APICS Deck 4 OO Flashcards Preview

APICS > APICS Deck 4 OO > Flashcards

Flashcards in APICS Deck 4 OO Deck (499):




cost control

Applying procedures that monitor the progress of operations against authorized budgets, and taking action to achieve minimal costs.C


impulse response

How quickly an estimate or forecast changes when the underlying data of the estimate have changed.I


teardown bill of material

Syn: disassembly bill of material.T



Abbreviation for automated guided vehicle system.A



Drawing the organization’s processes or relationships that form a business process.M M


production schedule

A plan that authorizes the factory to manufacture a certain quantity of a specific item. It is usually initiated by the production planning department.P


third-party logistics company

A company that manages all or part of another company’s product delivery operations.T


allowable cost

A reasonable cost specifically permitted under Federal Acquisition Regulation (FAR) requirements.A


mathematical programming

The general problem of optimizing a function of several variables subject to a number of constraints. If the function and constraints are linear in the variables and a subset of the constraints restricts the variables to be nonnegative, a linear programming problem exists.M


flow process chart

A graphic, symbolic representation of the work performed, or to be performed, on a product as it passes through some or all of the stages of a process. Typically, the information included in the chart is quantity, distance moved, type of work done (by symbol with explanation), and equipment used. Work times may also be included. The flow process chart symbols (ASME Standard Symbols) generally used are as follows: O operation: A subdivision of a process that changes or modifies a part, material, or product and is done essentially at one workplace location → transportation (move): Change in location of a person, part, material, or product from one workplace to another ■ inspection: Comparison of observed quality or quantity of a product with a quality or quantity standard ▼ storage: Keeping a product, material, or part protected against unauthorized removal D delay: An event that occurs when an object or person waits for the next planned action O combined activity: Adjustment during testing (e.g., combination of the separate operation and inspection symbols) Syn: process flowchart, process flow diagram. See: flowchart, process flow.F


master budget

The document that consolidates all other budgets of an organization into an overall plan, including the projection of a cash flow statement and an operating statement for the budget period as well as a balance sheet for the end of the budget period. Syn: static budget.M


shipping point

The location from which material is sent. Ant: receiving point.S


outbound stockpoint

The designated locations near the point of use on a plant floor to which material produced is taken until it is pulled to the next operation.O


discussion list

A group of people who have all signed up on a listserver to participate via email in the discussion of a given topic.D


batch processing

1) A manufacturing technique in which parts are accumulated and processed together in a lot. 2) A computer technique in which transactions are accumulated and processed together or in a lot. Syn: batch production.B


pull signal

Any signal that indicates when to produce or transport items in a pull replenishment system. For example, in just-in-time production control systems, a kanban card is used as the pull signal to replenish parts to the using operation. See: pull system.P


center-of-gravity models

Syn: gravity models.C


functional benchmarking

Benchmarking a single function within an organization rather than the entire organization. See: benchmarking.F



An acronym for supplier, input, process, output, customer (pronounced “sye-pahk”).S


bill of material (BOM)

1) A listing of all the subassemblies, intermediates, parts, and raw materials that go into a parent assembly showing the quantity of each required to make an assembly. It is used in conjunction with the master production schedule to determine the items for which purchase requisitions and production orders must be released. A variety of display formats exist for bills of material, including the single-level bill of material, indented bill of material, modular (planning) bill of material, transient bill of material, matrix bill of material, and costed bill of material. 2) A list of all the materials needed to make one production run of a product, by a contract manufacturer, of piece parts/components for its customers. The bill of material may also be called the formula, recipe, or ingredients list in certain process industries.B



Abbreviation for scan-based trading.S



Abbreviation for activity-on-arrow network.A


tool order

A document authorizing issue of specific tools from the tool crib or other storage. Syn: tool issue order.T


program manager

A person assigned program management responsibilities for the implementation activities associated with a new or ongoing product or service offering to customers. See: program management.P



The sublabeling of items to identify their particular makeup and to separate one lot from other production lots of the same item.G



An agreement by which a firm first sells its assets to a financial institution and then leases these same assets from the financial institution.S


less-than-truckload (LTL)

Either a small shipment that does not fill the truck or a shipment of not enough weight to qualify for a truckload quantity (usually set at about 10,000 lbs.) rate discount, offered to a general commodity trucker.L


floating order point

An order point that is responsive to changes in demand or to changes in lead time.F



A solution to a problem that is best from a narrow point of view but not from a higher or overall company point of view. For example, a department manager who would not have employees work overtime to minimize the department’s operating expense may cause lost sales and a reduction in overall company profitability.S


start date

In project management, the time an activity begins; this may be defined as an actual start date or a planned start date.S



Computer work completed either when disconnected from the internet or from an intranet. This term describes anytime when someone cannot be contacted via their computer.O


going concern value

The value of the firm as a whole, rather than the sum of the values of the separate parts.G


point-of-sale information

Information about customers collected at the time of sale.P



Southern Common Market.M


customer service life cycle

In information systems, a model that describes the relationship with a customer as having four phases: requirements, acquisition, ownership, and retirement.C


design cycle

The interval of time between the start of the design process of one model and the completion of the design process for the model.D


cost driver analysis

In activity-based cost accounting, the examination of the impact of cost drivers. The results of this analysis are useful in the continuous improvement of cost, quality, and delivery times.C


pull system

1) In production, the production of items only as demanded for use or to replace those taken for use. See: pull signal. 2) In material control, the withdrawal of inventory as demanded by the using operations. Material is not issued until a signal comes from the user. 3) In distribution, a system for replenishing field warehouse inventories where replenishment decisions are made at the field warehouse itself, not at the central warehouse or plant.P



A business that takes title to products and resells them to final consumers.R


crew size

The number of people required to perform an operation. The associated standard time should represent the total time for all crew members to perform the operation, not the net start to finish time for the crew.C C


tracking capacity strategy

Adding capacity in small amounts to attempt to respond to changing demand in real time in the marketplace. This approach may satisfy total demand and help minimize unit costs, but it can be difficult in some situations to add incremental amounts of capacity, especially if the facility has no more space available.T


distribution warehouse

A facility where goods are received in large-volume uniform lots, stored briefly, and then broken down into smaller orders of different items required by the customer. Emphasis is on expeditious movement and handling.D



In project management, the totality of products to be created by a project.S



A series of interrelated activities and operations involving the design, material selection, planning, production, quality assurance, management, and marketing of discrete consumer and durable goods.M


performance rating

Observation of worker performance to rate the productivity of the workers as a percentage in terms of the standard or normal worker performance.P


profitability analysis

In activity-based cost accounting, the examination of profit received from cost objects to attempt to optimize profitability. A variety of views may be examined including customer, distribution channel, product, and regions.P


required capacity

Syn: capacity required.R



Material flow activity where materials are shipped to customers from a secondary shipping point rather than from a preferred shipping point.C



The percentage of an active ingredient within the whole. For example, a 40 percent solution of hydrochloric acid.C


capacity utilization

Goods produced, or customers served, divided by total output capacity.C


skills inventories

An organized file of information on each employee’s skills, abilities, knowledge, and experience, usually maintained by a personnel office. See: labor grade.S


process layout

Syn: functional layout.P


composite part

A part that represents operations common to a family or group of parts controlled by group technology. Tools, jigs, and dies are used for the composite part; therefore, any parts of that family can be processed with the same operations and tooling. The goal here is to reduce setup costs.C


leverage-capital structure ratio

An indicator of whether or not a company has the ability to retire its long-term debts.L


growth trajectory

Syn: ramp rate.G


floor-ready merchandise

Products shipped by a supplier having all needed tags, prices, security devices, and so on already in place.F F


bonded warehouse

Buildings or parts of buildings designated by the U.S. Secretary of the Treasury for storing imported merchandise, operated under U.S. Customs supervision.B



1) The difference between the expected (budgeted or planned) value and the actual. 2) In statistics, a measurement of dispersion of data. See: estimate of error.V


transportation brokers

Firms that find shipments for carriers for a fee.T


legacy systems

A computer application program that is old and interfaces poorly with other applications but is too expensive to replace. It often runs on antiquated hardware.L


contract administration

Managing all aspects of a contract to guarantee that the contractor fulfills his obligations.C


multilevel master schedule

A master scheduling technique that allows any level in an end item’s bill of material to be master scheduled. To accomplish this, MPS items must receive requirements from independent and dependent demand sources. See: two-level master schedule.M


capital structure

The combination of permanent shortterm debt, long-term debt, preferred stock, and common equity used to finance a firm.C



The process of a transportation vehicle returning from the original destination point to the point of origin. The 1980 Motor Carrier Act deregulated interstate commercial trucking and thereby allowed carriers to contract for the return trip. The backhaul can be with a full, partial, or empty load. An empty backhaul is called deadheading. See: deadhead.B



Any instrument, such as a saw blade, that is the working part of a machine.T


bricks and mortar

A company that sells through a physical location. Ant: clicks and mortar (selling over the internet).B


ordering cost

Used in calculating order quantities, the costs that increase as the number of orders placed increases. It includes costs related to the clerical work of preparing, releasing, monitoring, and receiving orders, the physical handling of goods, inspections, and setup costs, as applicable. See: acquisition cost, inventory costs.O



Abbreviation for foreign trade zone.F


cumulative trauma disorder

An occupational injury believed to be caused by repetitive motions such as typing or twisting.C


infrastructural elements

Elements of a strategy including decision rules, policies, personnel guidelines, and organizational structure.I


inventory record

A history of the inventory transactions of a specific material.I


strategic partnerships

Alliances with top supplier and buyer performers to enhance a firm’s performance.S


direct material

Material that becomes a part of the final product in measurable quantities.D



Money that is deposited outside of the country that issued it (outside of the issuing country’s control).E



Abbreviation for radio frequency identification.R


fishbone analysis

A technique to organize the elements of a problem or situation to aid in the determination of the causes of the problem or situation. The analysis relates the effect of the environment to the several possible sources of the problem.F


acceptance plan

How an organization determines which product lots to accept or reject based on samples. See: acceptance sampling.A



A timetable for planned occurrences (e.g., shipping schedule, master production schedule, maintenance schedule, supplier schedule). Some schedules include the starting and ending time for activities (e.g., project schedule).S


reactive maintenance

Syn: breakdown maintenance.R



In information systems, a software program that is used to contact and obtain data from a server program on another computer. Each client program is designed to work with one or more specific kinds of server programs, and each server requires a specific kind of client. A browser is one type of client.C


industrial engineering

The engineering discipline concerned with facilities layout, methods measurement and improvement, statistical quality control, job design and evaluation, and the use of management sciences to solve business problems.I


physical distribution

Syn: distribution.P


percent of fill

Syn: customer service ratio.P


average cost per unit

The estimated total cost, including allocated overhead, to produce a batch of goods divided by the total number of units produced.A


triple bottom line (TBL)

An approach that measures the economic, social, and environmental impact of an organization's activities with the intent of bringing value for both its shareholders and society.T


sequential development process

A process in which the product or services idea must clear specific hurdles before it can go on the next development phase.S


strategic plan

The plan for how to marshal and determine actions to support the mission, goals, and objectives of an organization. Generally includes an organization’s explicit mission, goals, and objectives and the specific actions needed to achieve those goals and objectives. See: business plan, operational plan, strategic planning, strategy, tactical plan.S


calculated capacity

Syn: rated capacity.C



The analysis of the behavior of individual economic decision makers (individuals and firms).M


warehouse management system (WMS)

A computer application system designed to manage and optimize workflows and the storage of goods within a warehouse. These systems often interface with automated data capture and enterprise resources planning systems.W


load center

Syn: work center.L


standard cost accounting system

A cost accounting system that uses cost units determined before production for estimating the cost of an order or product. For management control purposes, the standards are compared to actual costs, and variances are computed.S


vendor-owned inventory (VOI)

Syn: consigned stocks.V


periodic review system

Syn: fixed reorder cycle inventory model.P


participative design/engineering

A concept that refers to the simultaneous participation of all the functional areas of the firm in the product design activity. Suppliers and customers are often also included. The intent is to enhance the design with the inputs of all the key stakeholders. Such a process should ensure that the final design meets all the needs of the stakeholders and should ensure a product that can be quickly brought to the marketplace while maximizing quality and minimizing costs. Syn: co-design, concurrent design, concurrent engineering, new product development team, parallel engineering, simultaneous design/engineering, simultaneous engineering, team design/ engineering. See: early manufacturing involvement.P


product life cycle management (PLM)

The process of facilitating the development, use, and support of products that customers want and need. PLM helps professionals envision the creation and preservation of product information, both to the customer and along the reverse-logistics portion of the supply chain.P


computer-aided design (CAD)

The use of computers in interactive engineering drawing and storage of designs. Programs complete the layout, geometric transformations, projections, rotations, magnifications, and interval (cross-section) views of a part and its relationship with other parts.C


capacity requirements plan

A time-phased display of present and future load (capacity required) on all resources based on the planned and released supply authorizations (i.e., orders) and the planned capacity (capacity available) of these resources over a span of time. See: load profile.C


supply chain event management (SCEM)

A term associated with supply chain management software applications, where users have the ability to flag the occurrence of certain supply chain events to trigger some form of alert or action within another supply chain application. SCEM can be deployed to monitor supply S chain business processes such as planning, transportation, logistics, or procurement. SCEM can also be applied to supply chain business intelligence applications to alert users to any unplanned or unexpected event.S



Comparing a company’s costs, products, and services to that of a company thought to have superior performance. The benchmark target is often a competitor but is not always a firm in the same industry. Seven types of benchmarking have been cited: (1) competitive benchmarking, (2) financial benchmarking, (3) functional benchmarking, (4) performance benchmarking, (5) process benchmarking, (6) product benchmarking, and (7) strategic benchmarking. See: competitive benchmarking, financial benchmarking, functional benchmarking, performance benchmarking, process benchmarking, product benchmarking, strategic benchmarking.B


pack-out department

The department that performs the final steps (often including packaging and labeling) before shipment to the customer. See: final assembly department.P


gross profit margin rate

Sales minus cost of goods sold then divided by sales.G


forecast horizon

The period of time into the future for which a forecast is prepared.F


service blueprint

A service analysis method that allows service designers to identify processes involved in the service delivery system, isolate potential failure points in the system, establish time frames for the service delivery, and set standards for each step that can be quantified for measurement.S


product manager concept

A marketing method in which a manager is given complete responsibility for managing the introduction, stocking policy, marketing, and sales of a specific product.P


item master record

Syn: item record.I


tier one

The group of suppliers that are directly responsible for not only product supply but product development.T



A product design strategy that shifts product differentiation closer to the consumer by postponing identity changes, such as assembly or packaging, to the last possible supply chain location.P


closed-loop feedback system

A planning and control system that monitors system progress toward the plan and has an internal control and replanning capability.C


drop ship

To take the title of the product but not actually handle, stock, or deliver it (i.e., to have one supplier ship directly to another or to have a supplier ship directly to the buyer’s customer).D


kitted material

Syn: kit.K



A U.S. dollar held in a foreign bank.E



In project management, a collection of projects that are grouped to facilitate management. They are not necessarily interdependent.P



Syn: push technology.W


breeder bill of material

A bill of material that recognizes and plans for the availability and usage of by-products in the manufacturing process. The breeder bill allows for complete by-product MRP and product/byproduct costing.B


network path

Any continuous series of project activities connected by precedence relationships in a project schedule network diagram.N


corporate culture

The set of important assumptions that members of the company share. It is a system of shared values about what is important and beliefs about how the company works. These common assumptions influence the ways the company operates.C


unit cost

Total labor, material, and overhead cost for one unit of production (e.g., one part, one gallon, one pound).U



Characteristic of computer software or hardware that makes it easy for the user or operator to use the programs or equipment with a minimum of specialized knowledge or recourse to operating manuals.U



The providing of basic, technical, and sometimes professional human assistance to employees to help them with personal and work-related problems.C


quality function deployment (QFD)

A methodology designed to ensure that all the major requirements of the customer are identified and subsequently met or exceeded through the resulting product design process and the design and operation of the supporting production management system. QFD can be viewed as a set of communication and translation tools. QFD tries to eliminate the gap between what the customer wants in a new product and what the product is capable of delivering. QFD often leads to a clear identification of the major requirements of the customers. These expectations are referred to as the voice of the customer (VOC). See: house of quality.Q


projected finish date

The current estimate of the date when an activity will be completed.P



Abbreviation for on-time in-full.O



Abbreviation for manufacturing execution systems.M



The taking of property without adequate compensation for it.C


hold points

Stockpoints for semifinished inventory.H


fourth-party logistics (4PL)

Fourth-party logistics differs from third-party logistics in the following ways: (1) the 4PL organization is often a separate entity formed by a joint venture or other long-term contract between a client and one or more partners; (2) the 4PL organization is an interface between the client and multiple logistics services providers; (3) ideally, all aspects of the client’s supply chain are managed by the 4PL organization; and, (4) it is possible for a major 3PL organization to form a 4PL organization within its existing structure. See: third-party logistics.F


adaptive website

In e-commerce, a site that records a visitor’s behavior, uses artificial intelligence software to “learn” this behavior, and chooses what to present to the visitor based on this learning.A


integrated carrier

A company that provides a variety of transportation services including ground, sea, air carriage, and freight forwarding.I


revision level

A number or letter representing the number of times a part drawing or specification has been changed.R


holding costs

Syn: carrying costs.H



Abbreviation for cost equalization point.C


direct offset

Similar to bartering, trading goods or services for related goods or services or agreeing on coproduction. D


arrow diagram

A technique to determine the relationships and precedence of different activities and the time estimate for project completion. The technique is useful in identifying potential problems and improvement opportunities.A


product family

A group of products with similar characteristics, often used in production planning (or sales and operations planning). Syn: product line.P


manufacturing engineering

The engineering discipline concerned with designing and improving production processes. See: process engineering.M


learning organization

1) Group of people who have woven a continuous, enhanced capacity to learn into the corporate culture. 2) An organization in which learning processes are analyzed, monitored, developed, and aligned with competitive goals.L



Abbreviation for point of sale.P


assembly parts list

As used in the manufacturing process, a list of all parts (and subassemblies) that make up a particular assembly. See: batch card, manufacturing order.A



Supplies or materials (such as paint, cleaning materials, or fuel) that are consumed or exhausted in the production or sale of a good or service. Syn: consumable tooling, supplies; expendables.C


occurrence factor

Within the repair/remanufacturing environment, the occurrence factor is associated with how often a repair is required to bring the average part to a serviceable condition (some repair operations do not occur 100 percent of the time). The factor is expressed at the operation level in the routing. See: repair factor, replacement factor.O



Cubic volume of space being used or available for shipping or storage.C


multilevel where-used

A display for a component listing all the parents in which that component is directly used and the next higher level parents into which each of those parents is used, until ultimately all top-level (level 0) parents are listed.M


feedback loop

The part of a closed-loop system that allows the comparison of response with command.F



In e-commerce, a portion of a web page that contains advertising or the name of a website. The banner usually contains a hypertext connection to a web page of the company doing the advertising.B


concurrent design

Syn: participative design/ engineering.C



Acronym for roll-on/roll-off container ship.R


fixed order quantity system

An inventory system, such as economic order quantity, in which the same order quantity is used from order to order. The time between orders (order period) then varies from order to order. Syn: fixed reorder quantity inventory model. See: fixed order period system.F


freight charge

The rate established for the transportation of freight.F


salable goods

A part or assembly authorized for sale to final customers through the marketing function.S


capacity requirements

The resources needed to produce the projected level of work required from a facility over a time horizon. Capacity requirements are usually expressed in terms of hours of work or, when units consume similar resources at the same rate, units of production.C


operation list

Syn: routing.O


lean enterprise

A group of individuals, functions, and sometimes legally separate but operationally synchronized organizations. The value stream defines the lean enterprise. The objectives of the lean enterprise are to correctly specify value to the ultimate customer, and to analyze and focus the value stream so that it does everything from product development and production to sales and service in a way that actions that do not create value are removed and actions that do create value proceed in a continuous flow as pulled by the customer. Lean enterprise differs from a “virtual corporation” in which the organizational membership and structure keeps changing.L


batch sheet

In many process industries, a document that combines product and process definition. See: batch card.B


inventory ordering system

Inventory models for the replenishment of inventory. Independent demand inventory ordering models include but are not limited to fixed reorder cycle, fixed reorder quantity, optional replenishment, and hybrid models. Dependent demand inventory ordering models include material requirements planning, kanban, and drum-buffer-rope.I


cumulative lead time

The longest planned length of time to accomplish the activity in question. It is found by reviewing the lead time for each bill of material path below the item; whichever path adds up to the greatest number defines cumulative lead time. Syn: aggregate lead time, combined lead time, composite lead time, critical path lead time, stacked lead time. See: planning horizon, planning time fence.C


review period

The time between successive evaluations of inventory status to determine whether to reorder. See: replenishment period.R


demand lead time

The amount of time potential customers are willing to wait for the delivery of a good or a service. Syn: customer tolerance time.D


exogenous variable

A variable whose values are determined by considerations outside the model in question.E


free slack

The amount of time by which the completion of an activity in a project network can increase without delaying the start of the next activity.F



An individual whose functions may include supplier selection, negotiation, order placement, supplier follow-up, measurement and control of supplier performance, value analysis, and evaluation of new materials and processes. In some companies, the functions of order placement and supplier follow-up are handled by the supplier scheduler.B


supply uncertainty

The risk of interruptions in the flow of components from upstream suppliers.S



Syn: backflush.E E


control board

A visual means of showing machine loading or project planning, usually a variation of the basic Gantt chart. Syn: dispatch(ing) board, planning board, schedule board. See: schedule chart.C


host computer

Any computer on a network that is a repository for services available to other computers on the network. It is common to have one host machine provide several services such as the World Wide Web.H


competitive analysis

An analysis of a competitor that includes its strategies, capabilities, prices, and costs.C


schedule board

Syn: control board.S


acceptance sampling

1) The process of sampling a portion of goods for inspection rather than examining the entire lot. The entire lot may be accepted or rejected based on the sample even though the specific units in the lot are better or worse than the sample. There are two types: attributes sampling and variables sampling. In attributes sampling, the presence or absence of a characteristic is noted in each of the units inspected. In variables sampling, the numerical magnitude of a characteristic is measured and recorded for each inspected unit; this type of sampling involves reference to a continuous scale of some kind. 2) A method of measuring random samples of lots or batches of products against predetermined standards.A A


first pass yield

The ratio of products that conform to specifications without rework or modification to total input.F


order batching

The process of gathering a group of orders or data before sending them out to the next stage.O order complete manufacture to customer receipt of



In project management, accumulating the estimated costs of individual activities to arrive at a cost baseline.C C



Placing project team members in physical proximity to facilitate communication and working relationships. C



The adjustment of a shop order quantity of a parent to use the remaining units of a component, raw material, or lot.B


shop order reporting

Syn: production reporting and status control.S



Abbreviation for high-level language.H


financial benchmarking

Comparing one company’s financial results with that of another company. This type of benchmarking need not involve direct contact between the initiator company and the target company, as many financial records are publicly available. See: benchmarking. F



Abbreviation for Certified Fellow in Production and Inventory Management.C


constraint-oriented finite loading

A finite loading technique that plans orders around bottleneck work centers. The objective is to maximize total production throughput. Orders in small lot sizes aggregate into large lot sizes at the constraint and then load forward. Prior operations are then backward-scheduled, and downstream operations are forward-scheduled. See: drumbuffer- rope, order-oriented finite loading.C


expected life

The average length of time a product remains in service or in a serviceable condition.E



1) The capability of a system to perform its expected function. 2) The capability of a worker, machine, work center, plant, or organization to produce output per time period. Capacity required represents the system capability needed to make a given product mix (assuming technology, product specification, etc.). As a planning function, both capacity available and capacity required can be measured in the short term (capacity requirements plan), intermediate term (roughcut capacity plan), and long term (resource requirements plan). Capacity control is the execution through the I/O control report of the short-term plan. Capacity can be classified as budgeted, dedicated, demonstrated, productive, protective, rated, safety, standing, or theoretical. See: capacity available, capacity required. 3) Required mental ability to enter into a contract.C


serpentine picking

A picking technique aimed at reducing travel time by 50 percent and improving the flow of pickers down each aisle. This technique involves picking from both sides of each aisle as the picker goes down it. This is in contrast to picking from one side of the aisle and then crossing to the other side.S


exempt employee

A person filling an exempt position. See: exempt positions.E



1) The attribute allowing the ongoing location of a shipment to be determined. 2) The registering and tracking of parts, processes, and materials used in production, by lot or serial number.T


purchasing unit of measure

Syn: unit of measure (purchasing). P



1) Those stocks or items used to support production (raw materials and work-in-process items), supporting activities (maintenance, repair, and operating supplies), and customer service (finished goods and spare parts). Demand for inventory may be dependent or independent. Inventory functions are anticipation, hedge, cycle (lot size), fluctuation (safety, buffer, or reserve), transportation (pipeline), and service parts. 2) All the money currently tied up in the system. As used in theory of constraints, inventory refers to the equipment, fixtures, buildings, and so forth that the system owns as well as inventory in the forms of raw materials, workin- process, and finished goods.I


file transfer protocol (FTP)

A protocol used to transfer files over the internet.F


locator file

A file used in a stockroom (or anywhere) providing information on where each item is located. See: locator system.L


performance appraisal

Supervisory or peer analysis of work performance. May be made in connection with wage and salary review, promotion, transfer, or employee training.P


minimum inventory

The planned lowest amount or level of inventory for an item.M


cut-off control

A procedure for synchronizing cycle counting and transaction processing.C


on-time schedule performance

A measure (percentage) of meeting the customer’s originally negotiated delivery request date. Performance can be expressed as a percentage based on the number of orders, line items, or dollar value shipped on time.O


curve fitting

An approach to forecasting based on a straight line, polynomial, or other curve that describes some historical time series data.C



Abbreviation for lot tolerance percent defective.L


predatory pricing

Lowering prices below cost to drive out competition and then raising prices again. In the United States, this is a violation of Article 2 of the Sherman Act.P P



Inventory kept on hand to satisfy demand for products that are no longer being manufactured.E


cumulative manufacturing lead time

The cumulative planned lead time when all purchased items are assumed to be in stock. Syn: composite manufacturing lead time.C


robust design

Type of design for a product or service that plans for intended performance even in the face of a harsh environment.R



The process of changing order or operation due dates, usually as a result of their being out of phase with when they are needed.R


flexible machine center (FMC)

An automated system, which usually consists of computer numerical control machines with robots loading and unloading the parts conveyed into, and through, the system. Its purpose is to provide quicker throughput, changeovers, setups, and so forth to enable the manufacturing of multiple products.F



Acronym for production activity control.P


component lead-time offset

Syn: lead-time offset.C


process controllers

Computers designed to monitor the manufacturing cycle during production, often with the capability to modify conditions, to bring the production back to within prescribed ranges.P


customer-supplier partnership

A long-term relationship between a buyer and a supplier characterized by teamwork and mutual confidence. The supplier is considered an extension of the buyer’s organization. The partnership is based on several commitments. The buyer provides long-term contracts and uses fewer suppliers. The supplier implements quality assurance processes so that incoming inspection can be minimized. The supplier also helps the buyer reduce costs and improve product and process designs. Syn: customer partnership. See: outpartnering.C


feature code

An identifying code assigned to a distinct product feature that may contain one or more specific part number configurations.F


transit time

A standard allowance that is assumed on any given order for the movement of items from one operation to the next. Syn: travel time.T


constraints management

The practice of managing resources and organizations in accordance with the theory of constraints (TOC) principles. See: theory of constraints.C


durable goods

Generally, any goods whose continuous serviceability is likely to exceed three years (e.g., trucks, furniture). See: consumer durable goods.D


net working capital

The current assets of a firm minus its current liabilities. Syn: working capital.N


action plan

A process to obtain results identified by one or more objectives.A



Abbreviation for American Society for Quality Control, now simply American Society for Quality (ASQ).A


inventory policy

A statement of a company’s goals and approach to the management of inventories.I


computer-assisted software engineering (CASE)

The use of computerized tools to assist in the process of designing, developing, and maintaining software products and systems.C C



Syn: participative design/engineering.C



In product development, the use of standardized parts for flexibility and variety. Permits product development cost reductions by using the same item(s) to build a variety of finished goods. This is the first step in developing a planning bill of material process.M


transportation legal classifications

Legal regulatory classification of transportation by product, shipping size, rates, carriers, and types of services.T


application service provider (ASP)

A firm that produces outsourced services for clients.A



1) Gross profit after direct costs of goods sold have been deducted from sales revenue for a given period. 2)



Abbreviation for no-touch exchange of dies.N



A good’s or service’s nonfulfillment of an intended requirement or reasonable expectation for use, including safety considerations. There are four classes of defects: Class 1, Very Serious, leads directly to severe injury or catastrophic economic loss; Class 2, Serious, leads directly to significant injury or significant economic loss; Class 3, Major, is related to major problems with respect to intended normal or reasonably foreseeable use; and Class 4, Minor, is related to minor problems with respect to intended normal or reasonably D foreseeable use. See: blemish, imperfection, nonconformity.D


private ownership

A form of business ownership in which the business is either owned by a single person (i.e., proprietorship) or organized under law as a separate legal entity but in which the company stock is not publicly traded. See: partnership, public ownership.P


random events

1) occurrences that have no discernable pattern. 2) In statistics, unexplained movements occurring in historical (time series) data. See: random variation.R


activity dictionary

In activity-based cost accounting, a set of standard definitions of activities including descriptions, business process, function source, cost drivers, and other data important to activity-based planning.A


statute of limitations

A statute restricting the length of time in which a lawsuit may be filed.S



The difference between sales price and variable costs. Contribution is used to cover fixed costs and profits.C



Abbreviation for commercial-off-the-shelf.C Council of Supply Chain Management Professionals


operations management

1) The planning, scheduling, and control of the activities that transform inputs into finished goods and services. 2) A field of study that focuses on the effective planning, scheduling, use, and control of a manufacturing or service organization through the study of concepts from design engineering, industrial engineering, management information systems, quality management, production management, inventory management, accounting, and other functions as they affect the operation.O



Abbreviation for critical-to-quality characteristicsC


inventory write-off

A deduction of inventory dollars from the financial statement because the inventory is of less value. An inventory write-off may be necessary because the value of the physical inventory is less than its book value or because the items in inventory are no longer usable.I


demand segmentation

Categorizing demand types into groups that share similar characteristics (e.g., government, large customers, seasonal products). Similar segments can be treated alike in business or capacity planning.D


path convergence

In project management, the point in a network diagram where one or more parallel paths come together. A delay on any of the parallel paths can conceivably delay network completion.P


production release

Syn: manufacturing order.P


selling and administrative cost

Those costs that are associated with the marketing, sales, and administrative functions for a plant or company. This is a function of overhead costing and is an important number in the COGS (costs of goods sold) calculation.S



A privately owned network that makes use of internet technology and applications to meet the needs of an enterprise. It resides entirely within a department or company, providing communication and access to information, similar to the internet, with web pages, and so on for internal use only.I



Abbreviation for programmable logic controller.P


alternate routing

A routing that is usually less preferred than the primary routing but results in an identical item. Alternate routings may be maintained in the computer or off-line via manual methods, but the computer software must be able to accept alternate routings for specific jobs.A


route sheet

Syn: routing.R



The process of finding a value of a function between two known values. Interpolation may be performed numerically or graphically.I


assignable variation

Variation made by one or more causes that can be identified and removed. See: assignable cause, common causes.A


FOB origination

The buyer takes possession of the goods at the supplier’s location, and the buyer must provide transportation.F


feeder workstations

An area of manufacture whose products feed a subsequent work area.F



In kanban, an arrangement in which the customer does not specify the quantity to be delivered on a specific basis, but instead gives the supplier a set of guidelines. The delivery person determines the quantity according to these rules.B


baseload demand

Syn: base demand.B



1) The amount of work-in-process inventory between two manufacturing operations, especially in repetitive manufacturing. 2) In supply chains, the time necessary for items such as documents and checks to go from one supply chain partner to another. 3) In the critical path method of project management, the amount of time that an activity’s early start or early finish time can be delayed without delaying the completion time of the entire project. There are three types: total float, free float, and independent float. Syn: path float, slack.F


planned order receipt

The quantity planned to be received at a future date as a result of a planned order release. Planned order receipts differ from scheduled receipts in that they have not been released. Syn: planned receipt.P


base index

Syn: base series.B


lower control limit (LCL)

Control limit for points below the central line in a control chart.L


limited life material

Material having a finite shelf life.L


supplier number

A numerical code used to distinguish one supplier from another.S



Pertaining to a statement or formula based upon experience or observation rather than on deduction or theory.E



An organizational structure within a factory, consisting of a compact entrepreneurial unit, either process-oriented or product-oriented and structured to achieve maximum productivity.S


process integration

Coordinating operations and consolidating data to simplify processes and increase efficiency.P



1) In transportation, shipments from multiple companies are placed together in the same shipment in order to reduce the costs of each shipment. 2) In production, that action that combines in parallel previously independent processes to reduce the total variance compared to the variances that would occur when the processes were independent.P


dependent demand

Demand that is directly related to or derived from the bill of material structure for other items or end products. Such demands are therefore calculated and need not and should not be forecast. A given inventory item may have both dependent and independent demand at any given time. For example, a part may simultaneously be the component of an assembly and sold as a service part. See: independent demand.D


financial accounting

The use of generally accepted accounting principles to prepare reports to external agencies, such as investors and governmental agencies.F


value chain

The functions within a company that add value to the goods or services that the organization sells to customers and for which it receives payment.V


contract target cost

The estimated cost negotiated in a contract.C


designing in quality vs. inspecting in quality

Syn: prevention vs. detection.D


purchase price discount

A pricing strategy in which a seller offers a customer a cheaper price in exchange for purchasing more goods.P


FOB destination

The supplier pays for transportation to the buyer’s location, where the buyer takes possession of the goods.F



Abbreviation for contracts for the international sale of goods.C



Acronym for work in process.W


is within tolerance

as long as the dimension is not exactly on the target. For example, a loss to society might occur because an assembly made of components that are within specification, but not exactly on target, wears out faster than an assembly comprised of components that are all exactly on the target.L


process industries

The group of manufacturers that produce products by mixing, separating, forming, and/or performing chemical reactions. Paint manufacturers, refineries, and breweries are examples of process industries.P



1) A product model constructed for testing and evaluation to see how the product performs before releasing the product to manufacture. 2) Model consisting of all files and programs needed for a business application.P


break-even time

The total elapsed time of a technology transfer beginning with a scientific investigation and ending when the profits from a new product offset the cost of its development.B


shop order close-out station

A stocking point on the shop floor where completed production of components is transacted (received) into and subsequently transacted (issued) to assembly or other downstream operations. This technique is used to reduce material handling by avoiding the need to move items into and out of stockrooms, while simultaneously enabling a high degree of inventory record accuracy.S


average total cost

The ratio of total costs (the sum of total fixed costs and total variable costs) over units produced.A



A designation claimed by companies that have been granted a site visit by the Malcolm Baldrige National Quality Award examiners.B


schedule performance index (SPI)

Earned value (EV) divided by planned value (PV), which measures a project’s schedule efficiency.S


people involvement

Syn: employee involvement.P


block control

Control of the production process in groups, or “blocks,” of shop orders for products undergoing the same basic processes.B


blend order

A manufacturing order to a blending department authorizing it to mix the ingredients of a product. See: assembly order.B


work sampling

The use of a number of random samples to determine the frequency with which certain activities are performed.W


consumer market

A market composed of individuals and families who buy products and services for consumption. See: government market, industrial market, institutional market.C


landed cost

This cost includes the product cost plus the costs of logistics, such as warehousing, transportation, and handling fees.L


alliance development

Strengthening the capabilities of a key supplier.A



Syn: float, slack time.S


simplex algorithm

A procedure for solving a general linear programming problem.S


transportation management system (TMS)

A computer application system designed to manage transportation operations. These systems typically offer modules focused on specific functions, such as intermodal transportation, import/export management, fleet service management, and load planning and optimization.T


flexible manufacturing system (FMS)

A group of numerically controlled machine tools interconnected by a central control system. The various machining cells are interconnected via loading and unloading stations by an automated transport system. Operational flexibility is enhanced by the ability to execute all manufacturing tasks on numerous product designs in small quantities and with faster delivery.F



A set of buyers and sellers exchanging products. Prices tend to equalize through ongoing exchanges between buyers and sellers. Markets include institutional markets, government markets, industrial markets, and consumer markets. See: consumer market, government market, industrial market, institutional market.M



Short for International Commercial Terms; created to simplify international transactions.I



A graph or map of allotted shelf space based on an analysis of sales date indicating the best arrangement of products on a store shelf.P


process design, (5) motion

activities that do not add


R&D order

Syn: experimental order.R



1) The quantity received from manufacturing or a supplier that is in excess of the quantity ordered. 2) The condition resulting when expenditures exceed the budget.O


contract manufacturing

A situation in which a third party makes products that are packaged under another company’s label.C


cellular layout

An equipment configuration to support cellular manufacturing.C


irregular maintenance

Syn: breakdown maintenance.I I


replan cycle

The time it takes to implement a new production plan into the plant’s actual production plan. Done after completion of the last cycle and is a rolling document.R


setup lead time

Syn: setup time.S


market-positioned warehouse

Warehouse positioned to replenish customer inventory assortments and to afford maximum inbound transport consolidation economies from inventory origin points with relatively shorthaul local delivery.M


description by performance characteristics

A method to identify a product or service by specifying the performance required.D


functional systems design

The development and definition of the business functions to be accomplished by a computer system (i.e., preparing a statement of the proposed computer system’s data input, data manipulation, and information output in common business terms that can be reviewed, understood, and approved by a user organization). This statement, after approval, provides the basis for the computer system’s design.F


cost object driver

In activity-based cost accounting, a numerical measure of the demand placed on one cost object by other cost objects.C


request for proposal (RFP)

A document used to solicit vendor responses when the functional requirements and features are known but no specific product is in mind. Syn: invitation for bid (IFB). See: request for information (RFI).R


Thomas Register

A privately produced reference set that includes a listing of part suppliers by product type and geographic area.T


flow diagram

Syn: flowchart.F


responsible landfill

Landfill operations designed to turn waste into recoverable resources, minimize the amount of space consumed, and maximize the operational life of the landfill.R


product layout

Layout of resources arranged sequentially based on the product’s routing.P



Syn: engineer-to-order.D


balance sheet

A financial statement showing the resources owned, the debts owed, and the owner’s share of a company at a given point in time. See: funds flow statement, income statement.B


central storage

Using a central location for storing all inventory items in order to obtain more control of inventory and to improve inventory record accuracy.C


of variables

perhaps only one, known as a constraint that actually limit the ability to generate more of the system’s goal.T


flexible workforce

A workforce whose members are cross-trained and whose work rules permit assignment of individual workers to different tasks.F


labor usage variance

Syn: labor efficiency variance.L


strategic sourcing

A comprehensive approach for locating and sourcing key material suppliers, which often includes the business process of analyzing total-spendfor- material spend categories. There is a focus on the development of long-term relationships with trading partners who can help the purchaser meet profitability and customer satisfaction goals. From an information technology applications perspective, strategic sourcing includes automation of request for quote (RFQ), request for proposal (RFP), electronic auctioning (e-auction or reverse auction), and contract management processes.S



Syn: pilot test.P



Abbreviation for electronic form.E


transportation cycle time

A logistics performance measure of the lead time required for a product to reach its final destination; the time between leaving a warehouse and arriving at the destination.T


back room

In service operations, the part of the operation that is completed without direct customer contact. Many service operations contain both back room and front room operations. See: front room.B


open system architecture

The capability of software and diverse hardware environments to communicate with each other through the use of standard messaging and protocols respectively. See: modular system.O


Securities and Exchange Commission (SEC)

A U.S. government agency that has primary responsibility for enforcing the federal securities laws and regulating the securities industry. The SEC was created by the Securities Exchange Act of 1934 with a mission to protect investors; maintain fair, orderly, and efficient markets; and facilitate capital formation.S



Buyers who purchase for the purpose of reselling.M


gross profit

Sales minus cost of goods sold.G


ideal quality

A term used by Genichi Taguchi to refer to the target value of a particular measure. Loss to society increases with the square of the deviation of an actual product from this ideal point.I


drum schedule

The detailed production schedule for a resource that sets the pace for the entire system. The drum schedule must reconcile the customer requirements with the system’s constraint(s).D



Abbreviation for less than truckload.L


improve phase

One of the six sigma phases of quality. In this phase, the improvements to products and/or processes are adopted. See: design-measure-analyzeimprove- control process.I


probability tree

A graphic display of all possible outcomes of an event based on the possible occurrences and their associated probabilities.P



Abbreviation for lower specification limit.L



Tools for plastic or chemical production. A mold is the term used for the tools that shape plastic or other soft material parts.M



Manufacturing operations for making components, as opposed to assembly operations.F



An amount or percentage by which a contract price may be adjusted if specified contingencies occur, such as changes in the supplier’s raw material or labor costs.E


employee assistance program (EAP)

Employer-provided service aimed at helping employees and their families with personal and work-related problems. Examples inemployee E clude financial counseling and chemical-dependency rehabilitation programs.E


inspection order

An authorization to an inspection department or group to perform an inspection operation.I



An index method of the variability of a process. A widely used process capability index. It is expressed as: C



Estimation of the future value of some data series based on past observations. Statistical forecasting is a common example. Syn: projection.E


work teams

Teams of employees formed to shepherd a particular work area or function.W



Reducing total shipping costs by reducing the per-item shipping cost. This is done by including multiple smaller items in one larger box.O



A business process of floating ideas and comments around in an iterative manner, much like tossing a ball back and forth.C


public ownership

A business formed under law as a separate legal entity and where stock is publicly traded. See: partnership, private ownership.P



Acronym for define-measure-analyze-improvecontrol. D


customer service ratio

1) A measure of delivery performance of finished goods, usually expressed as a percentage. In a make-to-stock company, this percentage usually represents the number of items or dollars (on one or more customer orders) that were shipped on schedule for a specific time period, compared with the total that were supposed to be shipped in that time period. Syn: customer service level, fill rate, order-fill ratio, percent of fill. Ant: stockout percentage. 2) In a maketo- order company, it is usually some comparison of the number of jobs or dollars shipped in a given time period (e.g., a week) compared with the number of jobs or dollars that were supposed to be shipped in that time period.C


process hours

The time required at any specific operation or task to process the product.P


interactive system

Refers to those computer applications in which a user communicates with a computer program via a system, entering data and receiving responses from the computer. See: interactive computer system.I


green supply chain

A supply chain that considers environmental impacts on its operations and takes action H along the supply chain to comply with environmental safety regulations and communicate this to customers and partners. See: environmentally responsible business.G


server factory

A facility making minor improvements to products; set up primarily to avoid the host country’s barriers to trade.S



Abbreviation for uniform resource locator.U


cash flow management

Syn: funds flow management.C


firm planned order (FPO)

A planned order that can be frozen in quantity and time. The computer is not allowed to change it automatically; this is the responsibility of the planner in charge of the item that is being planned. This technique can aid planners working with MRP systems to respond to material and capacity problems by firming up selected planned orders. In addition, firm planned orders are the normal method of stating the master production schedule. See: planning time fence.F



A computer, or software package, that provides a specific kind of service to client software running on other computers. The term can refer to a particular piece of software, for example a web server, or to the machine on which the software is running. A single server machine could have several different server software packages running on it, thus providing many different servers to clients on the network.S S


fabrication level

The lowest production level. The only components at this level are parts (as opposed to assemblies or subassemblies). These parts are either procured from outside sources or fabricated within the manufacturing organization.F



1) An established norm against which measurements are compared. 2) An established norm of productivity defined in terms of units of output per set time (units/hour) or in standard time (minutes per unit). 3) The time allowed to perform a specific job including quantity of work to be produced. See: standard time.S


experimental order

An order generated by the laboratory, research and development, or engineering group that must be run through regular production facilities with potential future product or market development as a project or team goal. Syn: engineering order, laboratory order, pilot order, R&D order.E



A predetermined course of action over a specified period of time that represents a projected response to an anticipated environment to accomplish a specific set of adaptive objectives.P


cost element

In activity-based cost accounting, the lowest subdivision of a resource, activity, or cost object.C



People with a vested interest in a company, including managers, employees, stockholders, customers, suppliers, and others.S


delay reporting

Reporting against an operation status of a manufacturing order on an exception basis, when delays are anticipated.D


demand risk

The risk that declining economic activity substantially reduces the demand for a firm’s products or services.D


material review board (MRB)

An organization within a company, often a standing committee, that determines the resolution or disposition of items that have questionable quality or other attributes.M


aggregate reporting

1) Reporting of process hours in general, allowing the system to assign the actual hours to specific products run during the period based on standards. 2) Also known as gang reporting, the reporting of total labor hours.A


return disposal costs

The costs that occur from discarding or recycling products that are returned because they have reached the end of their useful life or are obsolete. Commonplace in consumer goods industry.R


market segmentation

A marketing strategy in which the total market is disaggregated into submarkets, or segments, that share some measurable characteristic based on demographics, psychographics, lifestyle, geography, benefits, and so forth.M



quality is measured by the degree of customer satisfaction with a product’s characteristics and features.Q


order cycle

The progression used by a company starting with receipt of a customer’s order and ending with delivery to that customer.O


hopper cars

Rail cars that permit bulk commodities to be loaded at the top and removed from the bottom of the car. Some hopper cars have permanent tops that provide protection from bad weather.H


production plan

The agreed-upon plan that comes from the production planning (sales and operations planning) process, specifically the overall level of manufacturing output planned to be produced, usually stated as a monthly rate for each product family (group of products, items, options, features, and so on). Various units of measurement can be used to express the plan: units, tonnage, standard hours, number of workers, and so on. The production plan is management’s authorization for the master scheduler to convert it into a more detailed plan, that is, the master production schedule. See: sales and operations planning, sales plan.P



The process of eliminating an intermediate stage or echelon in a supply chain. Total supply chain operating expense is reduced, total supply chain inventory is reduced, total cycle time is reduced, and profits increase among the remaining echelons. See: echelon.D


continuous replenishment

A process by which a supplier is notified daily of actual sales or warehouse shipments and commits to replenishing these sales (by size, color, and so on) without stockouts and without receiving replenishment orders. The result is a lowering of associated costs and an improvement in inventory turnover. See: rapid replenishment, vendor-managed inventory.C


second-tier suppliers (or customers)

A supplier's suppliers (or customer's customers).S


match capacity strategy

A capacity strategy that strikes a balance between the lead and lag capacity strategies by adding capacity at approximately the rate of actual demand increase.M



Improvement in operating characteristics.U


growth-share matrix

In marketing, a division of products by relative market share and market growth rate.



A self-contained unit of a computer program that communicates with other parts of the program solely through inputs and outputs.M


supply chain execution

Execution-oriented software applications for effective procurement and supply of goods and services across a supply chain. It includes manufacturing, warehouse, and transportation execution systems, and systems providing visibility across the supply chain.S


barrier to entry

Factors that prevent companies from entering into a particular market, such as high initial investment in equipment.B


holonic network

1) A network of autonomous, distributed human or computer systems with the capability to act in an integrated manner. 2) A network of companies dynamically interacting to act as one system. Each company or holon has a different process and core competency. Virtual enterprises are created by organizing the holons, to take advantage of core competencies.H


traffic management

Control of transportation carriers, modes, and services.T



1) The condition of being out of date. A loss of value occasioned by new developments that place the older property at a competitive disadvantage. A factor in depreciation. 2) A decrease in the value of an asset brought about by the development of new and more economical methods, processes, or machinery. 3) The loss of usefulness or worth of a product or facility as a result of the appearance of better or more economical products, methods, or facilities.O



The population, or large set of data, from which samples are drawn. Usually assumed to be infinitely large or at least very large relative to the sample.U


production order

Syn: manufacturing order.P


modular system

A system architecture design in which related tasks are grouped in self-contained packages. Each package, or module, of tasks performs all of the tasks related to a specific function and advances in functions can be implemented without affecting other packages or modules because of the loose coupling with other modules. One example is a multitiered architecture in which application business rules are separated from the data management rules. Another example is a client-server architecture in which user interface tasks are separated from the application software. See: open system architecture.M


interarrival time

Time between the arrival of two sequential customers or events.I


product plan

Syn: market plan.P


historical analogy

A judgmental forecasting technique based on identifying a sales history that is analogous to a present situation, such as the sales history of a similar product, and using that past pattern to predict future sales. See: management estimation.H



Abbreviation for total quality control.T



Product spoilage, damage to the package, and so forth. This is one of the considerations in inventory carrying cost.D



A combination of "globalization" and "localization." When used in a supply chain context, glocalization is a form of postponement where a product or service is developed for distribution globally but is modified to meet the needs of a local market. The modifications are made to conform with local laws, customs, cultures or preferences.G



An accounting/financial term (balance sheet classification of accounts) representing debts or obligations owed by a company to creditors. Liabilities may have a short-term time horizon, such as accounts payable, or a longer-term obligation, such as mortgage payable or bonds payable. See: assets, balance sheet, debt, owner’s equity.L


capacity pegging

Displaying the specific sources of capacity requirements. This is analogous to pegging in MRP, which displays the source of material requirements.C



Abbreviation for advance ship notice.A


unit of driver measure

The common unit of measure used to group similar processes, so that comparisons can be made easily.U


cost accounting

The branch of accounting that is concerned with recording and reporting business operating costs. It includes the reporting of costs by departments, activities, and products.C


order priority

The scheduled due date to complete all the operations required for a specific order.O


carload lot

A shipment that qualifies for a reduced freight rate because it is greater than a specified minimum weight. Since carload rates usually include minimum rates per unit of volume, the higher LCL (less than carload) rate may be less expensive for a heavy but relatively small shipment.C


multiple-channel queuing system

A waiting line system that has parallel waiting lines with queues.M


net income (loss)

The final figure in the income statement.N



The simultaneous use by a computer of two or more central processing units, with each executing its own instruction set and each controlled by a single operating system.M



1) Stored materials used in making a product. 2) The room where stored components, parts, assemblies, tools, fixtures, and so forth are kept.S


single-period inventory models

Inventory models used to define economical or profit maximizing lot-size quantities when an item is ordered or produced only once (e.g., newspapers, calendars, tax guides, greeting cards, or periodicals) while facing uncertain demands. Syn: static inventory models.S



A general term that can refer to a material planner, dispatcher, or a combined function.S



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. Place is the distribution tactic used to provide the product to the customer. Distribution answers the questions of where, when, and how the product is made available. See: four Ps.P


external factory

A situation where suppliers are viewed as an extension of the firm’s manufacturing capabilities and capacities. The same practices and concerns that are commonly applied to the management of the firm’s manufacturing system should also be applied to the management of the external factory.E



Abbreviation for enterprise performance management.E


labor productivity

A partial productivity measure, the rate of output of a worker or group of workers per unit of time compared to an established standard or rate of output. Labor productivity can be expressed as output per unit of time or output per labor hour. See: machine productivity, productivity.L


aggregate inventory management

Establishing the overall level (dollar value) of inventory desired and implementing controls to achieve this goal.A


backroom costs

Indirect costs for operations that do not add direct value to a product and may or may not be necessary to support its production.B



Having the capability to handle orders using monies from several countries for billing purposes.M



1) Abbreviation for continuous process improvement. 2) Abbreviation for cost performance index.C



Things that can be quantitatively measured or valued, such as the costs of physical assets. A dimension of service quality referring to the physical appearance of the service facility, including the personnel and equipment.T


reverse logistics service

A service that arranges for the disposal of returned products.R


output control

A technique for controlling output where actual output is compared to planned output to identify problems at the work center or facility.O


economic indicator

An index of total business activities at the regional, national, and global levels.E


limited access

Securing inventory, usually in a locked environment, to protect it from theft and to help improve inventory count accuracy.L


queue time

The amount of time a job waits at a work center before setup or work is performed on the job. Queue time is one element of total manufacturing lead time. Increases in queue time result in direct increases to manufacturing lead time and work-in-process inventories.Q


applications software

A computer program or set of programs designed to assist in the performance of a specific task, such as word processing, accounting, or inventory management. See: application system.A


expected completion quantity

The planned quantity of a manufacturing order after expected scrap.E



The rate at which the system generates “goal units.” Because throughput is a rate, it is always


load profile

A display of future capacity requirements based on released and/or planned orders over a given span of time. Syn: load projection. See: capacity requirements plan.L


Delphi method

A qualitative forecasting technique where the opinions of experts are combined in a series of iterations. The results of each iteration are used to develop the next, so that convergence of the experts’ opinions is obtained. See: management estimation, panel consensus.D



A data point that differs significantly from other data for a similar phenomenon. For example, if the average sales for a product were 10 units per month, and one month the product had sales of 500 units, this sales point might be considered an outlier. See: abnormal demand.O



The activities related to receiving, storing, and shipping materials to and from production or distribution locations.W


available inventory

The on-hand inventory balance minus allocations, reservations, backorders, and (usually) quantities held for quality problems. Often called beginning available balance. Syn: beginning available balance, net inventory.A



Every part or assembly in a product structure is assigned a level code signifying the relative level in which that part or assembly is used within the product structure. Often times the end items are assigned level 0 with the components and subassemblies going into it assigned to level 1 and so on. The MRP explosion process starts from level 0 and proceeds downward one level at a time.L


overall factors

Syn: capacity planning using overall factors.O P


split delivery

A method by which a larger quantity is ordered on a purchase order to secure a lower price, but delivery is divided into smaller quantities and spread out over several dates to control inventory investment, save storage space, and so forth.S


production cycle

Syn: manufacturing lead time.P


ship-age limit

The date after which a product cannot be shipped to a customer.S


life cycle assessment (LCA)

Understanding the human and environmental aspects and impacts during the life of a product, process, or service, including energy, material, and environmental inputs and outputs. Sometimes called cradle-to-grave analysis, LCA includes raw material extraction through materials processing, manufacture, distribution, use, repair and maintenance, and disposal or recycling.L


transit inventory

Inventory in transit between manufacturing and stocking locations. See: transportation inventory.T


commercial speech

Communication that is primarily for a business purpose. Such speech is protected under the First Amendment to the U.S. Constitution but less so than is noncommercial speech.C


package to order

A production environment in which a good or service can be packaged after receipt of a customer order. The item is common across many different customers; packaging determines the end product.P


continuous improvement

The act of making incremental, regular improvements and upgrades to a process or product in the search for excellence.C


customs broker

A person who manages the paperwork required for international shipping and tracks and moves the shipments through the proper channels.C


adaptive control

1) The ability of a control system to change its own parameters in response to a measured change in operating conditions. 2) Machine control units in which feeds and/or speeds are not fixed. The control unit, working from feedback sensors, is able to optimize favorable situations by automatically increasing or decreasing the machining parameters. This process ensures optimum tool life or surface finish and/or machining costs or production rates.A


attribute inspection

Inspection for a go/no-go decision or yes/no decision or to count the number of defects on a unit. See: attribute, attribute data.A


vendor scheduler

Syn: supplier scheduler.V


blanket routing

A routing that lists groups of operations needed to produce a family of items. The items may have small differences in size, but they use the same sequence of operations. Specific times or tools for each individual item can be included.B


surrogate driver

In activity-based cost accounting, a substitute for the best possible driver that is useful because it is less costly and almost as accurate.S


shop committee

That committee that represents the union in its relations and negotiations with a company or plant. This is the first stage for the unionized employees to vet complaints.S


inactive inventory

Stock designated as in excess of consumption within a defined period or stocks of items that have not been used for a defined period.I


discontinuous demand

A demand pattern that is characterized by large demands interrupted by periods with no demand, as opposed to a continuous or steady (e.g., daily) demand. Syn: lumpy demand.D



Injury to another’s reputation by a public utterance: print (libel) or oral (slander).D


bin reserve system

Syn: two-bin inventory system.B



The physical plant, distribution centers, service centers, offices, laboratories, and related equipment.F


vertical merger

An alliance of two firms where one firm is a supplier to the other.V


strict liability

A tort doctrine requiring those engaging in very hazardous activities or those manufacturing very hazardous items be held to a high standard of conduct.S


supplier alternate

A seller other than the primary one. The supplier alternate may or may not supply the items purchased, but is usually approved to supply those items.S


stratification analysis

A statistical tool for determining root causes in which observed historical data are separated by particular characteristics to determine the effect of each characteristic upon the observed results. See: root cause analysis.S


centralized dispatching

The organization of the dispatching function into one central location. This structure often involves the use of data collection devices for communication between the centralized dispatching function, which usually reports to the production control department, and the shop manufacturing departments.C


yellow belt

One who has completed six sigma training in certain hands-on tools.Y


inventory valuation

The value of the inventory at either its cost or its market value. Because inventory value can change with time, some recognition is taken of the age distribution of inventory. Therefore, the cost value of inventory is usually computed on a FIFO basis, LIFO basis, or a standard cost basis to establish the cost of goods sold.I



The number of times per year that the system risks a stockout. The number of exposures is arrived at by dividing the lot size into the annual usage.E


decentralized dispatching

The organization of the dispatching function into individual departmental dispatchers.D


modal split

The breakdown of use of transportation modes. Statistics used for the calculation include passenger-miles, ton-miles, and revenue.M



An affirmative indication or judgment that a product or service has met the requirements of a relevant specification, contract, or regulation.C



A secure area used to store valuable items.C



An ongoing rise in the overall level of prices. Inflation reduces the purchasing power of money.I



The ability to view important information throughout a facility or supply chain no matter where in the facility or supply chain the information is located.V


valve inventory

In a just-in-time context, inventory at a stockpoint that is too large to be located next to the point of use of the material, and from which material is drawn by a pull system. The valve inventory is often located at a stockpoint in the plant’s receiving area.V



The makeup of an item, typically expressing chemical properties rather than physical properties.C



Money or resources used to invest in assets that produce products.C



1) The quantity of goods available for use. 2) The actual or planned replenishment of a product or component. The replenishment quantities are created in response to a demand for the product or component or in anticipation of such a demand.S



A quality characteristic’s departure from its intended level or state without any association to conformance to specification requirements or to the usability of a product or service. See: blemish, defect, nonconformity.I


supply chain inventory visibility

Software applications that permit monitoring events across a supply chain. These systems track and trace inventory globally on a line-item level and notify the user of significant deviations from plans. Companies are provided with realistic estimates of when material will arrive.S


flow rate

Running rate; the inverse of cycle time; for example, 360 units per shift (or 0.75 units per minute).F



Abbreviation for computer-aided engineering.C



Standard seven-bit character code used by computer manufacturers to represent 128 characters for information interchange among data processing systems, communications systems, and other information system equipment. An eighth bit is added as a parity bit to check a string of ASCII characters for correct transmission.A


regression analysis

A statistical technique for determining the best mathematical expression describing the functional relationship between one response and one or more independent variables. See: least-squares method.R


modification flexibility

The capability of the transformation process to quickly implement minor product design changes.M


information visibility

How extensive information is shared throughout a firm and with other stakeholders.I


seven new tools (N7)

A set of quality improvement tools developed by the Japanese Society for QC Technique Development. The N7 are affinity diagram, interrelationship digraph, matrix diagram, tree diagram, prioritization matrix, process decision program chart, and activity network diagram. See: basic seven tools of quality.S



For jobs that are late, the delivery date minus the due date. See: earliness, lateness.T


and (5) Pure competition

Many competitors offer undifferentiated products or services.I


operations sequencing

A technique for short-term planning of actual jobs to be run in each work center based upon capacity (i.e., existing workforce and machine availability) and priorities. The result is a set of projected completion times for the operations and simulated queue levels for facilities.O


house of quality (HOQ)

A structured process that relates customer-defined attributes to the product’s technical features needed to support and generate these attributes. This technique achieves this mapping by means of a six-step process: (1) identification of customer attributes; (2) identification of supporting technical features; (3) correlation of the customer attributes with the supporting technical features; (4) assignment of priorities to the customer requirements and technical features; (5) evaluation of competitive stances and competitive products; and (6) identification of those technical features to be used (deployed) in the final dehub ● ICC I sign of the product. HOQ is part of the quality function deployment (QFD) process and forces designers to consider customer needs and the degree to which the proposed designs satisfy these needs. See: customerdefined attributes, quality function deployment.H



A coefficient appearing in a mathematical expression, each value of which determines the specific form of the expression. Parameters define or determine the characteristics or behavior of something, as when the mean and standard deviation are used to describe a set of data.P


grandfather clause

A provision that exempts existing entities from a newly created regulation.G


general and administrative expenses (G&A)

The category of expenses on an income statement that includes the costs of general managers, computer systems, research and development, and more.G generally accepted accounting principles (GAAP) Accounting practices that conform to conventions, rules, and procedures that have general acceptability by the accounting profession.G



The allocation of product among consumers. When price is used to allocate product, it is allocated to those willing to pay the most.R



A situation in which an oversupply exists.S


alternate part

When a buyer can purchase similar products from different suppliers. This increases the buyer’s power as the buyer does not have to rely on just one supplier.A


selling expense

An expense or class of expense incurred in selling or marketing (e.g., salespersons’ salaries and commissions, advertising, samples, shipping costs).S selling, general, and administrative (SG&A) expenses The fixed costs associated with a company. Examples are salaries, marketing costs, customer service, occupancy expenses, and other overhead. In retail this is called the “cost of selling.”S


production capability

1) The highest sustainable output rate that could be achieved for a given product mix, raw materials, worker effort, plant, and equipment. 2) The collection of personnel, equipment, material, and process segment capabilities. 3) The total of the current committed, available, and unattainable capability of the production facility. The capability includes the capacity of the resource.P


freight bill

A freight carrier’s invoice for a shipment.F


price protection

An agreement by a supplier with a purchaser to grant the purchaser any reduction in price that the supplier may establish on its goods before shipment of the purchaser’s order or to grant the purchaser the lower price should the price increase before shipment. Price protection is sometimes extended for an additional period beyond the date of shipment.P


sample range

The largest value in a sample minus the smallest value in the sample.S


statistical control

The situation where variations among the observed samples can be attributed to a constant system of chance causes.S


would like to get

and the floor is the total variable costs of the product using traditional accounting.C


closed-loop MRP

A system built around material requirements planning that includes the additional planning processes of production planning (sales and operations planning), master production scheduling, and capacity requirements planning. Once this planning phase is complete and the plans have been accepted as realistic and attainable, the execution processes come into play. These processes include the manufacturing control processes of input-output (capacity) measurement, detailed scheduling and dispatching, as well as anticipated delay reports from both the plant and suppliers, supplier scheduling, and so on. The term closed loop implies not only that each of these processes is included in the overall system, but also that feedback is provided by the execution processes so that the planning can be kept valid at all times.C


flexible capacity

The ability to operate manufacturing equipment at different production rates by varying staffing levels and operating hours or starting and stopping at will.F


team design/engineering

Syn: participative design/ engineering.T T


in-process waiver requests

Requests for waivers on normal production procedures because of deviations in materials, equipment, or quality metrics, where normal product specifications are maintained.I


customer satisfaction

The results of delivering a good or service that meets customer requirements.C


lead capacity strategy

A capacity strategy in which, as demand increases and is expected to increase, capacity is added prior to the realization of demand.L


logistics channel

A set of supply chain partners who participate in storage, transportation, and communications that contribute to the flow of goods.L


multimedia files

Digitized image, video, and audio files that can be retrieved and converted to a form usable by a human.M


contract accounting

The function of collecting costs incurred on a given job or contract, usually in a progress payment situation. Certain U.S. government contracting procedures require contract accounting.C


laboratory order

Syn: experimental order.L



Acronym for point of purchase.P


hold order

A written order directing that certain operations or work be interrupted or terminated pending a change in design or other disposition of the material. Syn: stop work order.H


labor cost

The dollar amount of labor performed during manufacturing. This amount is added to direct material cost and overhead cost to obtain total manufacturing cost.L


manufacturing philosophy

The set of guiding principles, driving forces, and ingrained attitudes that helps communicate goals, plans, and policies to all employees and that is reinforced through conscious and subconscious behavior within the manufacturing organization.M


inventory optimization software

A computer application having the capability of finding optimal inventory strategies and policies related to customer service and return on investment over several echelons of a supply chain.I



An accounting/financial term (balance sheet classification of accounts) representing the resources owned by a company, whether tangible (cash, inventories) or intangible (patent, goodwill). Assets may


early finish date (EF)

In the critical path method of project management, the earliest time at which a given activity is estimated to be completed. This date can change as the project is executed.E


tact time

Syn: takt time.T