DEFINITION of 'Closed Loop MRP'

A system used for production planning and inventory control, with an information feedback feature that enables plans to be checked and adjusted. Closed Loop MRPs synchronize the purchasing or materials procurement plans with the master production schedule. The system feeds back information about completed manufacture and materials on hand into the MRP system, so that these plans can be adjusted according to capacity and other requirements. The system is called a closed loop MRP because of its feedback feature, which is also referred to as closing the loop."

BREAKING DOWN 'Closed Loop MRP'

Closed loop MRP systems are considered to be second-generation systems, and have since being supplanted by manufacturing resource planning (MRP II) and enterprise resource planning (ERP) systems. While MRP systems were primarily concerned with materials used in the manufacturing process, MRP II and ERP systems integrated additional aspects including finance and human resources.

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