What Is MRP II?

MRP II Explained

MRP II emerged in the early 1980s as practitioners hit the limits of pure material planning. The insight was that a material plan nobody can execute is not a plan. MRP II therefore wraps the MRP calculation in a loop: business planning sets the financial envelope, sales and operations planning sets volume by family, the master production schedule sets buildable end items, MRP explodes materials, and capacity requirements planning checks whether the resulting load fits available hours. Feedback from the shop floor closes the loop back to the schedule.

The closed-loop element is what distinguishes MRP II from MRP. In a true closed loop, shop floor reporting of completions, scrap, and actual run times feeds back into the next planning cycle, and rough cut capacity planning is used to reject an infeasible master production schedule before it reaches MRP. Systems that only push plans downward without ingesting execution reality are running MRP with extra screens, not MRP II.

MRP II also introduced the idea that operational plans and financial plans should be the same plan expressed in different units. The production schedule stated in units, when costed, becomes the projected cost of goods sold; the purchase plan becomes projected payables. This is the direct ancestor of the integrated ERP ledger, and it is why simulation capability, sometimes called what-if planning, is treated as a core MRP II function rather than a reporting extra.

In modern ERP the MRP II label has largely been absorbed by ERP itself. Infor SyteLine, LN, and M3 all implement the full closed loop, and the terminology survives mostly in APICS and CPIM training material. The concepts remain load-bearing though: when a plant complains that ERP is disconnected from reality, the diagnosis is nearly always a broken feedback leg in the MRP II loop.