---
title: "MRP II closed loop system"
subject: "Industrial Engineering and Management"
chapter: 5
key: "semester_6/industrial_engineering_and_management:mrp-ii-manufacturing-resource-planning"
source: https://www.bctengineer.com/q/semester_6/industrial_engineering_and_management/mrp-ii-manufacturing-resource-planning
site: BCT Engineering
---

# MRP II closed loop system

Industrial Engineering and Management · Chapter 5: Material Requirement Planning (MRP I and MRP II)

- Asked in: year not given, 5 marks
- Video: [Manufacturing resource planning](https://www.youtube.com/watch?v=ljhpEOjcDAo) — Audiopedia
- Answer checked by Claude Opus 5.5 (high effort) on 2026-10-14
- Page: https://www.bctengineer.com/q/semester_6/industrial_engineering_and_management/mrp-ii-manufacturing-resource-planning
- Whole chapter: https://www.bctengineer.com/md/semester_6/industrial_engineering_and_management/chapter-5

## Question

What is MRP II (Manufacturing Resource Planning)? Explain how it differs from MRP and describe its main modules.

## Short answer

MRP II is a company-wide closed-loop system that plans all manufacturing resources—materials, capacity, labour, and money—linking production with marketing and finance. Unlike MRP, it checks capacity and includes financial planning. Main modules: business/sales plan, MPS, MRP, CRP, shop-floor control/purchasing, and finance/simulation.

## Answer

**MRP II** extends MRP into a company-wide system that plans all the resources of a manufacturing firm: materials, capacity, labour, machines and money. It links production planning with marketing and finance and uses a common database. It is called "closed loop" because feedback from shop floor and suppliers is used to revise plans.

#### Main modules
```text
 Business plan -> Sales & operations plan
        |
   Master Production Schedule (MPS) -> Rough-cut capacity
        |
   MRP (material plan) -> Capacity requirements planning
        |
   Shop-floor control & purchasing
        |  (feedback to upper levels)
```

1. **Business and sales/production planning:** long-range plan in money and units.
2. **Master production schedule and rough-cut capacity planning.**
3. **MRP:** time-phased material plan.
4. **Capacity requirements planning (CRP):** checks that machines and labour can meet the MRP plan.
5. **Shop-floor control and purchasing:** dispatching, order release and supplier control.
6. **Finance, costing and simulation:** cost, budgets and "what-if" analysis.

#### MRP versus MRP II

| Basis | MRP | MRP II |
|---|---|---|
| Scope | Material planning only | All manufacturing resources |
| Capacity | Assumed infinite | Checked by CRP |
| Money | Not included | Financial planning included |
| Feedback | Limited | Closed loop |
| Integration | Production only | Marketing, finance, engineering, production |

The later extension is ERP, which covers the whole enterprise including HR and accounts.

## Check yourself

The answer's key points as multiple-choice questions, with the correct option and why.

1. What is the main extension of MRP II over MRP?
   A. It plans only raw material purchases
   B. It plans all manufacturing resources including capacity, labour, machines and money
   C. It removes the master production schedule
   D. It plans only finished goods inventory
   Answer: B. MRP II is a company-wide system for materials, capacity, labour, machines and finance using a common database. (Key point: Scope of MRP II)

2. Why is MRP II called a 'closed loop' system?
   A. It repeats the same plan every month
   B. It works only inside one department
   C. It uses no computer
   D. Feedback from shop floor and suppliers is used to revise plans
   Answer: D. Feedback to upper planning levels lets plans be revised, closing the loop. (Key point: Closed loop)

3. How do MRP and MRP II differ in handling capacity?
   A. MRP assumes infinite capacity; MRP II checks it with capacity requirements planning
   B. MRP checks capacity; MRP II ignores it
   C. Both assume infinite capacity
   D. Both use only rough-cut capacity
   Answer: A. CRP in MRP II checks that machines and labour can meet the MRP plan. (Key point: Capacity assumption)

4. What does capacity requirements planning (CRP) do?
   A. Sets the business plan in money
   B. Orders raw material from suppliers
   C. Checks whether machines and labour can meet the MRP plan
   D. Calculates product cost only
   Answer: C. CRP tests feasibility of the material plan against available capacity. (Key point: Module role)

## Related in Industrial Engineering and Management

- [MRP concept, inputs and outputs](https://www.bctengineer.com/question.md?key=semester_6%2Findustrial_engineering_and_management%3Amrp-concept-inputs-and-outputs) — Industrial Engineering and Management, chapter 5

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