What Is Gross-to-Net Requirements?
Also known as: gross to net, netting, net requirements, MRP netting logic
Definition
Gross-to-net is the core MRP calculation. It takes gross requirements for an item in each time bucket, subtracts projected on-hand inventory and scheduled receipts, adds safety stock, and leaves the net requirement that must be covered by new planned orders.
Gross-to-Net Requirements Explained
For each item and each period, MRP starts with gross requirements, which are independent demand such as sales orders and forecast plus dependent demand exploded from parent planned orders. It then rolls forward the projected available balance: starting on-hand plus scheduled receipts, less gross requirements. When the balance would fall below safety stock, the shortfall is the net requirement.
The net requirement is then converted to supply. The lot-sizing rule decides the quantity, the lead time offsets the due date to a start date, and a planned order is created. That planned order becomes gross demand for each component on the bill of materials, so the calculation cascades down level by level, which is why low-level codes matter.
Allocated stock is a frequent source of confusion. Material already reserved to a released order is generally not available to cover other demand, so on-hand is netted down by allocations. Some systems also net quality hold, expired and in-transit stock out of availability depending on settings.
Gross-to-net reads cleanly in a spreadsheet, and that is how planners validate unexpected results: lay out the periods for one item and recompute by hand. SyteLine, Infor LN and NetSuite each display supply and demand detail for an item so the netting can be traced step by step.
Why It Matters
- Every planned order in the system comes from this calculation, so it is the first place to look when MRP output seems wrong.
- Wrong inputs, such as inflated on-hand or missing receipts, produce confident but wrong net requirements.
- Netting settings for allocations, holds and safety stock decide how much planned supply the business buys.
- AI assistants can explain a net requirement line by line, which saves planners hours of manual tracing.
In Practice
Example for one week: gross requirement 300, on-hand 120, scheduled receipt 50, safety stock 40. Available is 120 plus 50 minus 300 = minus 130. Required balance is safety stock 40, so net requirement is 170. With a lot size of 100 multiples, MRP plans 200 and the extra 30 carries forward to the next period.
Frequently Asked Questions
What is the difference between gross and net requirements?
Gross requirements are total demand in a period. Net requirements are what remains after subtracting available inventory and scheduled receipts and accounting for safety stock.
Why does MRP show a net requirement when I have stock?
Stock may be allocated to other orders, on hold, below safety stock, or located in a warehouse that is not planned. Check allocations and the planning parameters of the item.
Does lot sizing affect net requirements?
Not the net figure itself, but it determines how the planned order quantity is rounded, and any excess carries into later periods as available inventory.
Related Terms
MRP (Material Requirements Planning)
MRP (Material Requirements Planning) is the ERP calculation that explodes demand through bills of materials, nets it against on-hand and on-order inventory, and offsets by lead time to produce timed purchase and work order suggestions.
Planned Order
A planned order is a system-generated supply proposal that MRP creates to cover a net requirement. It has a quantity and dates but is not yet a committed job, production order or purchase order, and MRP can delete or reschedule it on every run.
Safety Stock
Safety stock is buffer inventory carried above expected demand to protect against variability in demand and supply during replenishment lead time. In ERP it is netted out of available inventory so MRP plans replenishment before the buffer is consumed.
Lot Sizing
Lot sizing is the ERP rule that determines how much to order or produce in each replenishment, converting net requirements into order quantities by balancing setup or ordering cost against inventory carrying cost.
BOM (Bill of Materials)
A BOM (bill of materials) is the structured, hierarchical list of components, sub-assemblies, and quantities required to produce one unit of a parent item, and it is the primary input MRP explodes to calculate material requirements.
Go Deeper
Safety Stock Calculator
Size statistically defensible safety stock using demand variability, lead time variability, and your target service level, then see what that buffer costs to carry.
Free ToolSyteLine MRP Health Check
Diagnose why your SyteLine MRP output is noisy or ignored, scoring data accuracy, parameters, and planner behavior across ten dimensions.
SyteLine MRP Parameters Tuning Guide
Optimize SyteLine MRP parameters including order policies, lot sizing, safety stock, and lead times for accurate material requirements planning results.
Infor LN MRP Planning Configuration Guide
Configure MRP planning in Infor LN with planning parameters, order policies, safety stock rules, and demand pegging for optimal material requirements.
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