BSCM- Exam 1 Flashcards
Concepts and definitions for planning and controlling the flow of products or services into, through and out of an organization. Topics: Manufacturing and service systems, forecasting, master planning, material requirements planning, capacity management, production activity control, purchasing, inventory management, and distribution. Four phiilosophies are covered: Enterprice resource planning, lean, quality management and theory of contstraints
ABC Classification
Classification of a Group of items in descreasing order of annual dollar volume. Split into three classes A, B, C. A group usually repsresents 10 percent to 20 percent by number of items and 50 -70 percent by projected dollar volume. B usually represents about 20 percent of the items and about 20 percent of the dollar volume. C contains 60-70 percent of the items and respresents about 10 -30 percent of the dollar volume. Ddggfffffcfg
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In Transportation the facility with which a carrier provides services from one point to another. In warehouseing, the ability to get to and within the point of storage easily.
Actual Cost
All costs(labor, materials and overhead) that are associated with a job or order as it is processed through the company. Alternatively, costs could be accumulated using standard/estimated hours.
Advance ship notice
An electronic data interchange (EDI) notification of shipment of product.
Aesthetics
A dimention of product quality that intends to appeal to the senses
Aggregate forecast
An Estimate of sales, often time phased, for a grouping of products or product families produced by a facility or firm. stated in terms of units , dollars, or both. used for sales and production planning
Andon
An electronic board that provides visibility of floor status and supplies information to help coordinate the efforts to linked work centers. Signal lights are green (running) red (stop) and yellow (needs attention)
Anticipated Inventories
Inventory build up for a seasonal demand or a planned shutdown of a manufacturing plant, it can include finished goods, work-in-process, and raw materials.
Assemble-to-Order(ATO)
Subassemblies that are produced to a forecast but not completed until a customer order is received.
Description
- Fewer products than build-to-order, but volumes are higher
- Build to forecasted options
- Assemble option to customer specification.
- Use of planning bills
- Medium profit margin per item
Impact on Inventory
- Little, if any, finsished goods.
- Inventory based on option forecast.
- Raw material held, especially for long lead-time items
Assembly Line
An Assembly process in which equipment and work centers are laid out to follow the sequence in which raw materials and parts are assembled.
Asset
Assets are items that the company owns. Assets are divided into short-term(consumed in less than a year) ie. Cash, A/R & inventory.
Longterm assets ie. machines & Equipment
Assignable cause
A source of variation in a process that can be isolated, especially when its significantly larger magniture or different origin readily distinguishes it from random causes of variation Syn: special cause.
Automated storage/retrieval system(AS/RS)
High density, rack inventory storage system with vehicles automatically loading and unloading the racks.
Available Inventory
Is trhe remaining inventory quanity when allocations, reservations, back orders and rejected quantities are subtracted from the current on-hand balance.
Available-to-Promise (ATP)
Begining on-hand inventory minus customer orders that are due or past due. It is synonymous with uncommitted inventory.
Average Cost Per Unit
Method of determininga unit cost by using the actual formula below:
(Estimated Direct Cost + Estimated Indirect Cost)/ Total Units Made
Average Inventory
One half the average lot size plus the safety stock, when demand and lot sizes are expected to be relatively uniform over time. The average can be calculated as an average of several inventory observations taken over several historical time periods.
Backflush
Technique that explodes back through the Bill of material to account for the material, labor and overhead for an end item. Adjustments for actions such as scrap, rework, and extra usage must be entered into the system to reconcile the book records and the accounting records.
Backhauling
The process of a transportation vehicle returning from the original destination point to the point of orgin.
Backlog
Unshiped sales orders, customer orders, or other committed demand which may or may not be past due. Backlog can be expressed in dollars, orders, or units.
Backorder
Unshipped sales orders, customer orders, or other committed demand which is either an immediate demand or past due, because there is not enough inventory to fill the orders. Costs of backorders can be hard(expedite fees, express freight charges, overtime premium and so on) or soft (loss of customers or sales, loss of goodwill, and so on)
Backward Scheduling
This method is used to determine start dates and due dates of orders by begining with the required completion date of the order, then subracting lead-times for each operation. The start date of one operation becomes the due date of the previous, with the process continuing until all operations are scheduled.
Balance Sheet
A Financial Report for a company that indicates the net worth as of a specific date by identifying all assets and subtracting all liabilities.
- Note that two sides of the balance sheet are equal
Batch
A Predetermined number of units to be made or produced. each batch is assigned a unique identification number for traceability.
Batch Processing
An environment in which manufacturing waits for a specified quantity of parts before begining an operation in order to justify set-up and run times. The same technique can apply to computer transactions, where they are performed only at specified times each day rather than in real time.
Bias
A regular and consisten variation from the average or mean, always in one direction(consistently high or consistenly low). Since a bias is a pattern of forecast error, a forecasting model should have very little bias.
Bill of material (BOM)
A BOM contains a list of parts and quantiies required to build an end item. The establishment of the relationship between the end item and its parts, called “structuring the BOM”, is done systematically through a process of establishing the parent-component relationship.
- A manufacturing order(work order)would be required to build part B
- A purchase order would be needed to acquire parts 3 and 4, whenever there are components to the part, a purchase order is required.
Blanket Order
Synonym: Blanket PO
A Purchase Order(PO) for a long-term commitment, usually one year, for a small number of parts. Price is set, most likely pre determined scheduled deliveries. Blanket PO’s allow for a supplier to have greater visibility to the long-term requriements and the customer is able to lock in a price and reduce the administration costs with fewer PO’s.
Bottleneck
When demand is greater than the capacity of machines and/or a person to produce requried output, a bottleneck is said to exist. A bottleneck could exist in any process that is not capable of meeting the output/demand. indication of an area rquiring corrective action such as an increase in capacity if the demand is going to be satisfied ona timely basis.
Buffer
A quantity of incomplete parts that is held behind an operation or work center as a cushion, in order to reduce the possibility of any downtime due to lack of parts.
Business Plan
statement of long-range strategy, supported by projection of resources. Describes what the business looks like today and predicts what it will look like in the future, creates a framework for the company.
Capacity
Picture a manufacturing facility as a funnel
Capacity is the rate at which the work is withdrawn from the bottom of the funnel The width of the bottom opening is the rated capacity. The work in the funnel is the load. Capacity equals output and capacity controls allow for the monitoring of the actual output to the planned output of a machine and/or person.
Capacity Available
This is capacity that has not been consumed by customer orders. It is the capacity available to promise to customers in the form of products.
Capacity Management
There are two parts to capacity management
- The planning of the capacity required to meet projected demands
- The controlling of the capacity to monitor, adjust to and achieve the plan
Capacity management includes long-term, medium-term, and short-term capacity.
Capacity Management Framework
Long-Term Capacity Management
Production Plan –> Resource plan
Medium-Term Capacity Management
Master Schedule–> Rough cut capacity
Short to Medium Capacity Management
MRP –> CRP
Capacity Requried
The amount of output requried to meet the demand for specific perods of time, days, weeks, quarters, or years.
Capacity Requirements Planning(CRP)
The Process of reviewing, calculating, and making adjustments to the capacity limits in a much greater level of detail than rough-cut capacity. CRP uses the open and planned manufacturing orders and calculates the rquired time for each work center by time period through the parts routings and the applicable standar hours.
Carring Cost
All costs involved with holding inventory prior to use. The cost is usually defined as a percentage of the dollar value of inventory per unit of time (generally one year) Carrying costs includes: obsolescence, deterioration, taxes, insurance, storage and capital.
cash flow
A financial term that refers to the net flow of money in and out of a project or firm: cash receipts, cash expenses, adn investments.
Cellular Manufacturing
A production process performed by a dedicated team of people and equipment responsible for a specific high-value assembly or part. The equipment is organized in a cellular layout allowing the team to operate almost independently of other areas of the factory. All equipment and human resources required for teh assembly is located in the cell
Changeover
Synonum: Setup Time
The time required to prepare machine to produce parts, subassemblies and so on. This includes the total time between the last good unit of the previous part number is produced, until the completion of the first good part of the new part number. Setup time is included in the overall manufacturing lead-time and might include run and inspection time for the new part
Chase Method
The objective of this planning method is to maintain a level inventory while varying manufacturing rates to meed demand. Companies might combine chase and level production schedule methods over their planning horizon.
Closed-Loop (MRP)
A material requirements planning(MRP) system that contains feedback loops from all functions within the business, such as sales and operations planning, master production scheduling, and capacity requirements planning. the feedback ensures that the system is always current, anddata used for making important decisions is available.
Competitive Analysis
An analysis performed on a competitor’s strategies, capabilities prices, and costs in order to determine the company’s best approach to compete. required in order to complete a (SWOT) analysis
Component
The “Child” in the parent/child relationship as defined by the Bill of Material, an ingredient to the next higher assembly. A component might be a raw material, a sub assembly or even an assembly.
Consighnment
To reduce this risk to a customer, a supplier will often deliver their goods to a customer, with the agreement that payment is not required until after the items are sold. Consignment increases the likelihood of a customer taking a chance with new products or a new supplier. The term also applies to a shipment or delivery that is processed by a common carrier.
Contraint
A limitation (physical, policy, or procedure) that inhibits a process or somehow restricts it.
Continuous Production
A manufacturing process that is batchless, where the product flows successively without breaks. This type of manufacturing is possible only in a high-volume environment with very low product variety.
Control Chart
Synonym: Process Control Chart A SPC (statistical process control) tool that is sued to measure the variability of a process and to determine how much of the variability is random vs variance by distinct, single events or actions. Similar to a run chart, but also includes the average the upper control limit (UCL) and sometimes a lower control limit (LCL)
Cost of Goods Sold (COGS)
Costs that include direct materials, direct labor and factory overhead. These cost associatedwith the cost of producing the product are reflected in the company’s income statement Formula:
Begining Inventory + Inventory purchases - End inventory=COGS
Cost of Quality
All costs involved with monitoring the quality of the entire system. recognition and incorporation of preventative activities and the implementation of corrective actions when quality checks identify problems. Quality Cost are grouped in 4 categories:
- Internal failures(product has not reached the customer)
- External failures(product has reached the customer) includes warranty andreturn costs
- Appraisal costs, include all costs involved with monitoring the quality of the system in house ie. supplier audits, test equipment
- Prevention costs, costs of improvement activities, ie. ISO training and supplier certification programs
Cumulative Lead-Time
The longest past through the Bill of material product structure. Cumulative lead-time includes not only manufacturing lead-time but the purchasing as well as design lead-time. The planning hrizon for the master schedule should be at least as long as the comullative lead-time.
Customer Service
Meeting or exceeding customer’s expectations. includes delivery performance, pricing, flexibility, quality and warranty.
customer service ratio
A performance measure that is shown as a percentage of on-time vs promised deliver dates. stated both in dollars and units.
cycle
the time that it takes for a process to return to its original state or conditions, for example: seasonal demand. cycle also refersto the amount of time to complete a process or event.
Cycle Counting
A method of verifying the inventory record accuracy by randomly counting a portion of the stockroom each day, based on the ABC classifications. Higher dollar items (A’s) are counted more often than B-items which are counted more frequently than the lowest dollar items (C-parts) value in cycle counting is the ability to identify the root cause of record error and immediately implement corrective actions.
Cycle Stock
Inventory can be considered to have two components:
- Safety stock, which remains as a cushion, relatively unchanged
- Cycle stock, which gets consumed routinely and replenished for future demand.
Cycle Time
two types of cycle time
- Engineering cycle time- the amount of time between the completion of two parts or between sets of parts
- Material cycle time- the time measured from when the material first arrives at a facility until it is shipped out as a finished good for that facility.
Decoupling
Making teh supply or pervious operation independent from its consumption or the subsequent operaton, usually accomplished with an inventory buffer.
Demand
the requirement for a specific item, expressed as an independent or dependent source. Independent demand is the result of customer orders sales orders, or forecast. Dependent demand is calculated through MRP as its explodes through the Bill of materials.
Demand Management
the administration and entry of customer orders into the Master Schedule. This also includes working with the customers and or sales in a feedback loop to mutually agree on new dates when problems arise such as shortages, resource limitations, engineering changes and so on. The feedback loop is what makes demand management different from order entry.
Demand Pull
The JIT production environment is often described as a demand pull vs the demand push system as is used in the more traditional production environment. The demand push system puts more inventory on the shop floor than can be used in the manufacturing process in twenty four hours. A demand pull system is essentially a visual feedback control system, both within and between work centers ending with final assembly of the end item to satisy the customer’s demands.
Demontrated Capacity
Based on historical results, it shows how much capacity was actually used in production. It shows over or under utilization of capacity as compared to rated capacity.
Dependent Demand
Dependent demand is the demand for all the components required to satisfy the dependent or independent demand from a higher level and is determined using the BOM structure for the parent or next higher assembly. These demands are calculated, not forecasted. In contrast, independent demand is forecasted
Direct Labor
Labor cost and time involved in actually building or putting all the parts together to create the saleable product.
Direct Material
The material associated with the actual product vs indirect material, which might include gases, and so on. Usually, direct material is on the Bill of Material for the product.
Discrete Manufacturing
Thie production of specific items or units. Some examples of discrete manufacturing are computers, tires and medical devices. Process manufacturing, like gasoline and motor oil is not discrete manufacturing.
Dispatching
A prioritization method of listening which manufactruing orders on the shop floor are to be worked on and in what order.
Distribution Inventory
One of five basic categories of inventory, inventory is held a points (branch warehouses, distribution centers, or field warehouses) as close to the customer as possible.
Distribution Requirement Planning (DRP)
Distribution Requirement Planning (DRP) involves meeting customer requirements and receiving and storing goods at the lowest cost possible. In most cases, distribution encompasses the process of customer order entry through delivery of the product to the customer.
Distributor
A business that purchases and resells manufactured goods
Due Dates
The targed or required receipt date to either a purchased or work order make item
Economic Order Quantity(EOQ)
The Economic Order Quantity(EOQ) is a demand-based or static formula. This calculation establishes the amount to be purchased or manufactured by determining the minimal cost of purchasing or building with the cost to carry the inventory.
The formula might be used to determine the minimum units to be purchased or built or the minimum cost in dollars
Economic Order Quantity (EOQ) Formula
Units: EOQ U= Anual Usage in Units S= Setup or qordering Costs I= Inventory Carrying Cost C= Unit Cost Dollars: EOQ A= Annual Usage in Dollars S=Setup or Ordering Cost I= Inventory Carrying Cost
Efficiency
A measurement of the performance of a machine work center, operation or department which is the ratio of the actual output to the expected (or standard) output. The Formula for calculating efficiency depends on how work is measured for the project beign analyzed- units produced hours worked or dollars produced
Efficiency Formula
- Measured in units produced: For example: the standard for a mill is 48 parts per shift, the machinist produced 42
(42/48) x100% =87.5% efficency
Electronic Data Interchange (EDI)
EDI eliminates paperwork by sending and receiving data and documents electronically, either through a direct connection between the two departments or companies or by updating a database on the internet. The electronic exchange can be used for all types of documents although typically it is used for purchase order information current supply/demand data receipts and invoices.
Employee Empowerment?
Employee empowerment is more than involving employees in decision making activities pertaining to their job or increased access to company financials. . Managers empower teams by providing them with the desired outcome and the data needed for them to make the best choice of action.
Employee Involvement (EI)
All activities that improve an employee’s ability to make better decisions pertaining to their job. Training and education are both examples
Engineer-to order?
A manufacturing strategy that is required when products are unique or one of a kind and a completed customer specification is needed before work can start. This strategy results in no finished goods and minimal raw materials. However the lead time is normally very long.
Expedite
All actions taken to get an item produced in less than the normal lead time. SOme typical examples are overtime, additional shifts additional manning weekend work air freight and partial shipments. All of these expedite choices add to overall costs.
Explode
Based on the establishment of parent-component relationship it allows for the creationof a gross requirement from the generations of a planned orders releasing at the parent level
Extrinsic Forecast
Extrinsic indicators are supplied by such bodies as government agencies and trade assocations. The data must be assigned a period number in order to associate it with group demand data for the same period. Some examples of indicators are GDP, indistry sales, inventories housing starts, retail sales price indexes and unemployment rate.
This type of forecasting is for larger groups(product lines)
Feedback
The information flow (up and down) through an entire system which allows for appropriate decisions and changes. Feedback is a requirement of a closed-loop MRPII system.
Fill Rate
Synonym: Customer Service Ratio
A performance measure that is shown as a percentage of on-time vs promised delivery dates. It is stated both in dollars and units
Final Assembly Schedule (FAS)
The Final assembly schedule is used primarily in a build-to -stock, assemble to customer order environment. Ordering these are numerous options from which the customer can choose. The FAS is developed once the customer order is in the order entry and the delivery date has been agreed upon.
Finished Goods
Synonym: End Item/End Product
The final product that is to be sold to customers or used for warranty, service or repair of other products. These might be manufactured by the company or purchased as an original equipment manufacturer (OEM) item for resale.
Finish-to-Order
Synonym: Assemble-To-Order
Subassemblies that are produced to a forecast but not completed until a customer order is received.
Discription:
* Fewer products than build-to order, but volumes are higher
*Build to forecasted options
*Assemble option to customer specification.
*Medium profit margin per item
Finish-To-Order: Impact on Inventory
- Little if any finished goods.
- Inventory based on option forecast
- Raw material held, especially for long lead-time items.
Finite Forward scheduling
A scheduling technique that builds a schedule by starting with the earliest due date and proceeding forward through the routing, adding the standard lead-time for each step(work station) A Gantt chart might be used with this technique until the earliest ship date takes place in the MPS
Finite Loading
A capacity-planning term for the technique of recognizing the capacity limits of a work center and then assigning no more work than can be completed for that time period.
Firm Planned Order (FPO)
An order that has had the quantity and due date locked in. These orders are under the control of a person and not the MRP system. Changes might be suggested by the system but must be made manually. The Master Production schedule (MPS) has only firm planned orders.
Fixed-Order Quantity
A lot-sizing technique where a consisten lot quantity is predetermined. Demand that exceeds the predetermined quantity is satisfied by increasing the lot quantity in multiples of the fixed quantity. For example if the fixed-order quantity is 25, the table below indicates the resulting lot quantities baased on the varying demand:
Net requirement Number of Lots
1 to 25 1 to 25
26 to 50 2 to 25
51 to 75 3 to 25
Note: more units are produced than actually required. FOQ technique increaseed inventory levels
Flexible Manufacturing System (FMS)
An expansion or extension of the flexible machining center, where an entire group of Numerical Control(NC) machines are networked to a central control system. The parts are moved via an automated transport system.
Flow Manufacturing
Synonym: Flow Shop
A manufacturing environment where the machines, equipment and personnel are arranged for the most efficient material flow. Units produced are identical or very similar, so steps are repetitious and production is set at a given rate. There is very little time between batches.
Fluctuation Inventory
Inventory that is carried above the net requirements in order to offset forecast error. The greater the error the larger the investment in inventory
Forecast Error
The inaccuracy measured as an absolute value or a percentage of the sales forecast.
Forecast error= actual demand-forecast demand
The larger the forecast erro, the more inventory that must be carried.
Forecasting
Determining orders and subsequent sales of the finished goods over a period of time. Forecasting can be improved through the use of forecasting models. Improvements in forecasting leads to less on hand inventory and mroe efficient operations.
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 a close to the same time as possible.
Bar code
A series of alternating bars and spaces printed or stamped on parts, containers lables or other media representing encoded information that can be read by electronic readers. Used for timely and accurate input to data to a computer system
Batch Picking
A method of picking orders in which order requirements are aggregated by product across orders to reduce movement to and from product locations. The aggregated quantities of each product are then transported to a common area where the individual orders are constructed.
Billing and collection costs
In transportation, the cost related to issuing invoices or bills. These amounts can be reduced by combining shipments in an order to limit transportation frequency.
Bill of Lading
A carriers contract and receipt for goods the carrier agrees to transport from one place to another and to deliver to a designated person. In case of loss, damage ord delay the bill of lading is the basis for filling freight claims.
Bonded Warehouse
Buildings or parts of buildings designated by the U.S Secretary of the Treasury for storing imported merchandise, operated under U.S Customers Supervision
Break-Bulk
Dividing truckloads of homogeneous items into smaller, more approprate quantities for use.
Buffer Management
In the theory of contraints a process in which all expediting in a shop is driven by what is scheudled to be in the buffers(contraints, shipping and assembly buffers) By expediting this material into the buffers, the system helps avoid idleness at the contraints and missed customer due dates.
