Certified Supply Chain Professional (CSCP) Practice Exam

What does effective use of a closed-loop MRP system prevent?

1. Overproduction and stockouts

2. Limited capacities and longer production times

3. Stagnation in material ordering

4. High workforce turnover rates

The correct answer is: Overproduction and stockouts

The effective use of a closed-loop Material Requirements Planning (MRP) system primarily focuses on ensuring that production plans and inventory levels align seamlessly with actual demand and supply conditions. By integrating feedback loops, this system continuously monitors and adjusts inventory levels and production schedules based on real-time data. Overproduction occurs when more products are manufactured than are needed, leading to excess inventory that can raise holding costs and waste resources. Conversely, stockouts happen when demand exceeds current inventory, resulting in missed sales opportunities and dissatisfied customers. A closed-loop MRP system prevents both of these issues by effectively balancing supply with demand. It uses demand forecasts, production schedules, and inventory data to avoid producing too much or too little, maintaining optimal levels of stock. Other options, while important aspects of operations management, do not directly relate to the unique capabilities of a closed-loop MRP system. Limited capacities and longer production times can be managed through good operational practices but are not core focuses of MRP. Stagnation in material ordering pertains more to procurement processes, and while high workforce turnover rates might influence production efficiency, they are not a direct outcome of MRP system effectiveness. Therefore, the prevention of overproduction and stockouts is the clear benefit attributed to a closed-loop MRP