safety Stock
If net requirements are positive, MRP generates a planned order to cover the shortage.
Gross Requirements Example
A manufacturer builds industrial pumps. Part BRG-100 (bearing) is used in two parent assemblies:
- Pump Model A uses 2 bearings per unit. A work order for 100 Pump A units is due in Week 8.
- Pump Model B uses 4 bearings per unit. A planned order for 50 Pump B units is due in Week 8.
- Spare parts demand: forecast of 30 bearings in Week 8.
Gross requirements for BRG-100 in Week 8:
| Source | Calculation | Bearings |
|---|---|---|
| Pump A work order | 100 × 2 | 200 |
| Pump B planned order | 50 × 4 | 200 |
| Spare parts forecast | — | 30 |
| Total Gross Requirements | 430 |
Now MRP checks inventory:
- On-hand: 120 bearings
- Scheduled receipt (PO arriving Week 7): 150 bearings
Net Requirements = 430 - 120 - 150 = 160 bearings
MRP generates a planned order for 160 bearings (or more, depending on the lot sizing rule). If the lot-sizing method is EOQ at 200, MRP plans a purchase of 200 bearings, leaving 40 units for future periods.
Why Gross Requirements Matter for Scheduling
They reveal true demand before netting. Gross requirements show the total load a component faces, which helps planners understand demand patterns even when inventory temporarily covers the need.
They expose demand sources. By breaking gross requirements into parent orders and independent demand, planners can trace why demand exists. This is closely related to pegging — the ability to link component demand back to its source.
They drive capacity planning. Gross requirements for manufactured components translate directly into work center loads. CRP uses this information to validate whether production capacity is sufficient.
They support scheduling decisions. When scheduling software like Resource Manager DB sequences production, it needs to know total demand to prioritize critical components and prevent shortages that would halt downstream assembly.
Related Terms
- Net Requirements — Gross requirements minus inventory and scheduled receipts — the actual quantity to order or produce.
- Dependent Demand — The demand component of gross requirements that comes from BOM explosion of parent items.
- Pegging — The ability to trace gross requirements back to the specific parent orders that created them.
FAQ
Gross requirements represent the total demand for a component from all sources — parent orders, independent demand, and safety stock. Net requirements equal gross requirements minus on-hand inventory and scheduled receipts. Net requirements are what actually needs to be ordered or produced.
Gross requirements come from three sources: BOM explosion of parent planned orders and released orders, independent demand forecasts for service parts or direct sales, and safety stock requirements. In most manufacturing environments, BOM explosion is the dominant source.
Gross requirements are placed in the time bucket when the parent order needs the component — which is the parent's start date, not its due date. This offset accounts for the time needed to assemble the parent item and ensures components arrive before production begins.
This term is part of the Manufacturing Glossary. For a deep dive into material planning, see our MRP Guide.
Frequently Asked Questions
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