Which of the following best describes the net material requirements?

One of the important outputs of an MRP system is the material requirement plan. This plan shows the net requirements for materials or components to make the final product.

Which of the following best describes the net material requirements?
A . Gross requirements + on-order – Inventory on-hand
B . On order + Inventory on-hand
C . Total requirements – order releases + amount on-hand
D . Gross requirements – Inventory level – Scheduled receipt

View Answer

Answer: D

Explanation:

The net requirements are worked out using the following equation: Net requirements = Total requirements – Available inventory Where:

Total requirements = Gross requirements

Available inventory = Inventory on-hand + Units on-order

In the other words: Net requirements = Gross requirements – Inventory on-hand – Units on-order Inventory on-hand is also known as Inventory level, whereas Units on-order can be called Scheduled receipt.

Reference: CIPS study guide page 117

LO 2, AC 2.3