What is the different between gross material requirements plan (gross MRP) and a net material requirements plan (net MRP)?

What is the different between gross material requirements plan (gross MRP) and a net material requirements plan (net MRP)?
A . The gross requirement doesn’t take taxes into account, whereas the net requirement includes the tax considerations
B . The gross MRP includes consideration of available inventory, whereas the net MRP does not
C . The net MRP includes the amount of inventory on hand, whereas the gross MRP does not
D . The gross MRP is mostly paper-based, but the net MRP must be computerised

View Answer

Answer: C

Explanation:

Gross Material Requirements Planning (Gross MRP) is a process where the total demand for materials is calculated without considering the current inventory levels. It is simply an estimation of the total materials required to meet the production demand.

On the other hand, Net Material Requirements Planning (Net MRP) is a more refined process where the current inventory levels are taken into account. In net MRP, the gross requirements are adjusted for the available inventory and the scheduled receipts to determine the actual materials needed to meet the production demand.

The options A, B, and D don’t adequately describe the difference between gross MRP and net MRP.

Option A introduces an unrelated concept (tax considerations) which is not pertinent to the difference between gross and net MRP.

Option B is incorrect as it states the opposite of the correct relationship between gross and net MRP.

Option D introduces a method of documentation (paper-based vs. computerized) which is not a defining difference between gross and net MRP. Both gross and net MRP can be either paper-based or computerized.