Net Requirements Calculator
This calculator determines the net quantity of an item you need to acquire (produce or purchase) based on your total requirement, current stock, and incoming deliveries. It's a fundamental concept in inventory management and planning.
Enter your **Gross Requirement**, **On Hand Inventory**, and **Scheduled Receipts**. The calculator will compute the **Net Requirement**. All quantities should be non-negative numbers in consistent units.
Enter Planning Quantities
Understanding Net Requirements & Formula
What are Net Requirements?
Net Requirements represent the actual quantity of an item that needs to be produced or purchased to meet a specific demand, after accounting for existing inventory and planned deliveries. It answers the question: "How much *more* do I need right now?".
Net Requirements Formula
The formula is simple and direct:
Net Requirement = Gross Requirement - On Hand Inventory - Scheduled Receipts
If the result of this calculation is zero or negative, it means you have enough (or a surplus), and your Net Requirement to acquire *more* is 0.
Components Explained
- Gross Requirement: The total quantity needed, regardless of what you already have or expect. This comes from sales forecasts, customer orders, or higher-level production plans.
- On Hand Inventory: The quantity currently available in your physical stock.
- Scheduled Receipts: Quantities that are already planned or in transit and expected to arrive by the time they are needed to meet the gross requirement.
The calculator performs the direct subtraction: Gross Requirement - On Hand - Scheduled Receipts. A positive result indicates the quantity you are short and need to acquire. A zero or negative result indicates you have sufficient stock or a surplus.
Net Requirements Examples
Click on an example to see the breakdown:
Example 1: Simple Shortage
Scenario: You need 100 widgets. You have 20 in stock and expect 30 more soon.
1. Known Values: Gross Req = 100, On Hand = 20, Scheduled = 30.
2. Formula: Net Requirement = Gross Requirement - On Hand - Scheduled Receipts
3. Calculation: Net Requirement = 100 - 20 - 30 = 50
4. Result: Net Requirement = 50.
Conclusion: You need to acquire 50 more widgets.
Example 2: Just Enough Stock
Scenario: You need 50 bolts. You have 50 in stock and no scheduled receipts.
1. Known Values: Gross Req = 50, On Hand = 50, Scheduled = 0.
2. Formula: Net Requirement = Gross Requirement - On Hand - Scheduled Receipts
3. Calculation: Net Requirement = 50 - 50 - 0 = 0
4. Result: Net Requirement = 0.
Conclusion: You have exactly enough bolts; no new acquisition is needed *for this specific requirement*.
Example 3: Stock Surplus
Scenario: You need 50 pens. You have 60 in stock and expect 10 more next week.
1. Known Values: Gross Req = 50, On Hand = 60, Scheduled = 10.
2. Formula: Net Requirement = Gross Requirement - On Hand - Scheduled Receipts
3. Calculation: Net Requirement = 50 - 60 - 10 = -20
4. Result: Calculated Difference = -20.
Conclusion: The calculation is -20. This means you have a surplus of 20 pens relative to this requirement. Your Net Requirement to acquire *more* is 0.
Example 4: Urgent Need, No Stock
Scenario: You need 200 components for a rush order. You have none in stock and no scheduled receipts.
1. Known Values: Gross Req = 200, On Hand = 0, Scheduled = 0.
2. Formula: Net Requirement = Gross Requirement - On Hand - Scheduled Receipts
3. Calculation: Net Requirement = 200 - 0 - 0 = 200
4. Result: Net Requirement = 200.
Conclusion: You need to acquire all 200 components.
Example 5: No Current Need, Future Receipts
Scenario: Currently, you have a Gross Requirement of 0 for item X. You have 50 in stock and expect 100 more.
1. Known Values: Gross Req = 0, On Hand = 50, Scheduled = 100.
2. Formula: Net Requirement = Gross Requirement - On Hand - Scheduled Receipts
3. Calculation: Net Requirement = 0 - 50 - 100 = -150
4. Result: Calculated Difference = -150.
Conclusion: The calculation is -150. You have a significant surplus. Your Net Requirement to acquire more is 0.
Example 6: On Hand Stock Only
Scenario: A project requires 75 specialized screws. You have 10 in stock, but no pending orders.
1. Known Values: Gross Req = 75, On Hand = 10, Scheduled = 0.
2. Formula: Net Requirement = Gross Requirement - On Hand - Scheduled Receipts
3. Calculation: Net Requirement = 75 - 10 - 0 = 65
4. Result: Net Requirement = 65.
Conclusion: You need to acquire 65 specialized screws.
Example 7: Relying on Scheduled Receipts
Scenario: You have an order for 150 units. You have 50 in stock, and 100 are scheduled to arrive tomorrow.
1. Known Values: Gross Req = 150, On Hand = 50, Scheduled = 100.
2. Formula: Net Requirement = Gross Requirement - On Hand - Scheduled Receipts
3. Calculation: Net Requirement = 150 - 50 - 100 = 0
4. Result: Net Requirement = 0.
Conclusion: Between your current stock and scheduled delivery, you have enough to meet the requirement.
Example 8: Small Need, Large Stock
Scenario: A minor repair needs 10 feet of wire. You have 200 feet in stock and no scheduled deliveries.
1. Known Values: Gross Req = 10, On Hand = 200, Scheduled = 0.
2. Formula: Net Requirement = Gross Requirement - On Hand - Scheduled Receipts
3. Calculation: Net Requirement = 10 - 200 - 0 = -190
4. Result: Calculated Difference = -190.
Conclusion: The calculation is -190. You have a large surplus. Your Net Requirement to acquire more is 0.
Example 9: No Need, Only Receipts
Scenario: You have no current requirement (Gross Req = 0) but just received 50 units that were on backorder.
1. Known Values: Gross Req = 0, On Hand = 0, Scheduled = 50.
2. Formula: Net Requirement = Gross Requirement - On Hand - Scheduled Receipts
3. Calculation: Net Requirement = 0 - 0 - 50 = -50
4. Result: Calculated Difference = -50.
Conclusion: The calculation is -50. This reflects the addition to your anticipated stock. Your Net Requirement is 0.
Example 10: Multiple Factors
Scenario: A production run needs 1000 fasteners. You have 250 in the warehouse and expect a delivery of 350 next shift.
1. Known Values: Gross Req = 1000, On Hand = 250, Scheduled = 350.
2. Formula: Net Requirement = Gross Requirement - On Hand - Scheduled Receipts
3. Calculation: Net Requirement = 1000 - 250 - 350 = 400
4. Result: Net Requirement = 400.
Conclusion: You need to acquire 400 more fasteners to meet the production requirement.
Understanding Inventory Planning
Net requirements is a core calculation in inventory management and material planning systems (like MRP - Material Requirements Planning). It helps businesses determine what needs to be produced or ordered and when, to meet demand without holding excessive inventory.
Units
Ensure your input quantities use a consistent unit of measure (e.g., pieces, boxes, pounds, meters) for accurate results. The output will be in the same unit.
Frequently Asked Questions about Net Requirements
1. What exactly is Net Requirement?
Net Requirement is the quantity of an item that is still needed after considering your total demand (Gross Requirement), what you currently have in stock (On Hand Inventory), and what is already on its way (Scheduled Receipts).
2. How is the Net Requirement calculated?
It's calculated using the formula: Net Requirement = Gross Requirement - On Hand Inventory - Scheduled Receipts.
3. What does a negative Net Requirement mean?
A negative result means your current stock and scheduled receipts are greater than the gross requirement. You have a surplus. The quantity you need to *acquire* is 0 in this case.
4. Why is calculating Net Requirements important?
It's essential for making informed decisions about purchasing and production. It prevents overstocking (by accounting for existing inventory) and prevents shortages (by identifying the exact quantity you're short).
5. What are "Gross Requirements"?
Gross Requirements are the total demand for an item for a specific period, without considering any inventory you already have or expect. They usually come from forecasts or customer orders.
6. What if I don't have Scheduled Receipts?
If you have no quantities on order or planned for delivery, you simply enter 0 for Scheduled Receipts. The calculation becomes: Net Requirement = Gross Requirement - On Hand Inventory.
7. What if my On Hand Inventory is zero?
If you have no items in stock, you enter 0 for On Hand Inventory. The calculation becomes: Net Requirement = Gross Requirement - Scheduled Receipts.
8. Does this calculation consider lead time or safety stock?
This basic calculator provides the immediate net requirement based on current figures. Real-world inventory planning systems often add complexities like safety stock levels and lead times to determine *when* an order needs to be placed or production started, but the core net requirement calculation remains the same.
9. What units should I use for the inputs?
Use consistent units for all three inputs (Gross Requirement, On Hand, Scheduled Receipts). If you're counting pieces, use pieces for all. The output (Net Requirement) will be in the same unit.
10. Is this tool part of MRP (Material Requirements Planning)?
Yes, calculating Net Requirements is a fundamental step within a Material Requirements Planning (MRP) system. MRP uses this calculation across many components and time periods to create a detailed plan for purchasing and production.
