MPR- Exam 2 Flashcards
Abnormal Demand
A large unexpected demand above the forecast, the result of a special deal with selected customers or unknown circumstances driving greater requirements. The possibility of abnormal demand must be considered in forecasting models.
Actual Demand
Sales orders, customer orders, or other forms of committed requirements that replace or net against the forecast demand inside the demand time fence. For example, in period 0 below, the forecast appears as follows
Period 1 2 3 4 5 6 7 8 9 10
Forecast 9 7 8 9 9 8 7 5 7 9
With actual demand of eight the following modifications would be made
Period 1 2 3 4 5 6 7 8 9 10
Orders 8
Forecast 7 8 9 9 8 7 5 7 9
Adaptive Smoothing
A type of exponential smoothing developed by Robert G Grown, in which the smoothing constant is adjusted as a trigonometric function of measuring the forecast error.
Aggregate Forecast
The Projected sales of product types, families, or some other product hierarchy that is usually time-phased and can be expressed as units to be manufactured or dollars (or both). The aggregate forecast is useful for planning capacity and resources (materials and employees) as well as for sales planning and analysis.
Aggregate Plan
A plan that supports the production strategy for product families, which includes all aspects. including, budgeted levels of finished goods, production backlog, and projected changes in the workforce.
Allocation
A process that reserves, for manufacturing orders, part that have not been released to the shop floor from the warehouse. An allocation creates a picking list that goes to the warehouse. The allocated part might not be sent from the warehouse until later, so an allocation ensures that the part will not be used to fill another order. It is an unprocessed stockroom requisition. Allocation is also a process that is used to distribute material where the quantities are not sufficient to cover all requirements.
Alpha Factor
Synonym: Smoothing constant
A weighting factor used in exponential smoothing. The value of the smoothing constant is between 0 and 1.00 and is determined by trial and error as a smoothing constant is applied to the most recent data. When there is no variability in sales from year to year, the smoothing constant is 0. When there is a wide variety in sales, the smoothing constant is 1.00
Assemble-to-Order
Subassemblies that are produced to a forecast but not completed until a customer order is received.
Description
* Fewer products than build-to-order
* Build to a forecasted option
*Assemble option to customer specification
* Use of planning bills
*Medium profit margin per item
Impact on Inventory
* Little, if any, finished goods
*inventory based on option forecast
* Raw material held, especially for long lead-time items.
Available to Promise
Beginning on-hand inventory minus customer orders that are due or past due. It is synonymous with uncommitted inventory
Backlog
Unshipped 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, freight charges, overtime premium, and so on. Or soft (loss of customers or sales loss of goodwill and so on
Base Series
A method of determining the impact of seasonal demand, which uses a standard succession of values of demand data over a period of time. It is based on the relative level of demand, compared to past periods. The average for the base series is 1.0 so any value larger than one indicates that the demand was greater than the average, conversely, any value less than 1.0 indicates that the demand was less than the average.
Bias
A regular and consistent variation from the average always in one direction (consistently high or low ) Since a bias is a pattern of forecast error, a forecasting model should have very little bias
Bottom-Up-Replanning
Allows the user to understand and address MRP related problems such as shortages, expedites, and so on. The where-used logic and the pegging capabilities allow this bottom-up (implosion) process to take place.
Bill of Resources
A Bill of Resources states how much labor and machine time is required to produce the typical unit of a product. When the capacity required to produce the typical unit is multiplied by the units required by the MPS, the total capacity for the period results
Bucket vs. Bucketless
Bucket System- A time period usually a week.
Bucketless system An MRP DRP or other time phased system in which all time phased data are processed, stored, and usually displayed using dated records rather than defined time periods (buckets)
Business Plan
A statement of long-range strategy supported by a projection of resources, a business plan describes what the business looks like today and predicts what it will look like in the future. It sets the direction for the company, and creates a framework in which the organization can respond to changes required in order to stay competitive.
Capacity Management
There are two parts to capacity management:
1) The planning of the capacity required to meet projected demands.
2) The controlling of the capacity to monitor, adjust to, and achieve the plan.
Capacity management includes long-term, medium term and short term capacity. The figure below illustrates how these periods are related in resource planning, rough-cut capacity planning, capacity requirements planning and input/output control.
What is capacity management (part 2)
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Chase Method
The Objective of this planning method is to maintain a level inventory while varying manufacturing rates to meet demand. Companies might combine chase and level production schedule methods over their planning horizon
Closed-Loop Material Requirements Planning (MRP)
An MRP system that contains feedback loops from all functions within the business such as sales and operations planning master production scheduling and capacity requirement planning. The feedback ensures that the system is always current and data used for making important decisions is available.
Common Parts Bill
Synonym: Common Parts Bill of Material
A Bill of Material created for planning purposes that gathers common parts under one pseudo parent part number to simplify MRP and (BOM) maintenance. In a factory that produces mountain bikes for example, a common parts (BOM) might contain the handle bar assembly seat and foot-peddles under a part number MTNBIKE-KIT
Contraint
A limitation (Physical, policy, or procedure ) that inhibits a process or somehow restricts it so that goals are never reached. An example of a physical constraint would be a CNC machine that runs one part every fifteen minutes when ten parts an hour are required. A procedural constraint would be that the routing for that same part directs the operations to the CNC rather than another faster work center. An example of a policy constraint might be a safety policy limiting an operator to one machine rather than being able to run enough machines at the work center to achieve the required rate
Consuming the forecast
Synonym: Forecast Consumption
Reducing or netting the forecast by actual demands as they are processed
Correlation
Correlation relates to the fact that when one set of data changes it is likely to impact another set of data. If changes are in the opposite direction, there is a negative correlation.
Continuous Flow
Synonym: Continuous Production
A manufacturing process that is batch less, where the product flows successively without breaks. This type of manufacturing is only possible in a high volume environment with very low product variety
Cumulative Lead-Time
The longest path through the Bill of Material product structure. Cumulative lead-time includes not only the manufacturing lead time but the purchasing, as well as design lead-time The planning horizon for the master schedule should be at least as long as the cumulative lead-time.
Curve Fitting
Using a straight line, polynomial, or other curve of historical demand to forecast future demand
Customer Partnership
Synonym: Customer supplier partnership
A relationship or alliance between a supplier and customer that drives decisions that are win-win. Successful businesses identify companies where long term relationships should be forged, with open two-way communication, mutual respect for a reasonable profit and a continued drive for better quality and lower prices
Customer Service
Meeting or exceeding the customers expectations. Customer service goes beyond meeting specifications and engineering requirements. It includes delivery performance pricing flexibility quality and warranty.
Delivery Cycle
Synonym: Delivery Lead-Time
The total duration from the receipt of the customer order until the order is completed, by delivering the product to the customer.
Decomposition
A forecasting technique that divides time series data into three segments.
1) Trend: A general increase or decrease over time.
2) Seasonal: A repeated demand pattern that is weekly, monthly, or quarterly. a recurring demand pattern.
3) Cyclical: Any repeated pattern that is not seasonal the forecast is made by projecting the individual patterns into the future and then combining them. If the time series data has no pattern, it is said to be random.
Delivery Policy
The standard length of time or goal from the point that a customer order is received until the item is actually shipped
Delphi Method
A qualitative forecasting method where experts are identified in various areas and asked to produce a forecast. The results of each person’s forecast is shared with the entire panel, then the individual experts are asked to reformulate their forecast. This might continue through several iterations.
Demand
The requirements 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 it explodes through the Bill of Material
Demand Filter
A set of rules or a standard that is established to routinely monitor sales and to compare them to the forecast, in order to identify variances beyond the defined limit.
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 manually 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 Time Fence (DTF)
This covers a period of time in which even desired changes would be very costly in terms of time and money. This period is based on estimates of how long it takes to make changes in customer orders, the forecast, and manufacturing and supplier lead-times. If allowed, changes within the time fence are usually authorized by higher management , including accounting, so that the cost of the change can be properly accounted for. Changes are typically allowed if there is available inventory and or capacity or a major competitive advantage can be achieved.
Demonstrated 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 contract independent demand is forecasted and any given item might have both dependent and independent demand. For example a part might be the component of an assembly and also be sold as a service part. THe MRP represents dependent demand.
Design to Order
Synonym: Engineer To Order
A manufacturing strategy that is required when products are so unique or one of a kind that a completed customer specification is needed before work can start. This strategy results in no finished goods and very little raw materials. However, the lead time is normally very long
Deviation
The variance between the acutal outcome and the forecast or between a number and the mean set of numbers. The deviation is usually measured as an absolute value (the numeric value without regard to the sign). It is also a document from the manufacturer to the customer acknowledging that certain specifications for the product have not been met.
Distribution
The activities and functions involved with processing finished goods or spares into a warehouse and shipping them to customer upon the receipt of a customer order. Distribution also includes the responsibilities for controlling the finished goods inventory, such as material handling, packaging, cycle counting order processing and customer service.
Distribution Center
A storage facility that is geographically located to service customers through quicker access and product delivery capabilities. Distribution centers include those run by suppliers, wholesalers and retailers, and those classified as public warehouses.
Distribution of Forecast Errors
A dispersal of forecast variances, often displayed in the form of a histogram for analysis or identification of a pattern for the errors.
Distribution Resource Planning (DRPII)
An expanded use of Distrubution requirements planning, that determines the overall resources needed to meet the plan this might include storage space (square feet, cubit feet, containers and so on) materials handling equipment and dollars.
Distribution Requirements Planning (DRP)
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. To determine what is needed a a branch warehouse, DRP uses a time-phased order point approach. In DRP the planned orders at the branch warehouse are exploded via MRP logic to become gross requirements for the various levels of regional warehouses, factory warehouses, and so on, and then becomes input to the Master Production Schedule.
Distribution Planning
The planning activities associated with transportation, warehousing inventory levels materials handling or administration site and location planning, industrial packaging data processing and communications networks to support distribution
Distribution Network Structure
The planned channels of inventory disbursement from one or more sources to field warehouses and ultimately to the customer. There may be one or more levels in the disbursement system.
Double Order Point
Synonym: Double Order Point System
A reorder point method, primarily for distribution systems, where two order points are used. The first order pint reached provides a warning to the supplying source of a future requirement. It is determined by adding the usage during the manufacturing lead-time to the actual order point. THe second order point is when the replenishment order is actually launched for a quantity that covers usage during the replenishment lead-time
Econometric Model
A set of formulas that are used together in order to determine the interrelationship of dependent and independent variables.
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 efficency dpends on how work is measured for the project being analyzed- units produced, hours worked or dollars produced. Examples:
1) Measured in units produced: for example: the standard for a mill is 48 parts per shift, the machinist produced 42
(42/48) x 100%==87.5% efficiency
2) Measured in standard house produced: for example: the standard fora job is 4 hours a new trainee worked 5.2 hours
(4/5.2) x 100% 76.9% efficiency
3) Measured in dollars produced: for example, work center 001 produced $670 against a standard of $700
($670/$700) x 100%= 95.7 % efficiency
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 inimal raw materials. However the lead time is normally very long
Exponential Smoothing
A forecasting tool that uses a weighted moving average, which applies more credence to recent events and data and gradually decreases as the occurrence ages. The benefit of this method is that it can be applied whether or not a trend exists or is evident.
Extrapolation
Using historical data to estimate the value of a data series into the future
Extrinsic Forecast
Extrinsic indicators are supplied by such bodies as government agencies and trade associations. 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, industry sales , inventories, housing starts, retail sales, price indexes and unemployment rates
Final Assembly Schedule (FAS)
The final assembly schedule is used primarily in a build-to-stock, assemble-to-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. Temporary Bills of Material, called planning bills, are used to schedule the options in to deliverable products
Finishing Lead-Time
Usually in an assemble-to-order environment, this is the time it takes to complete manufacturing the product after the customer order is received. Alternatively, it can refer to the normal lead-time in a final assembly schedule for completing the product.
Finish-to-Order
Synonym: Assemble-To-Order
Subassemblies 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
* Raw material held, especially for long lead time items
Finite Loading/Scheduling
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 firmed planned orders.
Focused Forecasting?
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Forecast consumption
Reducing or netting the forecast by actual demands as they are processed.
Forecast Error
The inaccuracy measured as an absolute value or a percentage of the sales forecast. It can be calculated by the following formula:
Forecast Error= Actual Demand - Forecast Demand
The larger the forecast error, the more inventory that must be carried.
Forecast Horizon
The time period covered by a forecast. A forecast horizon of one year would require a rolling twelve-month forecast.
Forecast Interval
The amount of time between the creation of forecasts. For example, if a company publishes a forecast on the first working day of every month, the forecast interval is monthly.
Frequency Distribution
Where the probability distribution is a table o statistical probabilities of all possible outcomes, the frequency distribution displays the actual outcome of each event. The data is classified into subdivisions called classes and can be presented in a table format (see below) or graphically as a histogram.
Class Frequency Yellow 6 Red 4 Green 5 Orange 3 Blue 1
Hedge
Any action taken to offset a perceived risk for a company. Common situations are potential labor strikes, price volatility of certain commodities and currency fluctuations.
Independent Demand
Demand that comes from sources such as the forecast, customer orders for end items and repair parts, and orders from other divisions of a company. Independent demand is demand for an end item or service part that is unrelated to the demand for other items. The MPS contains only independent demand
