Vocabulary

Question 1

ABC classification

Answer 1

classify into list of decreasing order by annual dollar volume. Then split into 3 classes

A is 10-20% of # of items. 50-70% projected dollar volume

B is 20% of # of items. 20% of projected dollar volume

C is 60-70% of items. 10-30% projected dollar volume

Question 2

advanced planning and scheduling (APS)

Answer 2

Computer program that uses mathematical algorithms to simulate and optimize the production plan for the short, intermediate, and long-term time periods.

Assesses multiple scenarios

Question 3

andon

Answer 3

system of lights at each work station used to make workers & management aware of a quality, quantity, or process problem

Question 4

assignable cause

Answer 4

source of variation in a process that can be isolated.

Especially when of large magnitude or different origin from random variation causes

Question 5

average outgoing quality limit (AOQL)

Answer 5

maximum average outgoing quality over all possible levels of incoming quality for a given acceptance sampling plan and disposal specification

Regardless of incoming quality the average outgoing defect rate should never be above the AOQL. An individual lot might be but the average over time shouldn’t be.

Assumes defective lots are 100% inspected.

Question 6

backflush

Answer 6

method of inventory bookkeeping. Theoretical consumption of child items. Computer inventory automatically updated.

Question 7

backlog

Answer 7

all customer orders received but not yet shipped.

Question 8

balance sheet

Answer 8

financial statement showing assets, liabilities, and owner’s share of a company at any given time

Question 9

batch picking

Answer 9

Order pick method. Pick aggregate demand for each item instead of just amount needed immediately. Reduces traffic for each product location.

Question 10

bias

Answer 10

consistent deviation from the mean in one direction (high or low).

Question 11

bonded warehouse

Answer 11

buildings or parts of buildings designated by US Secretary of the Treasury for storing imported merchandise. Operated by US Customs

Question 12

buffer management

Answer 12

Theory of Constraints.

Process in which all expediting in a shop is driven by inventory quantity that is supposed to be kept in the buffers.

Expedites material into the buffers to prevent the constraint from being idle.

Question 13

bullwhip effect

Answer 13

extreme change in supply position upstream caused by a small change in demand downstream.

Question 14

business plan

Answer 14

Statement of long-range strategy.

Revenue, cost, and profit objectives accompanied by budgets, projected balance sheet and cash flow statements

Question 15

capacity requirements planning (CRP)

Answer 15

Process of establishing, measuring, and adjusting limits or levels of capacity.

Determines in detail amount of labor and machine resources required to accomplish production tasks

Question 16

cellular manufacturing

Answer 16

manufacturing process that produces families of parts within a single line (aka cell) of machines controlled by operators who work only within the line

Question 17

centralized inventory control

Answer 17

Inventory decision making for all skus exercised from one office or department for an entire company

Question 18

certified supplier

Answer 18

Status awarded to a supplier tha consistently meets predetermined quality, cost, delivery, financial, and count objectives.

Incoming inspection may not be required

Question 19

chase production method

Answer 19

Goal is to produce the quantity demanded at any time. Inventory level is stable. Production adjusted to match sales requirements

Question 20

closed-loop MRP

Answer 20

system built around MRP that also includes production planning, master production scheduling, and capacity requirements planning.

Also includes the feedback that is provided by the execution processes so that planning can be kept valid at all times.

Question 21

consignment (2 definitions)

Answer 21

A shipment handled by a common carrier.

Also the process of a supplier placing goods at a customer location without receiving payment until after the goods are used or sold.

Question 22

continuous flow production

Answer 22

Production system in which the productive equipment is organized and sequenced according to the steps involved in production.

Material flow is continuous during the production process.

Routing of jobs is fixed and setups seldom change.

Question 23

continuous replenishment

Answer 23

Vendor-managed inventory

Supplier is notified daily of actual sales or warehouse shipments and commits to replenishing these without stock-outs and without replenishment orders.

Question 24

control chart

Answer 24

Graphical comparison of process performance data with predetermined computed control limits.

Used to detect assignable causes of variation (not random variations).

Question 25

control limit

Answer 25

Statistically determined line on a control chart. If value is outside this limit then process is deemed out of control.

Question 26

cost of goods sold (COGS)

Answer 26

Accounting classification useful for determining amount of direct materials, direct labor, and allocated overhead associated with the products sold during a given period of time.

Question 27

cost of poor quality – 4 cost categories

Answer 27

4 categories of cost.

1) Internal failure - found before customer receives the product.
2) External failure.
3) Appraisal costs - incurred to determine the degree of conformance to quality requirements.
4) Prevention cost.

Question 28

critical chain method

Answer 28

AKA Critical Path Method (CPM)

In the theory of constraints this is a network planning technique for analyzing a project’s completion time.

Used for planning and controlling project activities.
Based on technological or resource constraints.
Tries to minimize or eliminate these

Question 29

critical path method (CPM)

Answer 29

AKA Critical Chain Method

Network planning technique for analyzing a project’s completion time.

Shows each activity and the associated times in order to identify the constraint.

Question 30

cumulative available-to-promise

Answer 30

Calculation based on the ATP figure in the master schedule.

= ATP from the previous period + the MPS of the period - the backlog of the period - the sum of the differences between the backlogs and MPSs of all future periods.

Question 31

customer relationship management (CRM)

Answer 31

The collection and analysis of information designed for sales and marketing decision support. To understand and support existing and potential customer needs.

It includes account management, catalog and order entry, payment processing, credit and adjustments, and other functions

Question 32

cycle stock

Answer 32

One of the two main conceptual components of any item inventory.

Cycle stock depletes gradually as customer orders are received. It is replenished cyclically when supplier orders are received.

Question 33

cycle time

Answer 33

The length of time from when material enters a production facility until it exits.

Question 34

data governance

Answer 34

Overall management of data’s accessibility, usability, reliability, and security. Used to ensure data record accuracy.

Question 35

decentralized inventory control

Answer 35

Inventory decision making exercised at each stocking location for each SKU kept there.

Question 36

decoupling inventory

Answer 36

Amount of inventory maintained between entities in a manufacturing/distribution network to create independence between processes or entities.

Objective is to disconnect the rate of use from the rate of supply.

Question 37

demand lead time

Answer 37

Amount of time potential customer are willing to wait for a good or service.

Question 38

demand management

Answer 38

The process of planning, executing, controlling, and monitoring the design, pricing, promotion, and distribution of products and services.

Goal is to bring about transactions that meet organizational and individual needs

Question 39

demand planning

Answer 39

Process of combining statistical forecasting techniques and judgment to construct demand estimates for products.

From the supplier’s raw materials to the consumer’s needs

Question 40

demurrage

Answer 40

The carrier charges and fees applied when rail freight cars and ships are retained beyond a specified loading or unloading time

Question 41

detention

Answer 41

Carrier charges and fees applied when truck trailers are retained beyond a specified loading or unloading time

Question 42

direct labor

Answer 42

Labor specifically applied to the good being manufactured or used in the performance of the service.

Question 43

discrete manufacturing

Answer 43

Production of distinct items such as automobiles, appliances, or computers.

Question 44

discrete order picking

Answer 44

A method of picking orders in which the items on one order are picked before the next order is picked

Question 45

dispatching

Answer 45

The selection and sequencing of available jobs to be run at individual workstations and the assignment of those jobs to workers

Question 46

distribution requirements planning (DRP)

Answer 46

The function of determining the need to replenish inventory at branch warehouses. .

Question 47

dock-to-stock

Answer 47

Program through which specific quality and packaging requirements are met before the product is released.

Prequalified product is shipped directly into the customer’s inventory without the receiving inspection.

Question 48

drop ship

Answer 48

To take the title of the product but not actually handle, stock, or deliver it

EX: to have one supplier ship directly to another or to have a supplier ship directly to the buyer’s customer

Question 49

drum-buffer-rope (DBR)

Answer 49

Theory of constraints method for scheduling and managing operations that have an internal constraint or capacity-constrained resource

Question 50

drum schedule

Answer 50

The detailed production schedule for a resource that sets the pace of the entire system. Reconciles the customer requirements with the system’s constraint(s).