APICS Deck 1 OO Flashcards
Learning - APICS Terms
APICS Deck 1
Term
Definition
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demand manager
Person who assists sales and marketing in the development and maintenance of sales forecasts and reconciles volume and mix variations in the forecast.D
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product audit
The reinspection of any product to verify the adequacy of acceptance or rejection decisions made by inspection and testing personnel.P
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twenty-foot equivalent unit (TEU)
A measure of cargo capacity equivalent to a standard container (i.e., 20-feet long, 8-feet wide, and approximately 8-feet high).T
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cash-to-cash cycle time
An indicator of how efficiently a company manages its assets to improve cash flow. Inventory days + accounts receivable days – accounts payable days = cash-to-cash cycle time. See: cash conversion cycle.C
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process flexibility
The design of the manufacturing system, including operators and machinery, that allows quick changeovers to respond to near-term changes in product volume and mix. A necessary tool in lean and just in time.P
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product engineering
The discipline of designing a product or product line to take advantage of process technology and improve quality, reliability, and so forth.P
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assembly
A group of subassemblies and/or parts that are put together and that constitute a major subdivision for the final product. An assembly may be an end item or a component of a higher level assembly.A
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net weight
The weight of an article exclusive of the weights of all packing materials and containers.N
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growth rate; and (4) Question marks
low market share, high growth rate. Sometimes this same set of terms is used to categorize products by market share and profitability. See: cash cow, dog, question mark, star.G
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operation
1) A job or task, consisting of one or more work elements, usually done essentially in one location. 2) The performance of any planned work or method associated with an individual, machine, process, department, or inspection. 3) One or more elements that involve one of the following: the intentional changing of an object in any of its physical or chemical characteristics; the assembly or disassembly of parts or objects; the preparation of an object for another operation, transportation, inspection, or storage; planning, calculating, or giving or receiving information.O
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multinational strategy
A strategy that focuses on opportunities to achieve cross-business and cross-country coordination, thereby enabling economies of scope and an improved competitive position with regard to reducing costs, cross-country subsidization, and so on, to outcompete rivals. See: global strategy. multiphase system Syn: multiple-phase queuing system.M
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nonlinear programming
Programming similar to linear programming but incorporating a nonlinear objective function and linear constraints or a linear objective function and nonlinear constraints or both a nonlinear objective function and nonlinear constraints.N
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deadhead
The return of an empty transportation container to its point of origin. See: backhauling.D
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countertrade
Any transaction in which partial or full payment is made with goods instead of money. This often applies in international trade.C
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production cycle elements
Elements of manufacturing strategy that define the span of an operation by addressing the following areas: (1) the established boundaries for the firm’s activities, (2) the construction of relationships outside the firm’s boundaries (i.e., suppliers, distributors, and customers), (3) circumstances under which changes in established boundaries or relationships are necessary, (4) the effect of such boundary or relationship changes on the firm’s competitive position. The production cycle elements must explicitly address the strategic implications of vertical integration in regard to (a) the direction of such expansion, (b) the extent of the process span desired, and (c) the balance among the resulting vertically linked activities.P
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planned receipt
1) An anticipated receipt against an open purchase order or open production order. 2) Syn: planned order receipt.P
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gatekeeping
A group technique applied by a team leader to effectively manage a situation, discussion, or meeting. For example, in a situation where a dominant spokesperson or person of authority monopolizes a discussion, the gatekeeper will intervene by requesting additional group member’s input.G
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idle inventory
The inventory generally not needed in a system of linked resources. From a theory of constraints perspective, idle inventory generally consists of protective inventory and excess inventory. See: excess inventory, productive inventory, protective inventory.I
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plan make
Establishing plans for action over time that project appropriation of production resources to meet production requirements.P
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material index
The total of raw material weights divided by final product weight.M
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seven tools of quality
Syn: basic seven tools of quality.S
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enterprise
Any undertaking, venture, initiative, or business organization with a defined mission.E
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cloud computing
An emerging way of computing where data is stored in massive data centers which can be accessed from any connected computers over the internet.C
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decision theory
A systematic approach to making decisions, particularly when uncertainty is present.D
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sampling distribution
The distribution of values of a statistic calculated from samples of a given size.S
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clearinghouse
An entity restricted to providing services such as settling accounts.C
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forty-foot equivalent unit
A measure of container capacity that is equivalent to two 20-foot equivalency units; that is, a unit equivalent to 40-feet long, 8-feet wide, and approximately 8-feet high.F
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equal employment opportunity (EEO)
In the United States, the laws prohibiting discrimination in employment because of race or color, sex, age, handicap status, religion, and national origin.E
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any-quantity rate
A situation in which no quantity discount is available for large shipments.A
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work sequence
Ordered activities performed to accomplish work.W
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direct-deduct inventory transaction processing
A method of inventory bookkeeping that decreases the book (computer) inventory of an item as material is issued from stock, and increases the book inventory as transactions processed for each item. The key concept here is that the book record is updated coincidentally with the movement of material out of or into stock. As a result, the book record is a representation of what is physically in stock. Syn: discrete issue.D
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funnel experiment
An experiment that demonstrates the effects of tampering. Marbles are dropped through a funnel in an attempt to hit a flat-surfaced target below. The experiment shows that adjusting a stable process to compensate for an undesirable result or an extraordinarily good result will produce output that is worse than if the process had been left alone. See: tampering.F
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harmonic smoothing
An approach to forecasting based on fitting some set of sine and cosine functions to the historical pattern of a time series. Syn: seasonal harmonics.H
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futures
Contracts for the sale and delivery of commodities at a future time, made with the intention that no commodity be delivered or received immediately.F
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range
In statistics, the spread in a series of observations. For example, the anticipated demand for a particular product might vary from a low of 10 to a high of 500 per week. The range would therefore be 500 – 10, or 490.R
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pre-receiving
Paying for materials before receipt to prepare for incoming products and goods.P
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lateness
Delivery date minus due date. Lateness may be positive or, in the case of early jobs, negative. See: earliness, tardiness.L
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order entry
The process of accepting and translating what a customer wants into terms used by the manufacturer or distributor. The commitment should be based on the available-to-promise (ATP) line in the master schedule. This can be as simple as creating shipping documents for finished goods in a make-to-stock environment, or it might be a more complicated series of activities, including design efforts for make-to-order products. See: master schedule, order service.O
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electronic commerce application
A computer interface between two organizations that is used to carry out business transactions electronically.E
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business process management (BPM)
A business discipline or function that uses business practices, techniques, and methods to create and improve business processes. BPM is a holistic approach to the use of appropriate process-related business disciplines to gain business performance improvements across the enterprise or supply chain. It promotes business effectiveness and efficiency while striving for innovation, flexibility, and integration with technology. Most process improvement disciplines or activities can be considered as BPM.B
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priority control
The process of communicating start and completion dates to manufacturing departments in order to execute a plan. The dispatch list is the tool normally used to provide these dates and priorities based on the current plan and status of all open orders.P
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proxy
1) A written document authorizing an agent to vote a shareholder’s stock at a shareholder meeting. 2) The agent designated in 1).P
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organizational development (OD)
The process of building and strengthening core competencies and organizational capabilities that enable the execution of the business strategy and provide a sustainable competitive advantage over time. Organizational development includes staffing the organization, building core competencies and organizational capabilities, and continuous improvement initiatives in response to the changing business environment.O O
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failure mode effects analysis (FMEA)
A procedure in which each potential failure mode in every sub-item of an item is analyzed to determine its effect on other subitems and on the required function of the item.F
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bar code
A series of alternating bars and spaces printed or stamped on parts, containers, labels, or other media, representing encoded information that can be read by electronic readers. A bar code is used to facilibar B tate timely and accurate input of data to a computer system.B
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contestable market
A market having low entry costs.C
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open-end purchase order
A purchase agreement similar to a blanket purchase order that provides the added convenience of being able to negotiate additional items and expiration dates.O
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MRP nervousness
See: nervousness.M
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customer-defined attributes
The characteristics of a good or service that are viewed as being important in addressing the needs of the customer. See: house of quality.C
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horizontal dependency
The relationship between the components at the same level in the bill of material, in which all must be available at the same time and in sufficient quantity to manufacture the parent assembly. See: vertical dependency.H
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resource-constrained schedule
Syn: resource-limited schedule. See: drum-buffer-rope.R
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FPO
Abbreviation for firm planned order.F
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design for quality
A product design approach that uses quality measures to capture the extent to which the design meets the needs of the target market (customer attributes), as well as its actual performance, aesthetics, and cost. See: total quality engineering.D
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parametric estimating
The use of statistical and historical data to estimate activity parameters such as time or budget.P
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ISO certification
In quality management, denotes that a company has obtained an ISO9000 quality standard. Also, it is the process by which a firm achieves such certification. I
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product differentiation
A strategy of making a product distinct from the competition on a nonprice basis such as availability, durability, quality, or reliability.P
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backward integration
The process of buying or owning elements of the production cycle and channel of distribution back toward raw material suppliers. See: vertical integration.B
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QRM
Abbreviation for quick-response manufacturing.Q
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part type
A code for a component within a bill of material (e.g., regular, phantom, reference).P P
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total cost of quality
A sum that includes costs associated with rework, scrap, warranty costs, and other costs associated with preventing or resolving quality problems.T
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authorized deviation
Permission for a supplier or the plant to manufacture an item that is not in conformance with the applicable drawings or specifications.A
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engineering drawings
A visual representation of the dimensional characteristics of a part or assembly at some stage of manufacture.E
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weight confirmation
The process of confirming a shipment arrival only by confirming the correct weight has been delivered.W
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supply chain risk
The variety of possible events and their outcomes that could have a negative effect on the flow of goods, services, funds, or information resulting in some level of quantitative or qualitative loss for the supply chain.S
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order release
The activity of releasing materials to a production process to support a manufacturing order. See: planned order release.O
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resellers
Organizations intermediate in the manufacturing and distribution process, such as wholesalers and retailers.R
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aggregate lead time
Syn: cumulative lead time.A
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tipping point
The moment when something unique becomes common. The term often refers to the popular acceptance of new technologies. The concept has been applied to any process in which beyond a certain point, the rate at which the process (chemical, sociological, environmental, etc.) proceeds increase dramatically.T
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dashboard
An easy-to-read management tool similar to an automobile’s dashboard designed to address a wide range of business objectives by combining business intelligence and data integration infrastructure. See: executive dashboard.D
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base inventory level
The inventory level made up of aggregate lot-size inventory plus the aggregate safety stock inventory. It does not take into account the anticipation inventory that will result from the production plan. The base inventory level should be known before the production plan is made. Syn: basic stock. See: aggregate inventory.B
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pallet ticket
A label to track pallet-sized quantities of end items produced to identify the specific sublot with specifications determined by periodic sampling and analysis during production.P
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piece parts
Individual items in inventory at the simplest level in manufacturing (e.g., bolts and washers).P
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repair bill of material
In remanufacturing, the bill of material defining the actual work required to return a product to service. This bill is constructed based on inspection and determination of actual requirements. See: disassembly bill of material.R
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FMECA
Abbreviation for failure mode effects and criticality analysis.F
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project team directory
A list of team member names, roles, and communication information.P
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put-away time
The lead time between when a raw material or component arrives and when the items are available in the store. Syn: dock-to-stock time.P
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internet
A worldwide network of computers belonging to businesses, governments, and universities that enables users to share information in the form of files and to send electronic messages and have access to a tremendous store of information.I
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remedial maintenance
Unscheduled maintenance performed to return a product or process to a specified performance level after a failure or malfunction.R
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proportional rate
A lower rate given to specific parts of a shipment, instead of the entire rate being charged for only one part of the shipment.P
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cumulative receipts
A cumulative number, or running total, as a count of parts received in a series or sequence of shipments. The cumulative receipts provide a number that can be compared with the cumulative figures from a plan developed by cumulative MRP.C
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traveling requisition
Syn: traveling purchase requisition.T
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budget
A plan that includes an estimate of future costs and revenues related to expected activities. The budget serves as a pattern for and a control over future operations.B
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machine downtimes
Periods during which a machine is unavailable due to tool breakage, worker unavailability, machine breakdown, maintenance, teardown, setup, and other factors.M
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income
Syn: profit.I
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allocation
1) The classification of quantities of items that have been assigned to specific orders but have not yet been released from the stockroom to production. It is an “uncashed” stockroom requisition. 2) A process used to distribute material in short supply. Syn: assignment. See: reservation.A
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product-based layout
A type of layout where resources are arranged sequentially according to the steps required to make a particular complex product.P
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manufacturability
A measure of the design of a product or process in terms of its ability to be produced easily, consistently, and with high quality.M
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full pegging
The ability of a system to automatically trace requirements for a given component all the way up to its ultimate end item, customer, or contract number. Syn: contract pegging.F
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single-minute exchange of die (SMED)
The concept of setup times of less than 10 minutes, developed by Shigeo Shingo in 1970 at Toyota. See: single-digit setup.S
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functional organizational structure
An organizational structure based on functional specialization, such as sales, engineering, manufacturing, finance, and accounting.F
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workstation
The assigned location where a worker performs the job; it could be a machine or a workbench.W
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blockage
See: blocking.B
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lean manufacturing
Syn: lean production.L
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cargo container capacity
The inside usable cubic volume of a container.C
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linking tactical plans to strategic plans
production planning and sales and operations planning. See: operational planning, strategic planning, tactical plan.T
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reservation
The process of designating stock for a specific order or schedule. See: allocation.R
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direct loading
Syn: cross-docking.D D
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contract labor
Self-employed individuals or firms contracted by an organization to perform specific services on an intermittent or short-term basis.C
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location audit
A methodical verification of the location records for an item or group of items in inventory to ensure that when the record shows an item’s location, it is, in fact, in that location.L
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NVOCC
Abbreviation for non-vessel-operating common carrier.N O
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bespoke
A custom-made product or service. The term originally was applied to clothing, but now applies to software as well.B
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North American Free Trade Agreement (NAFTA)
An agreement among the United States, Canada, and Mexico to promote economic prosperity by reducing trade barriers.N
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semifinished goods
Products that have been stored uncompleted awaiting final operations that adapt them to different uses or customer specifications.S
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engineering change order
Syn: engineering change.E
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final assembly
The highest level assembled product, as it is shipped to customers.F
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part standardization
A program for planned elimination of superficial, accidental, and deliberate differences between similar parts in the interest of reducing part and supplier proliferation.P
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strategic deployment
See hoshin planning.S
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product velocity
Units sold per period.P
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finish-to-start
In project management, a network requirement that activity A must be finished before activity B can start. See: logical relationship.F
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accessory
A choice or feature added to the good or service offered to the customer for customizing the end product. An accessory enhances the capabilities of the product but is not necessary for the basic function of the product. In many companies, an accessory means that the choice does not have to be specified before shipment but can be added at a later date. In other companies, this choice must be made before shipment. See: feature.A
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cross-docking
The concept of packing products on the incoming shipments so they can be easily sorted at intermediate warehouses or for outgoing shipments based on final destination. The items are carried from the incoming vehicle docking point to the outgoing vehicle docking point without being stored in inventory at the warehouse. Cross-docking reduces inventory investment and storage space requirements. Syn: direct loading.C
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commodity procurement strategy
The purchasing plan for a family of items. This would include the plan to manage the supplier base and solve problems.C
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process
A six sigma improvement process comprised of five stages: (1) Determine the nature of the problem, (2) Measure existing performance and commence recording data and facts that offer information about the underlying causes of the problem, (3) Study the information to determine the root causes of the problem, (4) Improve the process by effecting solutions to the problem, and (5) Monitor the process until the solutions become ingrained.D
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break-even analysis
A study of the number of units, or amount of time, required to recoup an investment.B
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line efficiency
A measure of actual work content versus cycle time of the limiting operation in a production line. Line efficiency (percentage) is equal to the sum of all station task times divided by the longest task time multiplied by the number of stations. In an assembly line layout, the line efficiency is 100 percent minus the balance delay percentage.L
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lot size
The amount of a particular item that is ordered from the plant or a supplier or issued as a standard quantity to the production process. Syn: order quantity.L
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field finished goods
Finished goods kept in distribution centers or warehouses.F
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intermediate part
Material processed beyond raw material and used in higher level items. See: component.I
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capacity cushion
Extra capacity that is added to a system after capacity for expected demand is calculated. Syn: safety capacity. See: protective capacity.C
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end-of-life management
Planning for the phase-out of one product and the phase-in of a new product to avoid both the excessive inventory of and an out-of-stock situation with the old product before the replacement product is available.E
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count point
A point in a flow of material or sequence of operations at which parts, subassemblies, or assemblies are counted as being complete. Count points may be designated at the ends of lines or upon removal from a work center, but most often they are designated as the points at which material transfers from one department to another. Syn: pay point.C
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TQE
Abbreviation for total quality engineering.T
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overtime
Work beyond normal established working hours that usually requires that a premium be paid to the workers.O
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blend formula
An ingredient list for a product in process industries. See: batch card, manufacturing order, mix ticket.B
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supply chain visibility
The ability of supply chain partners to access demand and production information from trading partners.S
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form-fit-function
A term used to describe the process of designing a part or product to meet or exceed the performance requirements expected by customers.F
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systems view
A holistic approach to management that considers how actions impact the production process. Included within the system are suppliers, product design, process design, the production process, distribution, and customers.S T
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special warranty
An assurance that the product is fit for the specific purpose for which the product will be used. See: general warranty, warranty.S
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program evaluation and review technique (PERT)
In project management, a network analysis technique in which each activity is assigned a pessimistic, most likely, and optimistic estimate of its duration. The critical path method is then applied using a weighted average of these times for each node. PERT computes a standard deviation of the estimate of project duration. See: critical path method, graphical evaluation and review technique, and network analysis.P
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loss leader pricing
Pricing some products below cost to attract customers into the store, in the expectation that they will buy other items as well.L
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define-measure-analyze-design-verify
A six sigma process that outlines the steps needed to create a completely new business process or product at six sigma quality levels.D
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tactical planning
The process of developing a set of tactical plans (e.g., production plan, sales plan, marketing plan). Two approaches to tactical planning exist for
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financial forecasting
Estimating a firm’s future financial statements.F
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part master record
Syn: item record.P
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multiple-factor productivity
A measure of the productivity of two or more inputs, especially labor, capital costs, energy, and material. See: single-factor productivity.M
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hub-and-spoke systems
In warehousing, a system that has a hub (or center point) where sorting or transfers occur, and the spokes are outlets serving the destinations related to the hub.H
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plan-do-check-action (PDCA)
A four-step process for quality improvement. In the first step (plan), a plan to effect improvement is developed. In the second step (do), the plan is carried out, preferably on a small scale. In the third step (check), the effects of the plan are observed. In the last step (action), the results are studied to determine what was learned and what can be predicted. The plan-do-check-¬action cycle is sometimes referred to as the Shewhart cycle (because Walter A. Shewhart discussed the concept in his book Statistical Method from the Viewpoint of Quality Control) and as the Deming circle (because W. Edwards Deming introduced the concept in Japan; the Japanese subsequently called it the Deming circle). Syn: plan-do-check-act cycle, Shewhart circle of quality, Shewhart cycle. See: Deming circle.P
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incremental cost
1) Cost added in the process of finishing an item or assembling a group of items. If the cost of the components of a given assembly equals $5 and the additional cost of assembling the components is $1, the incremental assembly cost is $1, while the total cost of the finished assembly is $6. 2) Additional cost incurred as a result of a decision.I
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black belt
In six sigma, team leader for process improvement. Responsibilities include defining, measuring, and controlling the improvement process.B
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ECR
Abbreviation for efficient consumer response.E
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Wagner-Whitin algorithm
A mathematically complex, dynamic lot-sizing technique that evaluates all possible ways of ordering to cover net requirements in each period of the planning horizon to arrive at the theoretically optimum ordering strategy for the entire net requirements schedule. See: discrete order quantity, dynamic lot sizing.W
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auxiliary item
An item required to support the operation of another item.A
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finite loading
Assigning no more work to a work center than the work center can be expected to execute in a given time period. The specific term usually refers to a computer technique that involves calculating shop priority revisions in order to level load operation by operation. Syn: finite scheduling. See: drum-buffer-rope.F
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EAP
Abbreviation for employee assistance program.E
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grievance procedures
Methods identified in a collective bargaining agreement to resolve problems that develop or to determine if a contract has been violated.G
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process flow
The sequence of activities that when followed results in a product or service deliverable. See flow process chart, process chart.P
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product data management (PDM)
A system that tracks the configurations of parts and bills of material and also the revisions and history of product designs. It facilities the design release, distributes the design data to multiple manufacturing sites, and manages changes to the design in a closed-loop fashion. It provides the infrastructure that controls the design cycle and manages change.P
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distribution curve
A graphic display of numerous data points showing the mean and frequency of occurrences of observations on a chart. See: normal distribution curve.D
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revenue
The income received by a company from sales or other sources, such as stock owned in other companies.R
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labor ticket
Syn: labor claim.L
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risk adjusted discount rate
A discount rate that is higher for more risky projects and lower for less risky projects.R
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flow rack
A storage rack using metal shelves equipped with wheels or rollers allowing product to flow from the back to the front of the rack to make the product more accessible for order picking.F
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rack
A storage device for handling material in pallets. A rack usually provides storage for pallets arranged in vertical sections with one or more pallets to a tier. Some racks accommodate more than one-pallet-deep storage.R
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lost sale
A potential sale that was not completed, usually due to lack of availability of the item in question.L
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quality, cost, delivery (QCD)
Key measurements of customer satisfaction. Kaizen activity strives to improve these measurements.Q Q
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intermediately positioned strategy
To position a warehouse halfway between the supplier and the customer.I
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activity definition
The specific work to be performed that defines a project deliverable.A
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uniform resource locator (URL)
A means of locating web pages regardless of where they are on the internet.U
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straight-line schedule
Syn: gapped schedule.S
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spare parts
Syn: service parts.S
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brand manager
The person in charge of the marketing program for a given brand. Syn: product manager.B
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protective capacity
The resource capacity needed to
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database
A data processing file-management approach designed to establish the independence of computer programs from data files. Redundancy is minimized, and data elements can be added to, or deleted from, the file structure without necessitating changes to existing computer programs.D
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standard components
Components of a finished product that are easy to manufacture and are made by many suppliers, making them more of commodity to buy at low cost.S
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calendar time
The passage of days or weeks as in the definition of lead time or scheduling rules, in contrast with running time.C
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life cycle costing
In evaluating alternatives, the consideration
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centralized authority
Limiting the ability to make decisions to a few managers.C
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exponential smoothing forecast
A type of weighted moving average forecasting technique in which past observations are geometrically discounted according to their age. The heaviest weight is assigned to the most recent data. The smoothing is termed exponential because data points are weighted in accordance with an exponential function of their age. The technique makes use of a smoothing constant to apply to the difference between the most recent forecast and the critical sales data, thus avoiding the necessity of carrying historical sales data. The approach can be used for data that exhibit no trend or seasonal patterns. Higher order exponential smoothing models can be used for data with either (or both) trend and seasonality.E
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zone of freedom
Legal authority for transportation companies to charge, within limits, more than their variable costs.Z
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disbursement list
Syn: picking list.D
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demand management process
A process that weighs both customer demand and a firm’s output capabilities, and tries to balance the two. Demand management is made up of planning demand, communicating demand, influencing demand, and prioritizing demand.D
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pallet positions
A calculation that determines the space needed for the number of pallets for inventory storage or transportation based on a standard pallet size. Pallet dimensions vary around the globe, but are typically a constant in regional markets. The term is frequently used to quote storage and transportation rates.P
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material specification
An explanation of the characteristics of material to be produced or purchased.M
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worker productivity
The value of total goods and services produced by an employee divided by the labor hours required to produce those goods and services.W
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blowthrough
Syn: phantom bill of material.B B
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np chart
A control chart for evaluating the stability of a process in terms of the total number of units in a sample in which an event of a given classification occurs. Syn: number of affected units chart.N
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EPA
Abbreviation for Environmental Protection Agency.E
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first expiry first out (FEFO)
A picking methodology assuring that the usage shelf life of items is optimized. Years ago, first in, first out (FIFO) was satisfactory as the F shelf-life days for items often didn’t vary and FIFO often coincided with the expiry dates. However, re-testing is frequently done to extend shelf-life dates on some lots or batches, while other lots may have typical shelf-life dates shortened because of quality or processes. Thus, FEFO was introduced by software vendors to provide this picking methodology for use with shelf-life controlled items.F
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SCOR®
An acronym for Supply Chain Operations Reference-model.S
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central processing unit (CPU)
The electronic processing unit of a computer, where mathematical calculations are performed.C
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average cost system
In cost accounting, a method of inventory valuation for accounting purposes. A weighted average (based on quantity) of item cost is used to determine the cost of goods sold (income statement) and inventory valuation (balance sheet). Average cost provides a valuation between last-in, first-out and first-in, first-out methods. See: first in, first out; last in, first out.A
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globalization
The interdependence of economies globally that results from the growing volume and variety of international transactions in goods, services, and capital, and also from the spread of new technology.G
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EEO
Abbreviation for equal employment opportunity.E
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target market
1) A fairly homogeneous group of customers to whom a company wishes to appeal. 2) A definable group of buyers to which a marketer has decided to market.T
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tank inventory
Goods stored in tanks. These goods may be raw materials, intermediates, or finished goods. The description of inventory as tank inventory indicates the necessity of calculating the quantity on hand from the levels within the tanks.T
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marginal utility
The additional usefulness and enjoyment received from consuming one more unit of a good or service.M
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graphical user interface (GUI)
A connection between the computer and the user employing a mouse and icons so that the user makes selections by pointing at icons and clicking the mouse.G
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standing order
Syn: blanket purchase order.S
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promotion
One of the four Ps (product, price, place, and promotion) that constitute the set of tools used to direct the business offering to the customer. Promotion is the mechanism whereby information about the product offering is communicated to the customer and includes public relations, advertising, sales promotions, and other tools used to persuade customers to purchase the product offering. See: four Ps.P
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rush order
An order that for some reason must be fulfilled in less than normal lead time.R S
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channel equity
Important affiliations between suppliers and purchasers that improve value for everyone.C
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supplier-owned inventory
A system in which the supplier not only controls the inventory, but owns it and keeps in close to the consumer until it is purchased by the consumer. Falls within the supplier managed inventory umbrella.S
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merger
The acquisition of the assets and liabilities of one company by another.M
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key supply chain processes
Important steps in producing, marketing, and servicing goods and services.K L
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undertime
A condition occurring when more personnel are on the payroll than are required to produce the planned output.U
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container
A large box in which commodities to be shipped are placed.C
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dual sourcing
A method for sourcing requirements by using a few suppliers for the same products or services. See: multisourcing, multiple sourcing, single sourcing.D
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product quality
Attribute that reflects the capability of a product to satisfy customers’ needs.P
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strategic planning
The process of developing a strategic plan. See: operational planning, strategic plan, tactical planning.S
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transportation
The function of planning, scheduling, and controlling activities related to mode, vendor, and movement of inventories into and out of an organization.T
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statistical quality control (SQC)
The application of statistical techniques to control quality. Often the term statistical process control is used interchangeably with statistical quality control, although statistical quality control includes acceptance sampling as well as statistical process control.S
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upper specification limit (USL)
In statistical process control, the line that defines the maximum acceptable level of random output. See: tolerance limits.U
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time bucket
A number of days of data summarized into a columnar or row-wise display. A weekly time bucket would contain all of the relevant data for an entire week. Weekly time buckets are considered to be the largest possible (at least in the near and medium term) to permit effective MRP.T
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ES
Abbreviation for early start date.E
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configuration audit
A review of the product against the engineering specifications to determine whether the engineering documentation is accurate, up-to-date, and representative of the components, subsystems, or systems being produced.C
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unplanned issue
An issue transaction that updates the quantity on hand but for which no allocation exists.U
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bin trips
Usually, the number of transactions per stockkeeping unit per unit of time.B
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implied contract
A binding agreement inferred from the actions of the parties.I
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hybrid strategy
Syn: hybrid production method.H
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enterprise resources planning (ERP)
Framework for organizing, defining, and standardizing the business processes necessary to effectively plan and control an organization so the organization can use its internal knowledge to seek external advantage.E
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integrated services digital network (ISDN)
Emerging international standard for using public phone lines to transmit voice and data over the same line.I
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warranty costs
All of the costs associated with a warranty; these include shipping, receiving, repairing, replacement, and the materials needed for repair or replacement.W
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firewall
A device used to control access to a company’s data from the internet or other outside sources.F
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EOQ = 1
Reducing setup time and inventory to the point where it is economically sound to produce in batches with a size of one. Often EOQ = 1 is an ideal to strive for, like zero defects.E
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fishbone diagram
Syn: cause-and-effect diagram.F
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equal runout method
Syn: equal runout quantities.E
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product number
Syn: item number.P
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price elasticity
The degree of change in buyer demand in response to changes in product price. It is calculated by dividing the percentage of change in quantity bought by the percentage of change of price. Prices are considered elastic if demand varies with changes in price. If demand changes only slightly when the price changes, demand is said to be inelastic. For example, demand for most medical services is relatively inelastic, but demand for automobiles is generally elastic.P
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unit-of-measure conversion
A standard conversion ratio that a company or its computer system uses to quickly enter in the amount delivered based on a known quantity within each unit of measure (e.g., a case of soda contains 24 cans).U
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industrial market
A market where most or all customers are individuals or businesses that buy products to produce other goods and services. Syn: business market, producer market. See: consumer market, government market, institutional market.I
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CCR
Abbreviation for capacity-constrained resource.C
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order winners
Those competitive characteristics that cause a firm’s customers to choose that firm’s goods and services over those of its competitors. Order winners can be considered to be competitive advantages for the firm. Order winners usually focus on one (rarely more than two) of the following strategic initiatives: price/cost, quality, delivery speed, delivery reliability, product design, flexibility, after-market service, and image. See: order losers, order qualifiers.O
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elasticity of demand (supply)
The ratio of the percentage change in quantity demanded (supplied) to the percentage change in price.E
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manual rescheduling
The most common method of rescheduling open orders (scheduled receipts). Under this method, the MRP system provides information on the part numbers and order numbers that need to be rescheduled. Due dates and order quantity changes required are then analyzed and changed by material M planners or other authorized persons. Syn: planner intervention. Ant: automatic rescheduling.M
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customer order servicing system
An automated system for order entry, where orders are keyed into a local terminal and a bill-of-material translator converts the catalog ordering numbers into required manufacturing part numbers and due dates for the MRP system. Advanced systems contain customer information, sales history, forecasting information, and product option compatibilicustomer C ty checks to facilitate order processing, “cleaning up” orders before placing a demand on the manufacturing system. Syn: configuration system, sales order - configuration.C
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ISO 14000 Series Standards
A series of generic environmental management standards developed by the International Organization of Standardization, which provide structure and systems for managing environmental compliance with legislative and regulatory requirements and affect every aspect of a company’s environmental operations.I
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right-to-work state
A state that allows workers to choose whether or not to join a union.R
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cross plot
Syn: scatter chart.C
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aggregate plan
A plan that includes budgeted levels of finished goods, inventory, production backlogs, and changes in the workforce to support the production strategy. Aggregated information (e.g., product line, family) rather than product information is used, hence the name aggregate plan.A
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percent value-added time
The percentage of total cycle time that is spent on activities that provide value to the product or customer.P
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systems concept
An attempt to create the most efficient complete system as opposed to the most efficient individual parts. A “whole process” or “whole company” operating system that is driven by cause and effect.S
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turnaround time
Syn: setup.T
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prime operations
Critical or most significant operations whose production rates must be closely planned.P
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knowledge-based system
A computer program that employs knowledge of the structure of relations and reasoning rules to solve problems by generating new knowledge from the relationships about the subject.K
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management by walking around (MBWA)
The management technique of managers touring a facility on a regular basis to talk with workers and staff about problems, trends, and potential solutions.M
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consolidation warehouses
Collection points that receive less-than-truckload (LTL) shipments from regional sources and then ships in cargo load or truckload quantities to a manufacturing facility.C
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activity driver
In activity-based cost accounting, a yardstick of demands placed on an activity by given cost objects. Its purpose is to assign activity costs to cost objects.A
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sequential-sampling plan
Controlling quality by repeatedly sampling units and each time making a decision to accept or reject a batch or to continue sampling.S
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financial management
The function concerned with ensuring the availability of funds for research and development, operations, and marketing.F
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defects per million opportunities
The quantity of defects
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system constraint
In supply chain management, the supply chain is viewed as the complete system. The system constraint is the resource at any one of the trading partners that is most limiting the end-to-end throughput of the supply chain.S
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reasonable rate
A pricing strategy that allows a company to profit, but not to achieve monopolistic profits. Normally determined by industry pricing analysis.R R
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performance measurement
Syn: performance measure.P
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item number
A number that serves to uniquely identify an item. Syn: part number, product number, stock code, stock number.I
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helper application
Software that assists the browser when audio, video, or large images are requested.H
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surge tank
A container to hold output from one process and feed it to a subsequent process. It is used when line balancing is not possible or practical or only on a contingency basis when downstream equipment is nonoperational. S
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yield
The amount of good or acceptable material available after the completion of a process. Usually computed as the final amount divided by the initial amount converted to a decimal or percentage. In manufacturing planning and control systems, yield is usually related to specific routing steps or to the parent item to determine how many units should be scheduled to produce a specific number of finished goods. For example, if 50 units of a product are required by a customer and a yield of 70 percent is expected then 72 units (computed as 50 units divided by .7) should be started in the manufacturing process. Syn: material yield. See: scrap factor, yield factor.Y
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bill-of-material accuracy
The degree to which a list of specified items conforms to administrative specifications and with correct quantities.B
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single integrator solution
An enterprise resources planning implementation chosen entirely from one vendor.S
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cost of poor quality
The cost associated with providing poor quality products or services. There are four categories of costs: (1) internal failure costs (costs associated with defects found before the customer receives the product or service); (2) external failure costs (costs associated with defects found after the customer receives the product or service); (3) appraisal costs (costs incurred to determine the degree of conformance to quality requirements); and (4) prevention costs (costs incurred to keep failure and appraisal costs to a minimum). Syn: cost of quality.C
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authentication key
In information systems, a key that ensures that data in an electronic business transaction A are not changed. It can also be used as a form of digital signature.A
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backorder
An unfilled customer order or commitment. A backorder is an immediate (or past due) demand against an item whose inventory is insufficient to satisfy the demand. See: stockout.B B
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pilot test
1) In computer systems, a test before final acceptance of a new business system using a subset of data with engineered cases and documented results. 2) Generally, production of a quantity to verify manufacturability, customer acceptance, or other management P requirements before implementation of ongoing production. Syn: pilot, walkthrough.P
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blanket order
Syn: blanket purchase order.B
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packing list
A list showing merchandise packed, a copy of which is sent to the consignee to help verify the shipment.P
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shop calendar
Syn: manufacturing calendar.S
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de-expedite
The reprioritizing of jobs to a lower level of activity. All extraordinary actions involving these jobs stop.D
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six sigma
A methodology that furnishes tools for the improvement of business processes. The intent is to decrease process variation and improve product quality.S
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scenario planning
A planning process that identifies critical events before they occur and use this knowledge to determine effective alternatives.S
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network logic
Activity dependencies that make up a project schedule network diagram.N
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deblend
The further processing of a product to adjust specific physical and chemical properties to within specification ranges.D
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future order
An order entered for shipment at some future date.F
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long ton
Two thousand two hundred and forty pounds.L
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outbound logistics
Every process that is involved in the shipping and holding of products after they are completed until they are received by the customer.O
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design engineering
The discipline consisting of process engineering and product engineering.D
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future reality tree (FRT)
In the theory of constraints, a logic-based tool for constructing and testing potential solutions before implementation. The objectives are to (1) develop, expand, and complete the solution and (2) identify and solve or prevent new problems created by implementing the solution.F
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parent/child relationship
Refers to the logical linkage between higher and lower level items in the bill of material.P
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date code
A label on products with the date of production. In food industries, it is often an integral part of the lot number.D
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spend analysis
A purchasing activity in which a firm explores its spending patterns to identify opportunities to reduce costs or improve quality. This process is a part of value analysis as well as cost-benefit analysis.S
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one-piece flow
A concept that items are processed directly from one step to the next, one unit at a time. This helps to shorten lead times and lines of communication, thus more quickly identifying problems.O
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inventory investment
The dollars that are in all levels of inventory.I
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integrated logistics service providers
Organizations that provide one or many logistics services to a customer for a fee.I
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organizational breakdown structure
In project management, a representation of a project’s organization relating work packages to organizational units.O
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order
A general term that may refer to such diverse items as a purchase order, shop order, customer order, planned order, or schedule.O
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EDIFACT
Abbreviation for EDI for administration, commerce, and transport.E EDI for administration, commerce, and transport
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working capital
Syn: net working capital.W
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return on assets (ROA)
Net income for the previous 12 months divided by total assets. See: return on owner’s equity (ROE).R
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queuing theory
The collection of models dealing with waiting line problems; for example, problems for which customers or units arrive at some service facility at which waiting lines or queues may build. Syn: waiting line theory. See: queuing analysis.Q
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cash budget
A budget based on planned cash receipts and disbursements of a plant, division, or firm.C
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quotation expiration date
The date on which a quoted price is no longer valid.Q R
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family
A group of end items whose similarity of design and manufacture facilitates their being planned in aggregate, whose sales performance is monitored together, and, occasionally, whose cost is aggregated at this level.F
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OSHA
Acronym for Occupational Safety and Health Act.O
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period order quantity
A lot-sizing technique under which the lot size is equal to the net requirements for a given number of periods (e.g., weeks into the future). The number of periods to order is variable, each order size equalizing the holding costs and the ordering costs for the interval. See: discrete order quantity, dynamic lot sizing.P
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production management
1) The planning, scheduling, execution, and control of the process of converting inproduction P puts into finished goods. 2) A field of study that focuses on the effective planning, scheduling, use, and control of a manufacturing organization through the study of concepts from design engineering, industrial engineering, management information systems, quality management, inventory management, accounting, and other functions as they affect the transformation process.P
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bulk issue
Parts issued from stores to work-in-process inventory, but not based on a job order. They are issued in quantities estimated to cover requirements of individual work centers and production lines. The issue may be used to cover a period of time or to fill a fixed-size container.B
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scatter diagram
Syn: scatter chart.S
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effectivity
Syn: effective date.E
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integrated change control
In project management, a system under which any changes are coordinated across the entire project.I
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proof of delivery
Carrier’s records indicating the person signing for delivery with the date, time, and other related information.P
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distribution by value
Syn: ABC classification.D
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order service
The function that encompasses receiving, entering, and promising orders from customers, distribution centers, and interplant operations. Order service is also typically responsible for responding to customer inquiries and interacting with the master scheduler on availability of products. In some companies, distribution and interplant requirements are handled separately. See: order entry, order promising.O
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statistical process control (SPC)
The application of statistical techniques to monitor and adjust an operation. Often the term statistical process control is used interchangeably with statistical quality control.S
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manufacturing planning and control system (MPC)
A closed-loop information system that includes the planning functions of production planning (sales and operations planning), master production scheduling, material requirements planning, and capacity requirements planning. Once the plan has been accepted as realistic, execution begins. The execution functions include inputoutput control, detailed scheduling, dispatching, anticipated delay reports (department and supplier), and supplier scheduling. A closed-loop MRP system is one example of a manufacturing planning and control system.M
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MRP II
Abbreviation for manufacturing resource planning.M
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PFEP
Abbreviation for plan for every part.P
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cost engineer
An engineer whose judgment and experience are used in the application of scientific principles and techniques to problems of cost estimation and cost control in business planning, profitability analysis, project management and production planning, scheduling, and control.C
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ISO/TS 16949
A standard written by the International Automotive Task Force that applies only to automotive companies. It includes quality management system; management responsibility; resource management; product realization; and measurement, analysis, and improvement. See: QS 9000.I
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consolidation
Packages and lots that move from suppliers to a carrier terminal and are sorted and then combined with similar shipments from another supplier’s container load or truckload for travel to a final destination. See: milk run.C
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customer
1) A person or organization receiving a good, service, or information. See: external customer, internal customer. 2) In project management, every project has a customer who may be internal or external to the organization and who is responsible for the final project acceptance.C
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NSN
Abbreviation for national stock number.N
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zero defects
A performance standard developed by Philip B. Crosby to address a dual attitude in the workplace: People are willing to accept imperfection in some areas, while in other areas, they expect the number of defects to be zero. This dual attitude has developed as a result of the conditioning that people are human and humans make mistakes. However, the zerodefects methodology states that if people commit themselves to watching details and avoiding errors, they can move closer to the goal of zero defects. The performance standard that must be set is “zero defects,” not “close enough.”Z
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measures constraint
A common misnomer. Bad measures are not the constraint. Rather, bad measures hinder effective constraint management by inhibiting the ability to fully exploit and/or subordinate to the constraint.M
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move time
The time that a job spends in transit from one operation to another in the plant.M
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line of balance planning
A project planning technique using a lead-time offset chart and a chart of required final assembly completions to graph a third bar chart showing the number of each component that should be completed to date. This bar chart forms a descending line, and aggregate component completions are then plotted against this line of balance. This is a crude form of material planning.L
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waiver
Authorization to accept an item that, during production or upon inspection, is found to depart from specified requirements, but nevertheless is considered suitable for use as is or after rework.W
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value-driven enterprise
An organization that is designed and managed to add utility from the viewpoint of the customer in the transformation of raw materials into a finished good or service.V
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performance measurement baseline
An approved plan used to compare against actual execution to identify variances for management control.P
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make-or-buy decision
The act of deciding whether to produce an item internally or buy it from an outside supplier. Factors to consider in the decision include costs, capacity availability, proprietary and/or specialized knowledge, quality considerations, skill requirements, volume, and timing.M
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quick-response program (QRP)
A system of linking final retail sales with production and shipping schedules back through the chain of supply; employs point-of-sale scanning and electronic data interchange, and may use direct shipment from a factory to a retailer.Q
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inventory diversion
The shipment of parts against a project or contract other than the original project or contract for which the items were purchased.I
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to its cause. In the second phase
the remedial journey the team journeys from the cause to its remedy.D
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TWM
Abbreviation for total waste management.T
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demand deposits
Deposits that can be withdrawn on demand or paid to a third party by check.D
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pallet rack
A single- or multiple-level structure for storage used to support high stacking of palletized loads.P
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order-to-delivery cycle
The period of time that starts when the customer places an order and ends when the customer receives the order.O
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replacement cost
A method of setting the value of inventories based upon the cost of the next purchase.R
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duty
A tax levied by a government on the importation, exportation, or use and consumption of goods.D
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process focused
A type of manufacturing organization in which both plant and staff management responsibilities are delineated by production process. A highly centralized staff coordinates plant activities and intracompany material movements. This type of organization is best suited to companies whose dominant orientation is to a technology or a material and whose manufacturing processes tend to be complex and capital intensive. See: product focused, process-focused organization.P
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assemble-to-order
A production environment where a good or service can be assembled after receipt of a customer’s order. The key components (bulk, semi-finished, intermediate, subassembly, fabricated, purchased, packing, and so on) used in the assembly or finishing process are planned and usually stocked in anticipation of a customer order. Receipt of an order initiates assembly of the customized product. This strategy is useful where a large number of end products (based on the selection of options and accessories) can be assembled from common components. Syn: finish-to-order. See: make-to-order, make-to-stock.A
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marginal analysis
A decision rule that optimality occurs where incremental revenue equals incremental cost.M
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exempt positions
Positions that do not require the payment of overtime because they meet the tests of executive, supervisory, or administrative activity, as defined under the Fair Labor Standards Act.E
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total cost of ownership (TCO)
In supply chain management, the total cost of ownership of the supply delivery system is the sum of all the costs associated with every activity of the supply stream. The main insight that TCO offers to the supply chain manager is the understanding that the acquisition cost is often a very small portion of the total cost of ownership.T T
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base demand
The percentage of a company’s demand that derives from continuing contracts and/or existing customers. Because this demand is well known and recurring, it becomes the basis of management’s plans. Syn: baseload demand.B
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nonevident failure
Failure occurring in either a product or a production process that is not immediately evident. This may be indicative of a faulty design.N
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family contracts
A purchase order that groups families of similar parts together to obtain pricing advantages and a continuous supply of material.F
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Fair Labor Standards Act (FLSA)
Federal law that governs the definitions of management and labor and establishes wage payment and hours worked and other employment practices.F
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OTED
Abbreviation for one-touch exchange of die.O
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inventory returns
Items returned to the manufacturer as defective, obsolete, overages, and so forth. An inventory item record transaction records the return or receipt into physical stores of materials from which the item may be scrapped.I
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produce-to-order
Syn: make-to-order.P
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turnkey system
1) Computer packages that are already prepared by a hardware manufacturer or software house and are ready to run. 2) Any system of machines that is ready for immediate use.T
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manufacturing strategy
A collective pattern of decisions that acts upon the formulation and deployment of manufacturing resources. To be most effective, the manufacturing strategy should act in support of the overall strategic direction of the business and provide for competitive advantages (edges).M
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trend component
A component of demand, usually describing the impact of increasing or decreasing growth on demand. See: time series analysis.T
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master file
A main reference file of information, such as the item master file or work center file. See: detail file, item master file.M
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supply chain planning
The determination of a set of policies and procedures that govern the operation of a supply chain. Planning includes the determination of marketing channels, promotions, respective quantities and timing, inventory and replenishment policies, and production policies. Planning establishes the parameters within which the supply chain will operate.S
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drop-dead date
The last possible date to apply influence to a future activity.D
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phantom bill of material
A bill-of-material coding and structuring technique used primarily for transient (nonstocked) subassemblies. For the transient item, lead time is set to zero and the order quantity to lot-for-lot. A phantom bill of material represents an item that is physically built, but rarely stocked, before being used in the next step or level of manufacturing. This permits MRP logic to drive requirements straight through the phantom item to its components, but the MRP system usually retains its ability to net against any occasional inventories of the item. This technique also facilitates the use of common bills of material for engineering and manufacturing. Syn: blowthrough, transient bill of material. See: pseudo bill of material.P
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relevant costs
Those costs incurred because of a decision. The costs would not have resulted unless the decision was made and implemented. They are relevant to the decision.R
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hybrid purchasing organization
A mix of the centralized
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innovative products
Products that tend to have a high profit margin, be unique, have less competition, and have dynamic demand.I
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compensation laws
Laws designed to pay employees for injuries sustained on the job.C
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in-transit lead time
The time between the date of shipment (at the shipping point) and the date of receipt (at the receiver’s dock). Orders normally specify the date by which goods should be at the dock. Consequently, this date should be offset by in-transit lead time for establishing a ship date for the supplier.I
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wand
A device connected to a bar-code reader to identify a bar code.W
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arrival rate
In queuing theory, the value or distribution describing how often a person or thing arrives for service.A
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pegging
In MRP and MPS, the capability to identify for a given item the sources of its gross requirements and/or allocations. Pegging can be thought of as active where-used information. See: requirements traceability.P
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cycle
1) The interval of time during which a system or process, such as seasonal demand or a manufacturing operation, periodically returns to similar initial conditions. 2) The interval of time during which an event or set of events is completed.C
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process benchmarking
Benchmarking focused on the target firm’s business processes, including process flows, operating systems, and process technologies. See: benchmarking.P
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CRM
Abbreviation for customer relationship management and customer relations management.C
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demand uncertainty
The uncertainty or variability in demand as measured by the standard deviation, mean absolute deviation (MAD), or variance of forecast errors.D
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continuous flow (production)
Syn: continuous production.C
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vendor scheduling
Syn: supplier scheduling.V
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dispatch list
A listing of manufacturing orders in priority sequence. The dispatch list, which is usually communicated to the manufacturing floor via paper or electronic media, contains detailed information on priority, location, quantity, and the capacity requirements of the manufacturing order by operation. Dispatch lists are normally generated daily and oriented by work center. Syn: work center schedule, priority report.D
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dispersion
The scattering of the observations of a frequency distribution around its average.D
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operations
The group that produces the goods and/or services that a company sells.O
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gravity models
An approach used for locating facilities at the “center of gravity.” Gravity is determined by the product of the masses of two bodies divided by the square of the distance between them. In gravity models, the population of each neighborhood in the region is used as the mass, and driving time is used as the distance.G
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consideration
In contract law, an obligation that is to the detriment of one party (promisee) or to the benefit of the other party (promisor).C
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final assembly department
The name for the manufacturing department where the product is assembled. See: blending department, pack-out department.F F
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operation costing
A method of costing used in batch manufacturing environments when products produced have common, as well as distinguishing, characteristics; for example, suits. The products are identified and costed by batches or by production runs, based on the variations.O
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differentiate its product; (3) Differentiated oligopoly
A few companies produce partially differentiated products or services that are marketed within a given area. Differentiation may be based on quality, features, styling, or services offered along with the product; (4)
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electronic mail (email)
A technology for handling mail electronically.E
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process chart
A chart that represents the sequence of work or the nature of events in process. It serves as a basis for examining and possibly improving the way the work is carried out. Syn: operations process chart. See: flow process chart, process flow.P
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hybrid manufacturing process
Syn: hybrid production method.H
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flexibility
1) The ability of the manufacturing system to respond quickly, in terms of range and time, to external or internal changes. Six different categories of flexibility can be considered: mix flexibility, design changeover flexibility, modification flexibility, volume flexibility, rerouting flexibility, and material flexibility (see each term for a more detailed discussion). In addition, flexibility involves concerns of product flexibility. Flexibility can be useful in coping with various types of uncertainty (regarding mix, volume, and so on). 2) The ability of a supply chain to mitigate, or neutralize, the risks of demand forecast variability, supply continuity variability, cycle time plus lead-time uncertainty, and transit time plus customs-clearance time uncertainty during periods of increasing or diminishing volume.F
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product segments
The shared information between a plan-of-resources and a production rule for a specific product. It is a logical grouping of personnel resources, equipment resources, and material specifications required to carry out the production step.P
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hoshin kanri
See hoshin planning.H
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page
In information systems, an internet document containing both text and hypertext links to other pages that are stored on the server.P
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task interleaving
An attempt at reducing/eliminating “deadheading,” or driving an empty material handling vehicle. A warehouse management system directs a material carrying vehicle to put away materials as it goes to pick up other materials.T
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strategic performance measurements
Measurements that relate to the long-term goals of a business. Examples include profitability, market share, growth, and productivity. See: global performance measurements, operational performance measurements.S S
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balance
1) The act of evenly distributing the work elements between the two hands performing an operation. 2) The state of having approximately equal working times among the various operations in a process, or the stations on an assembly line. See: balance delay.B
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TMS
Abbreviation for transportation management system.T
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manufacturing release
The issuance of a manufacturing order into the factory.M
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mean absolute deviation (MAD)
The average of the absolute values of the deviations of observed values from some expected value. MAD can be calculated based on observations and the arithmetic mean of those observations. An alternative is to calculate absolute deviations of actual sales data minus forecast data. These data can be averaged in the usual arithmetic way or with exponential smoothing. See: forecast error, tracking signal.M
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format
The predetermined arrangement of the characters of data for computer input, storage, or output.F
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sequencing
Determining the order in which a manufacturing facility is to process a number of different jobs in order to achieve certain objectives.S
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audit
An objective comparison of actions to policies and plans.A
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market surveys
Questionnaires designed to get feedback from potential customers about demand for a product or service.M
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process costing
A cost accounting system in which the costs are collected by time period and averaged over all the units produced during the period. This system can be used with either actual or standard costs in the manufacture of a large number of identical units.P
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planning time fence
A point in time denoted in the planning horizon of the master scheduling process that marks a boundary inside of which changes to the schedule may adversely affect component schedules, capacity plans, customer deliveries, and cost. Outside the planning time fence, customer orders may be booked and changes to the master schedule can be made within the constraints of the production plan. Changes inside the planning time fence must be made manually by the master scheduler. Syn: planning fence. See: cumulative lead time, demand time fence, firm planned order, planned order, planning horizon, time fence.P
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incremental utilization heuristic
Using a worker’s full capacity by adding one task at a time (in priority order) up to the maximum capacity, or waiting for the utilization to fall and then adding more tasks.I
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intermittent production
A form of manufacturing in which the jobs pass through the functional departments in lots, and each lot may have a different routing. See: job shop.I I
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custom product
A product that is made to meet the requirements of specific customers.C
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fixed reorder cycle inventory model
A form of independent demand management model in which an order is placed every n time units. The order quantity is variable and essentially replaces the items consumed during the current time period. Let M be the maximum inventory desired at any time, and let x be the quantity on hand at the time the order is placed. Then, in the simplest model, the order quantity will be M – x. The quantity M must be large enough to cover the maximum expected demand during the lead time plus a review interval. The order quantity model becomes more complicated whenever the replenishment lead time exceeds the review interval, because outstanding orders then have to be factored into the equation. These reorder systems are sometimes called fixed-interval order systems, order level systems, or periodic review systems. Syn: fixedinterval order system, fixed order quantity system, order level system, periodic review system, time-based order system. See: fixed reorder quantity inventory model, hybrid inventory system, independent demand item management models, optional replenishment model.F
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to become virtual organizations
reducing costs, improving quality, reducing delivery lead time, and improving due-date performance.B
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standard output
An estimate of what should be produced, given a certain level of resources. Can be stated in units per hour or units per period (day, shift, etc.).S
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YMS
Abbreviation for yard management system.Y
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Southern Common Market (Mercosur)
A market/ customs alliance between Argentina, Brazil, Paraguay, and Uruguay created by the Treaty of Ascuncion (1991).S
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gain sharing plans
Syn: gain sharing.G
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master black belt
In six sigma, quality expert capable of implementing strategic quality efforts including teaching other facilitators (black belts) the quality applications within all levels of the organization.M
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count frequency
The number of times an item in inventory is counted during a period of time. Generally, highvalue inventories are counted more frequently than lowvalue items, although properties other than value can influence the frequency.C
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contract line items number (CLIN)
Specific items that are priced separately on a contract.C
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honeycombing
The practice of removing a pallet of merchandise where the space is not exhausted in an orderly fashion, resulting in a vacant space not usable for storage of other items. This is one of the hidden costs of warehousing.H
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variable
A quantity that can assume any of a given set of values. Ant: constant.V
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debt
An amount owed to creditors. It is generally equal to the total assets in a company less the equity. See: liabilities.D
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zone
1) A warehouse location methodology that includes some of the characteristics of fixed and random location methods. Zone locations hold certain kinds of items, depending on physical characteristics or frequency of use. 2) The specific warehouse location assigned to an order picker. In picking items for an order, the stock picker gets only the items for each order that are within his/her zone. The picker then fills the next order for items from his/her zone.Z
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unit of measure
The unit in which the quantity of an item is managed (e.g., pounds, each, box of 12, package of 20, case of 144).U
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project plan
In project management, a document that has been approved by upper management that is to be used in executing and controlling a project. It documents assumptions, facilitates communication, and documents the approved budget and schedule. It may exist at a summary or a detailed level.P
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multimedia
An interactive combination of two or more of the following: text, graphics, video, audio, and animation all controlled by a personal computer.M
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expeditor
A production control person whose primary duty is expediting.E
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where-used list
A listing of every parent item that calls for a given component, and the respective quantity required, from a bill-of-material file. See: implosion.W
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batch number
Syn: lot number.B
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rerouting flexibility
Accommodating unavailability of equipment by quickly and easily using alternate machines in the processing sequence.R R
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redundancy
1) A backup capability, coming either from extra machines or from extra components within a machine, to reduce the effects of breakdowns. 2) The use of one or more extra or duplicating components in a system or equipment (often to increase reliability).R
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P chart
A control chart for evaluating the stability of a process in terms of the percentage of the total number of units in a sample in which an event of a given classification occurs over time. P charts are used where it is difficult or costly to make numerical measurements or where it is desired to combine multiple types of defects into one measurement. Syn: percent chart.P
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time, all items in the order
in the correct quantity and
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performance variance
The difference between a performance standard and actual performance.P
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longest-task-time (LTT) heuristic
The method of attaching additional jobs to a workstation based on priority order, with the longest task scheduled first.L
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trend control chart
A control chart in which the deviation of the subgroup average, X-bar, from an expected trend in the process level is used to evaluate the stability of a process.T
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ubiquity
In inventory control, a raw material that is found at all locations.U
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Shewhart cycle
Syn: plan-do-check-action.S
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and decentralized purchasing format
usually decentralized at the corporate level and centralized at the business unit level.H
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sub-tier supplier
A supplier who delivers a product to a direct supplier to the customer.S
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optimization models
A class of mathematical models used when the modeler wishes to find the ideal (maximum or minimum) value of some objective function subject to a set of constraints.O
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analysis of variance (ANOVA)
A statistical analysis system that estimates what portion of variation in a dependent variable is caused by variation in one or more independent variables. It also produces a number used to infer whether any or all of the independentdependent variable relationships have statistical significance (i.e., have not been caused by randomness in the data).A
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product-market-focused organization
A firm in which individual plants are dedicated to manufacturing a specific product or product group.P
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human relations movement
A movement started in the early 1900s among managers who believed that employees are humans who should be treated with respect in the workplace.H
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remanufacturing
1) An industrial process in which worn-out products are restored to like-new condition. In contrast, a repaired product normally retains its identity, and only those parts that have failed or are badly worn are replaced or serviced. 2) The manufacturing environment where worn-out products are restored to likenew condition.R
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time and materials (T&M) contract
A type of contract that is a hybrid between cost-reimbursable and fixedtime contracts.T
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foreign trade zone (FTZ)
Areas supervised by U.S. Customs and Border Protection that are considered to be outside U.S. territory. Material in the zone is not subject to duty taxes, which are payable when the material is moved outside the zone for consumption. There is no limit on the time material may remain in the zone. Internationally, similar areas are called free trade zones.F F
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balancing the line
In repetitive manufacturing, regulating the assignments given to each workstation in order to ensure that all tasks at each workstation on the line are done in as close to the same time as possible.B
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possession utility
Product desirability created by marketing efforts.P
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WYSIWYG
Acronym for what you see is what you get.W X
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marginal revenue
The incremental sales dollars received when the level of output of some operation is increased by one unit.M
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loose standard
A standard time greater than that required by a qualified worker with normal skill and effort.L
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MRB
Abbreviation for material review board.M
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domestic corporation
A company incorporated in a particular state or country.D
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IIE
Abbreviation for Institute of Industrial Engineers.I
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recency, frequency, monetary (RFM)
Giving customers the highest rating who have bought recently, bought many times, and bought in large amounts.R
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receiving
The function encompassing the physical receipt of material, the inspection of the shipment for conformance with the purchase order (quantity and damage), the identification and delivery to destination, and the preparation of receiving reports.R
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service-oriented architecture (SOA)
A style of information technology (IT) design that guides all aspects of creating and using business services throughout their life cycles, as well as defining and provisioning the IT infrastructure that enables different computer applications to exchange data and participate in business processes, regardless of the operating systems or programming languages underlying those applications.S
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depreciation of a currency
A decrease in the buying power of a country’s currency in terms of other countries’ goods and services.D
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efficiency variance
In cost accounting, the difference between the actual volume of a resource used and the budgeted volume, multiplied by the budgeted or standard price.E
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scan-based trading (SBT)
As an item is sold, scanned information is sent to the manufacturer and creates a replacement order of that item. Used often in large retail store chains as well as large volume product producers.S
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master pack
A large, protective box used to contain smaller boxes. This reduces materials handling activities.M
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mix ticket
A listing of all the raw materials, ingredients, components, and such that are required to perform a mixing, blending, or similar operation. This listing is often printed on a paper ticket, which also may be used as a turnaround document to report component quantities actually used, final quantity actually produced, etc. This term is often used in batch process or chemical industries. See: assembly parts list, batch card, blend formula, manufacturing order.M
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automatic relief
A set of inventory bookkeeping methods that automatically adjusts computerized inventory records based on a production transaction. Examples of automatic relief methods are backflushing, directdeduct, and pre-deduct processing.A
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network analysis
In project management, the calculation of early and late start and finish times for those activities not yet completed. See: critical path method, graphical evaluation and review technique, and program evaluation and review technique (PERT).N
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quick asset ratio
A measure of a firm’s financial stability. It is defined as (current assets – inventory)/current liabilities. A value greater than one is desirable. Syn: quick ratio, acid test, acid test ratio.Q
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rework lead time
The time required to rework material in-house or at a supplier’s location.R
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lease
A rental agreement lasting an extended period.L
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reactor
A special vessel to contain a chemical reaction.R
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support functions
Activities such as accounting and information systems that do not directly participate in production but that are nevertheless essential.S
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lot tolerance percent defective (LTPD)
Expressed in percent defective, the poorest quality in an individual lot that should be accepted. Note: The LTPD is used as a basis for some inspection systems and is commonly associated with a value for a small consumer’s risk.L
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reorder quantity
1) In a fixed-reorder quantity system of inventory control, the fixed quantity that should be ordered each time the available stock (on-hand plus onorder) falls to or below the reorder point. 2) In a variable reorder quantity system, the amount ordered from time period to time period will vary. Syn: replenishment order quantity.R
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project production
Production in which each unit or small group of units is managed by a project team created especially for that purpose.P
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out-of-pocket costs
Costs that involve direct payments such as labor, freight, or insurance, as opposed to depreciation, which does not.O
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estimate at completion (EAC)
Estimated cost of an activity or project when the defined scope of work will be finished. It is the actual cost-to-date plus estimate-tocomplete for uncompleted activities.E
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c chart
A control chart for evaluating the stability of a process in terms of the count of events of a given classification occurring in a sample. Syn: count chart, number defective chart.C
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production planning
A process to develop tactical plans based on setting the overall level of manufacturing output (production plan) and other activities to best satisfy the current planned levels of sales (sales plan or forecasts), while meeting general business objectives of profitability, productivity, competitive customer lead times, and so on, as expressed in the overall business plan. The sales and production capabilities are compared, and a business strategy that includes a sales plan, a production plan, budgets, pro forma financial statements, and supporting plans for materials and workforce requirements, and so on, is developed. One of its primary purposes is to establish production rates that will achieve management’s objective of satisfying customer demand by maintaining, raising, or lowering inventories or backlogs, while usually attempting to keep the workforce relatively stable. Because this plan affects many company functions, it is normally prepared with information from marketing and coordinated with the functions of manufacturing, sales, engineering, finance, materials, and so on. See: aggregate planning, production plan, sales and operations planning, sales plan.P
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job shop
1) An organization in which similar equipment is organized by function. Each job follows a distinct routing through the shop. 2) A type of manufacturing process used to produce items to each customer’s specifications. Production operations are designed to handle a wide range of product designs and are performed at fixed plant locations using general-purpose equipment. Syn: jobbing. See: intermittent production, project manufacturing.J
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rate basis point
The center of shipping in a specific area; used to determine shipping rates.R
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clean technology
A technical measure taken to reduce or eliminate at the source the production of any nuiscleanup ● collaborative planning C ance, pollution, or waste and to help save raw materials, natural resources, and energy.C
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decoupling inventory
An amount of inventory kept between entities in a manufacturing or distribution network to create independence between processes or entities. The objective of decoupling inventory is to disconnect the rate of use from the rate of supply of the item. See: buffer.D
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single exponential smoothing
Syn: first-order smoothing.S
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sourcing decisions
High-level decisions regarding which products or services will be produced within a company and which will be purchased from external supply chain partners. These decisions normally are based on supplier cost and capability by comparison to producing the product in house.S
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FMS
Abbreviation for flexible manufacturing system.F
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perishability
The fact that an item has a limited shelf life and may be fragile and require special handling.P
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intangible
One distinguishing feature of pure services. Pure services cannot be inventoried or carried in stock for long periods of time.I
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first-piece inspection
Syn: first-article inspection.F
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standard hours
Syn: standard time.S
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workplace organization
The arrangement of tools, equipment, materials, and supplies according to their frequency of use. Those items that are never used are removed from the workplace, and those items that are used frequently are located for fast, easy access and Z replacement. This concept extends the idea of “a place for everything and everything in its place.”W
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option overplanning
Typically, scheduling extra quantities of a master schedule option greater than the expected sales for that option to protect against unanticipated demand. This schedule quantity may only be planned in the period where new customer orders are currently being accepted, typically just after the demand time fence. This technique is usually used on the second level of a two-level master scheduling approach to create a situation where more of the individual options are available than of the overall family. The historical average of demand for an item is quantified in a planning bill of material. Option overplanning is accomplished by increasing this percentage to allow for demands greater than forecast. See: demand time fence, hedge, planning bill of material.O
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private carrier
A group that provides transportation exclusively within an organization. Ant: common carrier.P
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tender offer
An offer by an organization to buy a block of shares directly from shareholders of another organization.T
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center
In statistics, values near the middle of results from a process.C
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IMC
Abbreviation for intermodal marketing company.I
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minimum weight
In transportation, the rate discount volume.M
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avoidable delay
The delay controlled by a worker and therefore not allowed in the job standard.A
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demand curve
A graphic description of the relationship between price and quantity demanded in a market, assuming that all other factors stay the same. Quantity demanded of a product is measured on the horizontal axis for an array of different prices measured on the vertical axis.D
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interleaving
Assigning multiple tasks to be performed concurrently, often the assignment of multiple picking orders to a single picker to pick concurrently.I
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co-product
A product that is usually manufactured together or sequentially because of product or process similarities. See: by-product.C
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life testing
The simulation of a product’s life under controlled real-world conditions to see if it holds up and performs as required.L
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dispatch(ing) board
Syn: control board.D
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setup
1) The work required to change a specific machine, resource, work center, or line from making the last good piece of item A to making the first good piece of item B. 2) The refitting of equipment to neutralize the effects of the last lot produced (e.g., teardown of the just-completed production, preparation of the equipment for production of the next scheduled item). Syn: changeover, turnaround, turnaround time.S
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future worth
1) The equivalent monetary value at a designated future date based on the time value of money. 2) The monetary sum, at a given future time, that is equivalent to one or more sums at given earlier times when interest is compounded at a given rate. See: time value of money.F
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production lead time
Syn: manufacturing lead time.P
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material usage variance
The difference between the planned or standard requirements for materials to produce a given item and the actual quantity used for a particular instance of manufacture.M
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summarized where-used
A form of an indented whereused bill of material that shows all parents in which a given component is used, the required quantities, and all the next-level parents until the end item is reached. Unlike the indented where-used, it does not list the levels of manufacture.S
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compound yield
The cumulative effect of yield loss at multiple operations within the manufacturing cycle.C
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vision statement
An organization’s statement of its vision. See: vision.V
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pattern recognition
Classifying raw data based on experience or statistical information.P
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cash flow statement
Syn: funds flow statement.C C
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process sheet
Detailed manufacturing instructions issued to the plant. The instructions may include specifications on speeds, feed, temperatures, tools, fixtures, and machines and sketches of setups and semifinished dimensions.P
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requisition
Syn: parts requisition.R
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market segment
A group of potential customers sharing some measurable characteristics based on demographics, psychographics, lifestyle, geography, benefits, and so forth.M
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certificate of analysis
A certification of conformance to quality standards or specifications for products or materials. It may include a list or reference of analysis results and process information. It is often required for transfer of the custody of materials.C
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procurement credit card
Credit cards with a predetermined credit limit issued to buyers. Syn: corporate purchasing cards.P
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optional replenishment model
A form of independent demand item management model in which a review of inventory on hand plus on order is made at fixed intervals. If the actual quantity is lower than some predetermined threshold, a reorder is placed for a quantity M – x, where M is the maximum allowable inventory and x is the current inventory quantity. The reorder point, R, may be deterministic or stochastic, and in either instance is large enough to cover the maximum expected demand during the review interval plus the replenishment lead time. The optional replenishment model is sometimes called a hybrid system because it combines certain aspects of the fixed reorder cycle inventory model and the fixed reorder quantity inventory model. See: fixed reorder cycle inventory model, fixed reorder quantity inventory model, hybrid inventory system, independent demand item management models.O
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warehouses (distribution centers)
Facilities used to store inventory. Decisions driving warehouse management include site selection, number of facilities in the system, layout, and methods of receiving, storing, and retrieving goods.W
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order interval
The time period between the placement of orders.O
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service factor
Syn: safety factor.S
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production leveling
Syn: level production method.P
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integrated enterprise
A business or organization made up of individuals who have acquired the knowledge and skills to work with others to make the organization a greater success than the sum of each individual’s output. Integration includes increased communication and coordination between individuals and within and across teams, functions, processes, and organizations over time. See: cross-functional integration.I
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staging
Pulling material for an order from inventory before the material is required. This action is often taken to identify shortages, but it can lead to increased problems in availability and inventory accuracy.S
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order qualifiers
Those competitive characteristics that a firm must exhibit to be a viable competitor in the marketplace. For example, a firm may seek to compete on characteristics other than price, but in order to “qualify” to compete, its costs and the related price must be within a certain range to be considered by its customers. Syn: qualifiers. See: order losers, order winners.O
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activity-based costing system
A set of activity-based cost accounting models that collectively define data on an organization’s resources, activities, drivers, objects, and measurements.A
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indirect retail locations
A retailer who sells products to the public but who buys products indirectly through a third-party distributor, rather than directly from the seller.I
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synthetic time standard
Syn: predetermined motion time.S
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business cycle
A period of time marked by long-term fluctuations in the total level of economic activity. Measures of business cycle activity include the rate of unemployment and the level of gross domestic product.B
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takt time
Sets the pace of production to match the rate of customer demand and becomes the heartbeat of any lean production system. It is computed as the available production time divided by the rate of customer demand. For example, assume demand is 10,000 units per month, or 500 units per day, and planned available capacity is 420 minutes per day. The takt time = 420 minutes per day/ 500 units per day = 0.84 minutes per unit. This takt time means that a unit should be planned to exit the production system on average every 0.84 minutes. Syn: tact time.T