What Is a Net Requirement in Manufacturing Planning?

A net requirement is the gross demand for an item minus the on-hand inventory and scheduled receipts already covering it: the quantity you actually have to make or buy. It is the checkbook-balance view of demand. You need 500, you hold 80, another 120 is on order, so the net requirement is 300. Everything the plan produces should trace back to a net requirement, because that is the genuine shortfall, and EDGEBIC nets demand down to it before scheduling any work.

This entry is part of the EDGEBIC by User Solutions glossary series; for the broader vocabulary of planning, see the manufacturing glossary.

How Net Requirements Work

Net requirement is the second step in the material planning arithmetic, right after gross requirement. Gross states the full demand for an item without regard to supply. Netting then subtracts the supply you already have, on-hand inventory plus scheduled receipts, to leave the amount still uncovered.

The formula is direct: net requirement = gross requirement minus on-hand minus scheduled receipts. If the supply already meets or exceeds the gross, the net falls to zero and nothing new is needed. If demand outstrips supply, the positive remainder is the net requirement, and it is that remainder, not the gross, that drives a planned order or a scheduled job.

This distinction is what keeps a plan from over-building. Gross demand for 500 does not mean produce 500 if 200 are already covered by stock and incoming receipts. Netting ensures you build only the 300 that are genuinely short, which conserves material, machine hours, and working capital. Skip the netting and you schedule inventory you already own.

A Concrete Example

A bracket has a gross requirement of 500 units next month. The stockroom holds 80 finished brackets, and a purchase order for 120 more is scheduled to arrive in time.

Netting subtracts both supplies: 500 minus 80 on hand minus 120 on order equals a net requirement of 300. That 300 is what actually has to be produced. The schedule reflects 300 units of work, not 500, and the difference is precisely the 200 units of supply you already had.

Now change the numbers. If you held 400 brackets and had 150 on order, supply of 550 would exceed the gross demand of 500, so the net requirement would be zero. No job would be scheduled at all, because there is nothing to cover.

How EDGEBIC Uses It

EDGEBIC nets demand against available inventory before it drives new production, so the quantity that reaches the schedule is the net requirement rather than the gross. This is the consume-from-stock behavior: when a job is planned, EDGEBIC draws the demand down against existing inventory first, and only the uncovered portion becomes scheduled work.

The effect is that capacity is spent on real shortfalls. A demand fully satisfied from stock creates no job and consumes no machine hours, while a demand that exceeds supply produces a job sized to the gap. EDGEBIC also computes and stores the net figure so you can report the gross-versus-net picture and see how much of each item's demand was absorbed by stock.

Keeping net and gross separate is what makes the plan trustworthy. Gross tells you the total the market wants; net tells you how much of that is still on you to make. By scheduling against net, EDGEBIC avoids building what you already hold and keeps the finite-capacity plan focused on genuine demand. See the subtraction mechanism in consume-from-stock netting and the raw-demand side in what a gross requirement is.

Related Reading

Net requirement is the netted counterpart of gross requirement, and it is produced by consume-from-stock netting. For the generic entry on the same term, see the net requirements glossary.