APICS Deck 6 OO Flashcards Preview

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Flashcards in APICS Deck 6 OO Deck (499):


The overall goal(s) for an organization set within the parameters of the business scope.M


process decision program chart

A technique used to show alternate paths to achieving given goals. Applications include preparing contingency plans and maintaining project schedules.P


have a short-term time horizon

such as cash, accounts


order management

The planning, directing, monitoring, and controlling of the processes related to customer orders, manufacturing orders, and purchase orders. Regarding customer orders, order management includes order promising, order entry, order pick, pack and ship, billing, and reconciliation of the customer account. Regarding manufacturing orders, order management includes order release, routing, manufacture, monitoring, and receipt into stores or finished goods inventories. Regarding purchasing orders, order management includes order placement, monitoring, receiving, acceptance, and payment of supplier.O



A manufacturer that turns the product of a converter into a larger variety of products. For example, a fabricator may turn steel rods into nuts, bolts, and twist drills, or may turn paper into bags and boxes.F



Abbreviation for enterprise resources planning.E



In the theory of constraints, the constraint is viewed as a drum, and nonconstraints are like soldiers in an army who march in unison to the drumbeat; the resources in a plant should perform in unison with the drumbeat set by the constraint.D


manufacturer’s representative

One who sells goods for several firms but does not take title to them. Syn: manufacturer’s agent, manufacturing representative.M


acceptable quality level (AQL)

When a continuing series of lots is considered, a quality level that, for the purposes of sampling inspection, is the limit of a satisfactory process average.A



The process of constructing and staging kits.K


sales cycle time

Time from a product entering a floor until it is completely sold out.S


classification of defects

The delineation of possible defects on a unit, classified by seriousness: critical (A), major (B), minor (C), or incidental (D).C


period capacity

The number of standard hours of work that can be performed at a facility or work center in a given time period.P


procurement cycle

Syn: procurement lead time.P


delivery policy

The company’s goal for the time to ship the product after the receipt of a customer’s order. The policy is sometimes stated as “our quoted delivery time.”D


nominal capacity

Syn: rated capacity.N


tiger teams

Teams that attempt to achieve a specific goal within a short time period.T


principle of postponement

Syn: order penetration point.P


order control

Control of manufacturing activities by individual manufacturing, job, or shop orders, released by planning personnel and authorizing production personnel to complete a given batch or lot size of a particular manufactured item. Information needed to complete the order (components required, work centers and operations required, tooling required, etc.) may be printed on paper or tickets, often called shop orders or work orders, which are distributed to production personnel. This use of order control sometimes implies an environment where all the components for a given order are O picked and issued from a stocking location, all at one time, and then moved as a kit to manufacturing before any activity begins. It is most frequently seen in job shop manufacturing. See: shop floor control.O


smoothing constant

In exponential smoothing, the weighting factor that is applied to the most recent demand, observation, or error. In this case, the error is defined as the difference between actual demand and the forecast for the most recent period. The weighting factor is represented by the symbol α. Theoretically, the range of α is 0.0 to 1. Syn: alpha factor, smoothing factor.S


Taguchi methods

Syn: Taguchi methodology.T


public-private partnering

Cooperation between a government entity and one or more private enterprises to perform work or utilize facilities.P



Abbreviation for transition tree.T



The 17 basic movements identified by Frank and Lillian Gilbreth. (The name of the term is essentially Gilbreth spelled backwards.) Examples of movements T include grasp, move, release, select, and position. See: predetermined time standards.T


buyer code

A code used to identify the purchasing person responsible for a given item or purchase order.B


honeycomb loss

The usable empty storage space in a stack due to storage of only a single stockkeeping unit in the stack to permit better access.H


information technology

The technology of computers, telecommunications, and other devices that integrate data, equipment, personnel, and problem-solving methods in planning and controlling business activities. Information technology provides the means for collecting, storing, encoding, processing, analyzing, transmitting, receiving, and printing text, audio, or video information.I


continuous manufacturing

A type of manufacturing process that is dedicated to the production of a very narrow range of standard products. The rate of product change and new product information is very low. Significant investment in highly specialized equipment allows for a high volume of production at the lowest manufacturing cost. Thus, unit sales volumes are very large, and price is almost always a key order-winning criterion. Examples of items produced by a continuous process include gasoline, steel, fertilizer, glass, and paper. Syn: continuous production.C


prevention costs

The costs caused by improvement activities that focus on the reduction of failure and appraisal costs. Typical costs include education, quality training, and supplier certification. Prevention costs are one of four categories of quality costs.P


and disposition costs

that will be incurred over the entire time of product ownership.L


overhead allocation

In accounting, the process of applying overhead to a product on the basis of a predetermined rate.O


transport stocks

A carrier material to move solids in solution or slurry or to dilute ingredients to safe levels for reaction.T


frozen zone

In forecasting, the periods where no changes can be made to work orders based on changes in demand. This provides stability to the master production schedule.F


job enlargement

An increase in the number of tasks that an employee performs. Job enlargement is associated with the design of jobs, particularly production jobs, and its purpose is to reduce employee dissatisfaction.J



A production environment where a good or service can be made after receipt of a customer’s order. The final product is usually a combination of standard items and items custom-designed to meet the special needs of the customer. Where options or accessories are stocked before customer orders arrive, the term assemble-to-order is frequently used. Syn: produce-to-order. See: assemble-to-order, make-tostock. M


price skimming

Introducing a product above its longrun price to maximize product margin before others can enter the market.P


consumer’s risk (ß)

For a given sampling plan, the probability of acceptance of a lot, the quality of which has designated numerical value representing a level that is worse than some threshold value. See: type II error.C


purchased part

An item sourced from a supplier.P


range chart

Syn: R chart.R


rolling wave planning

A form of planning where the work to be performed in the near term is planned in detail and longer term work is planned at a lesser level of detail.R


standard costs

The target costs of an operation, process, or product including direct material, direct labor, and overhead charges.S S


rationalization exercise

A process of reducing the population of figures such as stockkeeping unit counts or supplier lists.R


price schedule

The list of prices applying to varying quantities or kinds of goods.P


distributed numerical control

An approach to automated machining in which each machine tool has its own dedicated microcomputer or computer numerical control (CNC). Each machine tool’s CNC is connected via a network with a minicomputer that handles distributed processing between the host mainframe computer and the CNC. This minicomputer handles part program transfers and machine status data collection. This approach is considered more advanced than direct numerical control, in which several machine tools are tied directly to a central computer.D


value, (6) inventory

stock that is sitting is accumulating cost without necessarily providing value, (7) defective


cumulative system

A method for planning and controlling production that makes use of cumulative MRP, cumulative requirements, and cumulative counts.C


incentive pay system

A way to compensate employees based on their job performance.I I



Abbreviation for group technology.G


primary work center

The work center where an operation on a manufactured part is normally scheduled to be performed. Ant: alternate work center.P


burn rate

The rate at which a company consumes cash. It can be used to determine when more cash must be raised.B


joint replenishment system

Syn: joint replenishment.J


min-max system

A type of order point replenishment system where the minimum (min) is the order point, and the maximum (max) is the “order up to” inventory level. The order quantity is variable and is the result of the max minus available and on-order inventory. An order is recommended when the sum of the available and onorder inventory is at or below the min.M


efficient consumer response (ECR)

Replenishment through a distribution network based on point-of-sale information.E



A queuing theory term for leaving a line after entering it but before receiving service. See: balking.R


adaptable website

In e-commerce, a site that a visitor can change to customize.A



Abbreviation for upper specification limit.U



Abbreviation for failure mode analysis.F


common causes

Causes of variation that are inherent in a process over time. They affect every outcome of the process and everyone working in the process. Syn: random cause. See: assignable cause, assignable variation, common cause variability.C


group classification code

A part of a material classification technique that provides for designation of characteristics by successively lower order groups of code. Classification may denote function, type of material, size, shape, and so forth.G


inventory accuracy

When the on-hand quantity is within an allowed tolerance of the recorded balance. This important metric usually is measured as the percent of items with inventory levels that fall within tolerance. Target values usually are 95 percent to 99 percent, depending on the value of the item.I



Abbreviation for distributed data processing.D



One who receives a transfer of contract rights from a party to the contract.A


contingency planning

A process for creating a document that specifies alternative plans to facilitate project success if certain risk events occur.C


trailer on a flatcar (TOFC)

A specialized form of containerization in which motor and rail transport coordinate. Syn: piggyback.T


blanket release

The authorization to ship and/or produce against a blanket agreement or contract.B



The programs and documentation necessary to make use of a computer.S


value perspective

A quality perspective that holds that quality must be judged, in part, by how well the characteristics of a particular product or service align with the needs of a specific user.V


gross profit margin

Syn: gross margin.G


action report

Syn: action message.A


net operating profit after taxes (NOPAT)

Operating profit less applicable taxes.N


product configurator

A system, generally rule-based, to be used in design-to-order, engineer-to-order, or maketo- order environments where numerous product variations exist. Product configurators perform intelligent modeling of the part or product attributes and often create solid models, drawings, bills of material, and cost estimates that can be integrated into CAD/CAM and MRP II systems as well as sales order entry systems.P


business environment

Syn: operating environment.B


market-positioned strategy

A location strategy that focuses on the customer by placing warehouses closer to the customer. See: product-positioned strategy.M


multiple-phase queuing system

Queuing system that performs a service in two or more sequential steps when there are several waiting lines. Syn: multiphase system. See: channel, queuing theory.M



Abbreviation for rough-cut capacity planning.R


future value

A present payment’s value at some point in the future valued at a given interest rate.F



The costs or benefits of a firm’s activities borne or received by others.E



Devices that can monitor differences in conditions to control equipment on a dynamic basis.S


contribution relativities

An investment by one stakeholder may benefit others in the supply chain.C


rework order

A manufacturing order to rework and salvage defective parts or products. Syn: repair order, spoiled work order.R


TOC performance measures

In the theory of constraints, throughput, inventory, and operating expense are considered performance measures that link operational decisions to organizational profit.T


beginning inventory

A statement of the inventory count at the end of last period, usually from a perpetual inventory record.B


project schedule

In project management, a list of activities and their planned completion dates that collectively achieve project milestones.P



A Japanese word meaning student.D


use as is

Classification for material that has been declared to be unacceptable per the specifications, yet can be used.U



Abbreviation for global positioning system.G


force field analysis

A technique for analyzing the forces that will aid or hinder an organization in reaching an objective. An arrow pointing to an objective is drawn down the middle of a piece of paper. The factors that will aid the objective’s achievement (called the driving forces) are listed on the left side of the arrow; the factors that will hinder its achievement (called the restraining forces) are listed on the right side of the arrow.F


changeover costs

Syn: setup costs.C


fill rate

Syn: customer service ratio.F



Abbreviation for upper control limit.U


responsibility assignment matrix (RAM)

A tool to ensure that each component of work in a project is assigned to a responsible person.R


requirements explosion

The process of calculating the demand for the components of a parent item by multiplying the parent item requirements by the component usage quantity specified in the bill of material. Syn: explosion.R


net operating cash flow

In finance management, the difference between cash inflow and cash outflow for a period. It is found by taking the change in net operating profit after taxes and adding the change in depreciation then subtracting the increase in net working capital requirements. N


of all costs

including acquisition, operation,


total productive maintenance (TPM)

Preventive maintenance plus continuing efforts to adapt, modify, and refine equipment to increase flexibility, reduce material handling, and promote continuous flows. It is operatororiented maintenance with the involvement of all qualified employees in all maintenance activities. Syn: total preventive maintenance.T


on-the-job training (OJT)

Learning the skills and necessary related knowledge useful for the job at the place of work or possibly while at work.O


five-forces model of competition

A methodology for analyzing competitive pressures in a market and assessing the strength and importance of each of those pressures.F


control decision

A decision about the planning or controlling of daily operations.C


resource contention

Simultaneous need for a common resource. Syn: concurrency.R


multiple-item lot-sizing models

Processes or systems used to determine the total replenishment order quantity for a group of related items.M


planning bill of material

An artificial grouping of items or events in bill-of-material format used to facilitate master scheduling and material planning. It may include the historical average of demand expressed as a percentage of total demand for all options within a feature or for a specific end item within a product family and is used as the quantity per in the planning bill of material. Syn: planning bill. See: hedge, option overplanning, production forecast, pseudo bill of material.P


agency tariff

Rates for a variety of carriers published in a single document.A


buyer’s market

A market in which goods can easily be secured and in which the economic forces of business tend to cause goods to be priced at the purchaser’s estimate of value.B


overall equipment effectiveness (OEE)

Measuring the effectiveness of all of the equipment of a company based on usage, performance and production quality.O


and personal selling

that stimulate interest, trial, or purchase by final customers or others in the marketing channel.S


assembly lead time

The time that normally elapses between the issuance of a work order to the assembly floor and work completion.A


firm offer

A written offer to buy or sell goods that will be held open for a stipulated period.F


management science

Syn: operations research.M


fixed-interval order system

Syn: fixed reorder cycle inventory model.F


bubble chart

A diagram that attempts to display the interrelationships of systems, functions, or data in a sequential flow. It derives its name from the circular symbols used to enclose the statements on the chart.B


planning calendar

Syn: manufacturing calendar.P


hoshin planning

Breakthrough planning. A Japanese strategic planning process in which a company develops up to four vision statements that indicate where the company should be in the next five years. Company goals and work plans are developed based on the vision statements. Periodic audits are then conducted to monitor progress.H



A characteristic of those applications where a user communicates with a computer program via a terminal, entering data and receiving responses from the computer.I


sunk cost

1) The unrecovered balance of an investment. It is a cost, already paid, that is not relevant to the decision concerning the future that is being made. Capital already invested that for some reason cannot be retrieved. 2) A past cost that has no relevance with respect to future receipts and disbursements of a facility undergoing an economic study. This concept implies that since a past outlay is the same regardless of the alternative selected, it should not influence the choice between alternatives.S



Syn: failsafe work methods, pokayoke. M


Hawthorne effect

A study at the Hawthorne Western Electric plant from 1927 to 1932 systematically improved working conditions and productivity improved. Then, when it systematically worsened working conditions, productivity improved. From this study, it was determined that concern by management generally factors into improved productivity.H


value-of-service pricing

Allowing the market to determine the price.V



In accounting, the process of removing an asset from an organization’s books through the expensing process.W


customer share

In marketing, a measurement (usually a percentage) of how many potential customers are attracted to a brand. It is a measurement of the recognition of the brand in the marketplace and the predisposition of the customer to buy the brand when presented with a choice of competing brands.C



Abbreviation for flexible machine center.F


operations scheduling

The actual assignment of starting or completion dates to operations or groups of operations to show when these operations must be done if the manufacturing order is to be completed on time. These dates are used in the dispatching function. Syn: detailed scheduling, order scheduling, shop scheduling.O


line manufacturing

Repetitive manufacturing performed by specialized equipment in a fixed sequence.L


internal setup time

The time associated with elements of a setup procedure performed while the process or machine is not running. Ant: external setup time.I


visual control

The control of authorized levels of activities and inventories in a way that is instantly and visibly obvious. This type of activity and inventory control is used in a workplace organization where everything has an assigned place and is in its place.V



A method of evaluating an investment opportunity that provides a measure of the time required to recover the initial amount invested in a project.P


hybrid production method

A production planning method that combines the aspects of both the chase and level production planning methods. Syn: hybrid manufacturing process, hybrid strategy. See: chase production method, level production method, production planning method.H


decentralized purchasing

When purchasing decisions are made locally and not at a central location.D


pre-transaction elements

Customer service elements that pertain to the period before a product or service is sold, including flexibility, customer policies, and mission statement.P


material release

The introduction of parts into a production process.M


summarized bill of material

A form of multilevel bill of material that lists all the parts and their quantities required in a given product structure. Unlike the indented bill of material, it does not list the levels of manufacture and lists a component only once for the total quantity used.S S


freight forwarder

The “middle man” between the carrier and the organization shipping the product. Often combines smaller shipments to take advantage of lower bulk costs.F


reverse flow scheduling

A scheduling procedure used in some process industries for building process train schedules that starts with the last stage and proceeds backward (countercurrent to the process flow) through the process structure.R


decisions under certainty

Simple decisions that assume complete information and no uncertainty connected with the analysis of decisions.D


management by objectives (MBO)

A participative goalsetting process that enables the manager or supervisor to construct and communicate the goals of the department to each subordinate. At the same time, the subordinate is able to formulate personal goals and influence the department’s goals.M



Expenditures of short-term value, including depreciation, as opposed to land and other fixed capital. See: overhead.E


peak demand

A specific time when the quantity demanded is greater than all other times.P


competitive intelligence

The information required to conduct a competitive analysis about external events and trends that can affect a company’s plans.C


ABC analysis

Syn: ABC classification.A


certificated carrier

A regulated for-hire air carrier that provides service under an operating certificate.C


dedicated contract carrier

A third-party hauler that works exclusively for a single customer.D


engineering standard

Design or test guidelines intended to promote the design, production, and test of a part, component, or product in a manner that promotes standardization, ease of maintenance, consistency, adequacy of test procedures, versatility of design, ease of production and field service, and minimization of the number of different tools and special tools required.E



A measurement (usually expressed as a percentage) of the actual output to the standard output E expected. Efficiency measures how well something is performing relative to existing standards; in contrast, productivity measures output relative to a specific input (e.g., tons/labor hour). Efficiency is the ratio of (1) actual units produced to the standard rate of production expected in a time period or (2) standard hours produced to actual hours worked (taking longer means less efficiency) or (3) actual dollar volume of output to a standard dollar volume in a time period. Illustrations of these calculations follow. (1) There is a standard of 100 pieces per hour and 780 units are produced in one eight-hour shift; the efficiency is 780/800 converted to a percentage, or 97.5 percent. (2) The work is measured in hours and took 8.21 hours to produce 8 standard hours; the efficiency is 8/8.21 converted to a percentage or 97.5 percent. (3) The work is measured in dollars and produces $780 with a standard of $800; the efficiency is $780/$800 converted to a percentage, or 97.5 percent.E


supply chain integration

When supply chain partners interact at all levels to maximize mutual benefit.S


flexible path equipment

Materials handling equipment such as forklifts that do not have to follow fixed paths.F


activity-based budgeting (ABB)

In activity-based cost accounting, a budgeting process employing knowledge of activities and driver relationships to predict workload and resource requirements in developing a business plan. Budgets show the predicted consumption and cost of resources using forecast workload as a basis. The company can use performance to budget in evaluating success in setting and pursuing strategic goals; this activity is part of the activity-based planning process.A



Abbreviation for telnet.T


earliest due date (EDD)

A priority rule that sequences the jobs in a queue according to their (operation or job) due dates. See: earliest operation due date.E


marketing research

The systematic gathering, recording, and analyzing of data about problems relating to the marketing of goods and services. Such research may be undertaken by impartial agencies or by business firms or their agents. Marketing research includes several types: (1) market analysis (product potential is a type) is the study of the size, location, nature, and characteristics of markets, (2) sales analysis (or research) is the systematic study and comparison of sales (or consumption) data, (3) consumer research (motivation research is a type) is concerned with the discovery and analysis of consumer attitudes, reactions, and preferences. Syn: market research.M


differentiated marketing

Marketing to different market segments with a different marketing strategy for each segment.D


machine productivity

A partial productivity measure. The rate of output of a machine per unit of time compared with an established standard or rate of output. Machine productivity can be expressed as output per unit of time or output per machine hour. See: labor productivity, productivity.M



A representation of a process or system that attempts to relate the most important variables in the system in such a way that analysis of the model leads to insights into the system. Frequently, the model is used to anticipate the result of a particular strategy in the real system.M



Production lines shaped like the letter “U.” The shape allows workers to easily perform several nonsequential tasks without much walk time. The number of workstations in a U-line is usually determined by line balancing. U-lines promote communication.U


return on owner’s equity (ROE)

A financial measurement of how successful a company is in creating income for the owners of the organization. A comparison of the ROE with the ROA indicates the effectiveness of financial leverage employed by the firm. The measurement is calculated by dividing the net income by average owner’s equity. See: return on assets (ROA).R



An arrangement in which employees are allowed to choose work hours as long as the standard number of work hours is worked.F


chase production method

A production planning method that maintains a stable inventory level while varying production to meet demand. Companies may combine chase and level production schedule methods. Syn: chase strategy, chase-demand strategy.C


commercial-off-the-shelf (COTS)

A term describing computer software made available for sale by commercial developers.C


release-to-start manufacturing

The time it takes from when an order is released until the beginning of the manufacturing process. This delay occurs because of the movement of materials and the changing of lines. It is non-productive time that increases lead time.R



The authorization to produce or ship material that has already been ordered.R


stock status

A report showing the inventory on hand and usually showing the inventory on order and some sales or usage history for the products that are covered in the stock status report.S


transportation mode

The way an item is transported.T


discount rate

The rate of interest charged to commercial banks by a central banking authority.D



Logistics information systems that initiate and control the movement of materials between supply chain partners.W



Acronym for earnings before interest and taxesE


four-wall inventory

Syn: wall-to-wall inventory.F


cost of goods sold

An accounting classification useful for determining the amount of direct materials, direct labor, and allocated overhead associated with the products sold during a given period of time. See: cost of sales.C


focus-group research

A form of research (frequently used in marketing research) where data are gathered by interviewing consumers in groups of 6 to 10 at a time (the focus group). See: marketing research.F


indented tracking

The following of all lot numbers of intermediates and ingredients consumed in the manufacture of a given batch of product down through all levels of the formula.I


resource calendar

A calendar of working days and nonworking days that shows when resources are idle. Typically, the calendar includes holidays and weekends. See: manufacturing calendar.R


common variation

Syn: common cause variability.C


virtual factory

A changed transformation process most frequently found under the virtual corporation. It is a transformation process that involves merging the capabilities and capacities of the firm with those of its suppliers. Typically, the components provided by the suppliers are those that are not related to a core competency of the firm, while the components managed by the firm are related to core competencies. One ability found in the virtual factory is that it can be restructured quickly in response to changing customer demands and needs.V


mass marketing

The strategy of sending the same message to all potential customers.M


Pareto diagram

Syn: Pareto chart.P



Abbreviation for recency, frequency, monetary.R


cost-plus-incentive-fee contract

A contract in which the seller is paid for costs specified as allowable in the contract plus a profit provided certain provisions are met.C C


planning bill

Syn: planning bill of material.P


order scheduling

Syn: operations scheduling.O


experience curve pricing

The average cost pricing method, but using an estimate of future average costs, based on an experience (learning) curve.E



The measurement of active material in a specific lot, normally expressed in terms of an active unit. Typically used for such materials as solutions.P



1) The components of a parent item that have been pulled from stock and readied for movement to a production area. 2) A group of repair parts to be shipped with an order. Syn: kitted material, staged material.K



A multiservice website that provides access to data that may be secured by each user’s role. Users can aggregate data and perform basic analysis. Portal ownership can be independent, private, or consortiumbased. Yahoo! is an example of a consumer portal. Business portals are often connected with a customer relationship management or supplier relationship management system. Portals can include structured data, such as ERP information, pictures, and documents. Unlike exchanges or marketplaces, portals generally can display and aggregate data without integration between application software.P


inbound logistics

The group in charge of moving materials from suppliers or vendors into production processes or storage facilities; or, the actual movement of such material.I


schedule variance (SV)

Earned value (EV) minus planned value (PV), which measures a project’s schedule performance.S


replenishment order quantity

Syn: reorder quantity.R



Used as a relative reference within a firm or supply chain to indicate moving in the direction of the raw material supplier.U


single-level bill of material

A display of components that are directly used in a parent item. It shows only the relationships one level down.S


standing capacity

Syn: rated capacity.S


manufacturing progress curve

Syn: learning curve.M


product structure record

A computer record defining the relationship of one component to its immediate parent and containing fields for quantity required, engineering effectivity, scrap factor, application selection switches, and so forth.P


systems audit

The audit of any activity that can affect final product quality.S


spend management

Managing the outflow of funds in order to buy goods and services. The term is intended to S encompass such processes as outsourcing, procurement, e-procurement, and supply chain management.S


less-than-carload (LCL)

Either a small shipment that does not fill the railcar or a shipment of not enough weight to qualify for a carload quantity rate discount.L


operational availability

The portion of time a system is available to sustain operations in full.O


backward scheduling

Syn: back scheduling.B



Abbreviation for object-oriented programming.O


manufacturing lead time

The total time required to manufacture an item, exclusive of lower level purchasing lead time. For make-to-order products, it is the length of time between the release of an order to the production process and shipment to the final customer. For make-to-stock products, it is the length of time between the release of an order to the production process and receipt into inventory. Included here are order preparation time, queue time, setup time, run time, move time, inspection time, and put-away time. Syn: manufacturing cycle, production cycle, production lead time. See: lead time.M


single-sampling plan

A quality control method of taking only one sample and then making a decision to accept or reject a batch of items.S


demonstrated capacity

Proven capacity calculated from actual performance data, usually expressed as the average number of items produced multiplied by the standard hours per item. See: maximum demonstrated capacity.D



Abbreviation for future reality tree.F



Documentation of competency by a supplier or by an organization, such as ISO 9000 certification. See: supplier certification, ISO 9000.C


regularized schedule

A schedule having certain items produced at regular intervals.R



The degree of nonsymmetry shown by a frequency or probability distribution.S


exchange unit

The number of units to be produced before changing the bit, tool, or die. See: process batch.E



Tests of the physical and chemical properties of a sample.A


cash discount

A price break offered for the early payment of an invoice.C


smart label

A label with an embedded radio frequency identification tag.S


what-if simulation

An approach to conducting a what-if analysis usually found in MRP II and ERP systems.W


marginal product

In economics, the additional quantity of total output following from a one-unit increase in variable input. See: law of diminishing marginal returns.M


order-oriented finite loading

A set of finite loading techniques to schedule orders according to order-level priority rules. The techniques aim to either (1) maximize capacity utilization or (2) deliver a high proportion of ontime orders with low work in process. See: constraintoriented finite loading, drum-buffer-rope.O


assigned material

Syn: reserved material.A



Work arriving at a work center or production facility.I


simplex method

An approach to solving linear programming models.S


annual percentage rate

In finance, the rate of interest paid for a loan after compounding is considered. Syn: effective interest rate.A


random access

A manner of storing records in a computer file so that an individual record may be accessed without reading other records.R



A high-speed device used within a computer to store frequently retrieved data.C


risk acceptance

A decision to take no action to deal with a risk or an inability to format a plan to deal with the risk.R


material control

Syn: inventory control.M


job order

Syn: manufacturing order.J


control center

In a centralized dispatching operation, the place at which the dispatching is done.C



Abbreviation for management information system.M M


run sheet

A log-type document used in continuous processes to record raw materials used, quantity produced, in-process testing results, and so on. It may serve as an input document for inventory records.R


lot sizing

The process of, or techniques used in, determining lot size. See: order policy.L


imposed date

A fixed date given to an activity usually “start no earlier than” or “finish no later than.”I


flow plant

Syn: flow shop.F


affirmative action

A hiring policy that requires employers to analyze the workforce for underrepresentation of protected classes. It involves recruiting minorities and members of protected classes, changing management attitudes or prejudices toward them, removing discriminatory employment practices, and giving preferential treatment to protected classes.A


proprietary assembly

An assembly designed by a manufacturer that may be serviced only with component parts supplied by the manufacturer and whose design is owned or licensed by its manufacturer.P


batch manufacturing

A type of manufacturing process in which sets of items are moved through the different manufacturing steps in a group or batch.B


Occupational Safety and Health Act (OSHA)

A U.S. law that applies to all employers in the United States who are engaged in interstate commerce. Its purpose is to ensure safe and healthful working conditions by authorizing enforcement of the standards provided under the act.O


facility planning

Long range plan of what capacity is needed, when it will be needed, and what facilities will meet these requirements; also, a plan for the layout of these facilities.F


offal material

The by-product or waste of production processes (e.g., chips, shavings, turnings).O


funds flow management

The planning, execution, and control of cash receipts and disbursements with the objective of maintaining the cash balance at a preset positive value. Syn: cash flow management.F


branch and bound

Operations research models for determining optimal solutions based on the enumeration of subsets of possible solutions, which implicitly enumerate all possible solutions.B


handling cost

The cost involved in the movement of material. In some cases, the handling cost depends on the size of the inventory.H



To adjust observed data to a standard base.N


raw material

Purchased items or extracted materials that are converted via the manufacturing process into components and products.R


continuous variable

A variable, such as height, temperature, or weight, that can be measured along a continuous scale. See: discrete variable.C



Syn: load.W



Abbreviation for prerequisite tree.P



The most common or frequent value in a group of values.M


bill of resources

A listing of the required capacity and key resources needed to manufacture one unit of a selected item or family. Rough-cut capacity planning uses these bills to calculate the approximate capacity requirements of the master production schedule. Resource planning may use a form of this bill. Syn: bill of capacity. See: bill of labor, capacity planning using overall factors, product load profile, resource profile, rough-cut capacity planning, routing.B


what-if analysis

The process of evaluating alternate strategies by answering the consequences of changes to forecasts, manufacturing plans, inventory levels, and so forth. See: simulation.W



Syn: distributor.W


reserved material

Material on hand or on order that is assigned to specific future production or customer orders. Syn: allocated material, assigned material, obligated material.R


run time

The time required to process a piece or lot at a specific operation. Run time does not include setup time. Syn: run standards.R



Unknown future events that cannot be predicted quantitatively within useful limits; for example, an accident that destroys facilities, a major strike, or an innovation that makes existing products obsolete.U


bill-of-material processor

A computer program for maintaining and retrieving bill-of-material information.B


carrying cost

The cost of holding inventory, usually defined as a percentage of the dollar value of inventory per unit of time (generally one year). Carrying cost depends mainly on the cost of capital invested as well as such costs of maintaining the inventory as taxes and insurance, obsolescence, spoilage, and space occupied. Such costs vary from 10 percent to 35 percent annually, depending on type of industry. Carrying cost is ultimately a policy variable reflecting the opportunity cost of alternative uses for funds invested in inventory. Syn: holding costs.C



Allowable departure from a nominal value established by design engineers that is deemed acceptable for the functioning of the good or service over its life cycle.T


material list

Syn: picking list.M


locator system

A system for maintaining a record of the storage locations of items in inventory. See: locator file.L



Carrier charges and fees applied when truck trailers are retained beyond a specified loading or unloading time. See: demurrage, express.D


finished product

Syn: end item.F


lot-size inventory

Inventory that results whenever quantity price discounts, shipping costs, setup costs, or similar considerations make it more economical to purchase or produce in larger lots than are needed for immediate purposes.L lot-size inventory management interpolation technique


workman’s compensation

This is a state-administered program whereby employees are guaranteed medical coverage in case they are injured on the job and companies are limited as to their liability for such job-related injuries.W


audit trail

Tracing the transactions affecting the contents or origin of a record.A


average variable cost

The ratio of total variable costs over units produced.A


fault isolation

A technique used to identify the cause of a defect.F


due date rule

A dispatching rule that directs the sequencing of jobs by the earliest due date.D



Action taken to compensate for variation within the control limits of a stable system. Tampering increases rather than decreases variation, as evidenced in the funnel experiment. See: funnel experiment.T


information distribution

Making needed data available to stakeholders in a timely manner.I



Anything that adds value to a good or service in its creation, production, or delivery.R


type II error

An incorrect decision to accept something when it is unacceptable. See: consumer’s risk.T U U



The action that will be taken by a computer program when the user does not specify a variable parameter.D



1) A collaboration process whereby supply chain trading partners can jointly plan key supply chain activities from production and delivery of raw materials to production and delivery of final products to end customers. Collaboration encompasses business planning, sales forecasting, and all operations required to replenish raw materials and finished goods. 2) A process philosophy for facilitating collaborative communications. CPFR is considered a standard, endorsed by the Voluntary Interindustry Commerce Standards. Syn: collaborative planning.C


data communications

Transmission of data in computer-readable form using various transmission vehicles and paths.D


budget at completion (BAC)

The total planned budget for a project.B


activity-on-node network (AON)

A project management network in which the passage of time, via activities, takes place on circles called nodes. Each node contains A a number representing the estimated duration of the activity it represents. Nodes are connected by arrows that give precedence relationships. Syn: event-on-node network, precedence diagram method.A


level loading

Syn: load leveling.L



1) The interconnection of computers, terminals, and communications channels to facilitate file and peripheral device sharing as well as effective data communication. 2) A graph consisting of nodes connected by arcs.N



An instrument for measuring or testing.G


policy constraint

A common misnomer. Bad policies are not the constraint, rather they hinder effective constraint management by inhibiting the ability to fully exploit and/or subordinate to the constraint.P


market boundary

The boundary where the laid-down cost for two companies is equal. Laid-down cost is product cost plus unit transportation cost.M


ISO 26000

An international standard adopted by the International Standards Organization to assist organizations in contributing to sustainable development beyond legal compliance through a common understanding of social responsibility. ISO 26000 is not a management system standard and is not intended or appropriate for certification purposes or regulatory or contractual use.I



In project management, a network requirement that activity A must start before subsequent activity B can start. See: logical relationship.S



Abbreviation for total employee involvement.T


shop scheduling

Syn: operations scheduling.S


operation reporting

The recording and reporting of every manufacturing (shop order) operation occurrence on an operation-to-operation basis.O



1) A statistical process where generalizations regarding an entire body of phenomena are drawn from a relatively small number of observations. 2) In marketing, the delivery of free trial goods to consumers.S



Used as a relative reference within a firm or supply chain to indicate moving in the direction of the end customer.D



The standard terms and conditions on a purchase order or other document.B


inventory cycle

The length of time between two consecutive replenishment shipments.I


decision-support data

Syn: data warehouse.D


effective interest rate

Syn: annual percentage rate.E


project model

A time-phased project planning and control tool that itemizes major milestones and points of user approval.P


replacement factor

The percentage of time on average that an item will require replacement. The replacement factor is also expressed as a percentage applied to the quantity per assembly on the bill of material. It is useful for forecasting materials and capacity requirements for planning purposes. See: occurrence factor, repair factor.R


work center schedule

Syn: dispatch list.W


hundredweight (cwt)

One hundred pounds.H


plan source

Establishing plans for action over time that project appropriation of material resources to meet supply chain requirements.P



Available manufacturing days excluding holidays and weekends.M


active load

Work scheduled that may not be on hand.A


design of experiments (DOE)

1) A process for structuring statistically valid studies in any science. 2) A quality management technique used to evaluate the effect of carefully planned and controlled changes to input process variables on the output variable. The objective is to improve production processes.D


operation due date

1) The date when an operation should be completed so that its order due date can be met. It can be calculated based on scheduled quantities and lead times. 2) A job sequencing algorithm (disoperation O patching rule) giving earlier operation due dates higher priority.O


current cost

1) The current or replacement cost of labor, material, or overhead. Its computation is based on current performance or measurements, and it is used to address today’s costs before production as a revision of annual standard costs. 2) An asset’s value based on the cost of an identical asset purchased today.C



The use of a name, term, symbol, or design, or a combination of these, to identify a product.B



1) The physical acceptance of an item into a stocking location. 2) Often, the transaction reporting of this activity.R


defects per unit

The average number of blemishes on a particular product (e.g., a television cabinet).D


one-to-one marketing

A marketing strategy for sending a particular message to a single customer, often assisted by a marketing database.O


cost variance

In cost accounting, the difference between what has been budgeted for an activity and what it actually costs.C


maverick spending

A term used when employees or managers purchase from nonqualified suppliers, bypassing established purchasing procedures.M


design for manufacture and assembly (DFMA)

A product development approach that involves the manufacturing function in the initial stages of product design to ensure ease of manufacturing and assembly. See: early manufacturing involvement.D


design for remanufacture

Products developed in a manner that allows components to be used in other products. This process is associated with green manufacturing. D


balanced scorecard

A list of financial and operational measurements used to evaluate organizational or supply chain performance. The dimensions of the balanced scorecard might include customer perspective, business process perspective, financial perspective, and innovation and learning perspectives. It formally connects overall objectives, strategies, and measurements. Each dimension has goals and measurements.B



Procurement of a good or service from more than one independent supplier. Syn: multiple sourcing. Ant: single sourcing. See: dual sourcing.M


order quantity modifiers

Adjustments made to a calculated order quantity. Order quantities are calculated based upon a given lot-sizing rule, but it may be necessary to adjust the calculated lot size because of special considerations (scrap, testing, etc.).O


all forms of manufacturing

job shop, process, and repetitive and to many service industries as well. Syn: short-cycle manufacturing, stockless production, zero inventories.J


transportation method

A linear programming model concerned with minimizing the costs involved in supplying requirements to several locations from several sources with different costs related to the various combinations of source and requirement locations.T


tool calibration frequency

The recommended length of time between tool calibrations. It is normally expressed in days.T


discrete order quantity

An order quantity that represents an integer number of periods of demand. Most MRP systems employ discrete order quantities. See: fixed-period requirements, least total cost, least unit cost, lot-for-lot, part period balancing, period order quantity, Wagner-Whitin algorithm.D D


unit load

A shipping unit made up of a number of items, or bulky material, arranged or constrained so the mass can be picked up or moved as a single unit. Reduces material handling costs. Often shrink-packed on a pallet before shipment.U U


cumulative sum control chart

A control chart on which the plotted value is the cumulative sum of deviations of successive samples from a target value. The ordinate of each plotted point represents the algebraic sum of the previous ordinate and the most recent deviations from the target.C C



In project management, a network requirement that activity A must start before subsequent activity B can finish. See: logical relationship.S



Sending production work outside to another manufacturer. See: outsourcing.S



Abbreviation for direct numerical control.D


parameter design

Specifying the product characteristics and production process that will create the expected product performance.P


fixed-period quantity

An MRP lot-sizing technique that sets the lot size equal to the net requirements for a given number of periods.F


product genealogy

A record, usually on a computer file, of the history of a product from its introduction into the production process through its termination. The record includes lot or batch sizes used, operations performed, inspection history, options, and where-used information.P P


cost-plus-fixed-fee contract

A contract in which the seller is paid for costs specified as allowable in the contract plus a stipulated fixed fee.C



A special form used in general-purpose equipment to make specific parts.D


life cycle analysis

A quantitative forecasting technique based on applying past patterns of demand data covering introduction, growth, maturity, saturation, and decline of similar products to a new product family.L



The primary raw material in a chemical or refining process normally received by pipeline or largescale bulk shipments. Feedstock availability is frequently the controlling factor in setting the production schedule and rate for a process.F



A pick system that uses software to light up displays at each pick location and determines how much needs to be picked. The picker uses this as their requirement to pull for that particular order to set of orders.P



1) In activity-on-arrow networks, the graphic presentation of an activity. The tail of the arrow represents the start of the activity. The head of the arrow represents the finish. Unless a timescale is used, the length of the arrow stem has no relation to the duration of the activity. Length and direction of the arrow are usually a matter of convenience and clarity. 2) In activity-on-node networks, an arrow represents a precedence requirement.A


value-added productivity per employee

A measure that is determined by three things: total output of a company, materials purchased, and total employment. To come up with this number, one must subtract materials purchased from total output and then divide that number by total employment. It allows a company to understand easily how much production the typical employee is producing.V


telnet (TN)

Software that enables a user to log on to remote computers.T



Abbreviation for critical path method.C



A method of sourcing that uses one supplier in one area of business for a product or service and uses a different supplier in a different area of business for similar products or services. The suppliers can then compete for future business.C


mixed manufacturing

Make-to-stock and make-to-order manufacturing using a single plant and set of equipment.M


tolerance limits

1) The upper and lower extreme values permitted by the tolerance. 2) In work measurement, the limits between which a specified operation time value or other work unit will be expected to vary. See: lower specification limit, upper specification limit. Syn: specification limits.T


process train

A representation of the flow of materials through a process industry manufacturing system that shows equipment and inventories. Equipment that performs a basic manufacturing step, such as mixing or packaging, is called a process unit. Process units are combined into stages, and stages are combined into process trains. Inventories decouple the scheduling of sequential stages within a process train.P


pyramid forecasting

A forecasting technique that enables management to review and adjust forecasts made at an aggregate level and to keep lower level forecasts in balance. The procedure begins with the roll up (aggregation) of item forecasts into forecasts by product group. The management team establishes a (new) forecast for the product group. The value is then forced down (disaggregation) to individual item foreQCD ● quality, cost, delivery (QCD) Q casts so that they are consistent with the aggregate plan. The approach combines the stability of aggregate forecasts and the application of management judgment with the need to forecast many end items within the constraints of an aggregate forecast or sales plan. See: management estimation, planning bill of material, product group forecast.P Q



The grouping of consumers according to their behavior patterns and lifestyles.P


tool issue order

Syn: tool order.T


planning and control process

A process consisting of the following steps: plan, execute, measure, and control.P



Abbreviation for material-dominated scheduling.M



Grasps the situation.G



Sponsored promotions that are nonpersonal in nature.A


independent project

A project which, whether or not it is accepted, does not eliminate other projects from eligibility. See: contingent project, mutually exclusive project.I


present value

The value today of future cash flows. For example, the promise of $10 a year from now is worth something less than $10 in hand today.P



Abbreviation for central processing unit.C


buyer cycle

The purchasing sequence that generally follows the buyer’s product and budget cycles.B


probability and impact matrix

A matrix combining two dimensions of risk: (1) likelihood of occurrence and (2) impact if it happens.P


approved vendor list (AVL)

A list of parties that have been approved by a company as its suppliers. This list usually is based on product quality and financial stability of the firm.A


autonomous work group

A production team that operates a highly focused segment of the production process to an externally imposed schedule but with little external reporting, supervision, interference, or help.A



A department or function charged with the responsibility for arranging the most economic classification and method of shipment for both incoming and outgoing materials and products.T



Training or schooling done online.E



A production program’s ability to regularly produce products of the correct quantity and quality.R


derived demand

Demand for component products that arises from the demand for final design products. For example, the demand for steel is derived from the demand for automobiles.D D


budgeted cost of work scheduled

In project management, this term has been replaced with the term planned value.B


may be regulated or unregulated; (2) Pure oligopoly

A few companies produce essentially the same product or service and market it within a given area. A company is forced to price its product at the going rate unless it can


100 percent inspection

The act of inspecting or testing every item in an incoming or outgoing lot.1


part coding and classification

A method used in group technology to identify the physical similarity of parts.P


job shop layout

Syn: functional layout.J



Automated shutdown of a line, process, or machine upon detection of an abnormality or defect.A


share, high growth rate; (3) Dogs

low market share, low


World Trade Organization (WTO)

The successor to the General Agreement on Tariffs and Trade (GATT); the international agency overseeing trade between nations.W


sales forecast

Syn: forecast accuracy, forecast.S


Operating profit

earnings or income after all expenses (selling, administrative, depreciation) have been deducted


synchronous control

A pull-type production control system that is based on setting production rates and feeding work into production to meet the planned rates, then monitoring and controlling production.S


automated quality control inspection system

A system that employs machines to help inspect products for quality control.A


fuzzy logic

A field of logic based on “fuzzy sets,” that is, sets in which membership is probabilistic rather than deterministic.F G


forecast consumption

Syn: consuming the forecast.F


detail file

A file that contains manufacturing, routing, or specification details. See: master file.D


training aid

An item to enhance training, usually minor in nature. Training aids may include charts, graphs, slides, and schematics.T


question mark

In marketing, a slang term for a low market share but high growth rate product. See: growthshare matrix.Q



To perform a bill-of-material explosion.E


grid technique

A quantitative model used for locating plants and warehouses by finding the least cost point, given the positions of raw materials and markets.G



A 28-foot trailer, usually used in trucking enterprises.P P


40/30/30 rule

A rule that identifies the sources of scrap, rework, and waste as 40 percent product design, 30 percent manufacturing processing, and 30 percent from suppliers.4


work center where-used

A listing (constructed from a routing file) of every manufactured item that is routed (primary or secondary) to a given work center.W


worker efficiency

A measure (usually computed as a percentage) of worker performance that compares the standard time allowed to complete a task to the actual worker time to complete it. Syn: labor efficiency.W


service response logistics

Obtaining, producing, and distributing material for wholesaling and retailing; supply chain management is focused on location, service, and capacity issues. Syn: integrated logistics.S


indented bill of material

A form of multilevel bill of material. It exhibits the highest-level parents closest to the left margin, and all the components going into these parents are shown indented toward the right. All subsequent levels of components are indented farther to the right. If a component is used in more than one parent within a given product structure, it will appear more than once, under every subassembly in which it is used.I


current reality tree (CRT)

A logic-based tool for using cause-and-effect relationships to determine root problems that cause the observed undesirable effects of the system. See: root cause analysis.C


product layout

Another name for flow process layout. The system is set up for a limited range of similar products. Focused-factory production would also be considered in this category. See: flow processing, focused factory.P


hypertext links

Links contained within text connecting to other websites or other pages on the current site.H


customer partnership

Syn: customer-supplier partnership.C



1) The technique of using representative or artificial data to reproduce in a model various conditions that are likely to occur in the actual performance of a system. It is frequently used to test the behavior of a system under different operating policies. 2) Within MRP II, using the operational data to perform what-if evaluations of alternative plans to answer the question, “Can we do it?” If yes, the simulation can then be run in the financial mode to help answer the question, “Do we really want to?” See: what-if analysis.S


number defective chart

Syn: c chart.N


service phases

The number of phases necessary to service a new arrival in the system.S


discrete issue

Syn: direct-deduct inventory transaction processing.D


critical process parameters

A variable or a set of variables that dominates the other variables. Focusing on these variables will yield the greatest return in investment in quality control and improvement.C


distribution planning

The planning activities associated with transportation, warehousing, inventory levels, materials handling, order administration, site and location planning, industrial packaging, data processing, and communications networks to support distribution.D


en route

A term describing goods in transit.E


integrated internet marketing (I2M)

The use of internet facilities to sell products, influence stakeholder attitudes, and improve the company’s image.I



Abbreviation for third-party logistics.3



Risk-free buying of an asset in one market and simultaneous selling of an identical asset at a profit in another market.A


experimental research

A form of research (sometimes used in marketing research) where matched sets of people are controlled for certain variables (such as income, age, and so on) while other variables (such as products offered) are varied to test research questions. See: marketing research.E


network loop

A network path that crosses the same activity or node twice. A network loop cannot be analyzed by the critical path method, critical chain, or other traditional network schedule analysis techniques.N


free on board (FOB)

The terms of sale that identify where title passes to the buyer.F


environmentally responsible manufacturing

A collection of manufacturing activities that includes design of the product, facility, manufacturing processes, logistics, and supplier relationships that reduce or eliminate environmental waste through innovation and improvements.E


service time

The time taken to serve a customer (e.g., the time required to fill a sales order or the time required to fill a request at a tool crib).S


commodity buying

Grouping like parts or materials under one buyer’s control for the procurement of all requirements to support production.C



A distinctive characteristic of a good or service. The characteristic is provided by an option, accessory, or attachment. For example, in ordering a new car, the customer must specify an engine type and size (option), but need not necessarily select an air conditioner (attachment). See: accessory, attachment, option.F


agile manufacturing

The ability to respond quickly to unpredictable changes in customer needs by reconfiguring operations.A


interplant demand

One plant’s need for a part or product that is produced by another plant or division within the same organization. Although it is not a customer order, it is usually handled by the master production scheduling system in a similar manner. See: interplant transfer.I


level schedule

1) In traditional management, a production schedule or master production schedule that generates material and labor requirements that are as evenly spread over time as possible. Finished goods inventories buffer the production system against seasonal demand. See: level production method. 2) In JIT, a level schedule (usually constructed monthly) in which each day’s customer demand is scheduled to be built on the day it will be shipped. A level schedule is the output of the load-leveling process. Syn: JIT master schedule, level production schedule. See: load leveling.L


trading partner

Any organization external to the firm that plays an integral role within the supply chain community and whose business fortune depends on the success of the supply chain community.T


cost of capital

The cost of maintaining a dollar of capital invested for a certain period, normally one year. This cost is normally expressed as a percentage and may be based on factors such as the average expected return on alternative investments and current bank interest rate for borrowing.C


branch warehouse

Syn: distribution center.B



1) Abbreviation for advanced planning and scheduling. 2) Abbreviation for advanced planning system.A


stockless purchasing

Buying material, parts, supplies, and so on, for direct use by the departments involved, as opposed to receiving them into stores and subsequently issuing them to the departments. The intent is to reduce inventory investment, increase cash flow, restock S duce material handling and storage, and provide better service. See: dock-to-stock inventory.S


product profiling

1) A graphical device used to ascertain the level of fit between a manufacturing process and the order-winning criteria of its products. Product profiling can be used at the process or company level to compare the manufacturing capabilities with the market requirements to determine areas of mismatch and identify steps needed for realignment. 2) Removing material around a predetermined boundary by means of numerically controlled machining. The numerically controlled tool path is automatically generated on the system.P


dual-card kanban system

Syn: two-card kanban system.D


delivery schedule

The required or agreed time or rate of delivery of goods or services purchased for a future period.D



The total time required to receive, fill, and deliver an order for an existing product to a customer, timed from the moment that the customer places the order until the customer receives the product. See: purchasing lead time.T



Software system that creates, uses, and maintains product models that allow complete definition of all possible product options and variations with a minimum of data entries.C


actual finish date

In project management, the date on which an activity in a project was actually completed.A


systems thinking

A school of thought that focuses on recognizing the interconnections between the parts of a system and synthesizing them into a unified view of the whole.S


returns processing cost

All of the costs associated with dealing with returned items after they have been received. These costs occur when returned items are repaired, discarded, or replaced.R


scheduled receipt

An open order that has an assigned due date. See: open order.S



All work items required between the end of one operation or job and the start of setup for the next operation or job, both jobs requiring the same machinery or facilities. See: teardown time.T


overhead base

The denominator used to calculate the predetermined overhead rate used in applying overhead (e.g., estimated direct labor hours, estimated direct labor dollars).O


failure mode analysis (FMA)

A procedure to determine which malfunction symptoms appear immediately before or after a failure of a critical parameter in a system. After all the possible causes are listed for each symptom, the product is designed to eliminate the problems.F


record accuracy

A measure of the conformity of recorded values in a bookkeeping system to the actual values; for example, the on-hand balance of an item maintained in a computer record relative to the actual on-hand balance of the items in the stockroom.R



Abbreviation for estimate to complete.E


time fence

A policy or guideline established to note where various restrictions or changes in operating procedures take place. For example, changes to the master production schedule can be accomplished easily beyond the cumulative lead time, while changes inside the cumulative lead time become increasingly more difficult to a point where changes should be resisted. Time fences can be used to define these points. See: demand time fence, hedge, planning time fence.T


marks and numbers

Identifying agents placed on products or containers used to identify a shipment or its parts.M


break-even chart

A graphical tool showing the total variable cost and fixed cost curve along with the total revenue curve. The point of intersection is defined as the break-even point (i.e., the point at which total revenues exactly equal total costs). See: total cost curve.B



A mathematical array having one, two, and sometimes more dimensions, into which collections of data may be stored and processed.M


purchase order

The purchaser’s authorization used to formalize a purchase transaction with a supplier. A purchase order, when given to a supplier, should contain statements of the name, part number, quantity, description, and price of the goods or services ordered; agreedto terms as to payment, discounts, date of performance, and transportation; and all other agreements pertinent to the purchase and its execution by the supplier.P


information data warehouse

A repository (typically large) of corporate data that can be accessed using specialized query tools. This technique separates the analysis of data from the recording of data and is often used to combine data from different computing systems I to make information access more convenient and coherent. See: data warehouse.I



A system of relating information without using menus or hierarchies.H


key performance indicator (KPI)

A financial or nonfinancial measure that is used to define and assess progress toward specific organizational goals and typically is tied to an organization's strategy and business stakeholders. A KPI should not be contradictory to other departmental or strategic business unit performance measures.K



An element of variability results that measures the output of a process. If a process results in product dimensions falling within a bell-shaped curve, then the process is running normally.S


expected demand during lead time

Syn: demand during lead time.E


seven zeros

The seven zeros are an essential part of the Toyota Production System. They are zero defects, zero excess lot size, zero setups, zero breakdowns, zero excess handling, zero lead time, and zero surging.S


order level system

Syn: fixed reorder cycle inventory model.O


gross requirement

The total of independent and dependent demand for a component before the netting of on-hand inventory and scheduled receipts.G


regeneration MRP

An MRP processing approach where the master production schedule is totally reexploded down through all bills of material, to maintain valid priorities. New requirements and planned orders are completely recalculated or “regenerated” at that time. Ant: net change MRP.R


fair return

Within transportation, a profit level accomplishing a rate of return on investment that regulatory agencies deem acceptable given the level of risk.F



When an operation has more expenditures on labor than capital. See: capital-intensive.L


discounted cash flow

A method of investment analysis in which future cash flows are converted, or discounted, to their value at the present time. The net present value of an item is estimated to be the sum of all discounted future cash flows.D


attrition factor

The budget fraction apportioned for replacement personnel training because of projected personnel losses (retirements, promotions, and terminations).A


natural variations

These variations in measurements are caused by environmental elements and cannot be removed. See: common cause variability.N


business market

Syn: industrial market.B


initial public offering (IPO)

A firm’s first sale of common stock.I


value chain initiative

This initiative combines software, hardware, and supply chain companies to develop an integrated system to support software sharing among diverse applications.V


price point

The relative price position at which the product will enter the market compared to direct and indirect competitors’ prices. It is considered within the context of the price-range options available: high, medium, or low.P


measure phase

A phase in the six sigma designmeasure- analyze-improve-control process during which current performance is evaluated. See: design-measureanalyze- improve-control process.M


idle time

The time when operators or resources (e.g., machines) are not producing product because of setup, maintenance, lack of material, lack of tooling, or lack of scheduling.I


low-level code

A number that identifies the lowest level in any bill of material at which a particular component appears. Net requirements for a given component are not calculated until all the gross requirements have been calculated down to that level. Low-level codes are normally calculated and maintained automatically by the computer software. Syn: explosion level.L



A shipment method in which commodities are placed in containers, and after initial loading, C the commodities per se are not rehandled in shipment until they are unloaded at the destination.C



Abbreviation for activity-based cost accounting.A


specific identification

This method keeps track of the units of the beginning inventory and the units purchased that is, specific identification of the purchase cost of each item. This may be done through a coding method or serial number identification.S


gate review

The formal review process between the major phases of a new product introduction effort. The determination to continue or to stop the project is formally made at each review point or gate.G


net profit

An absolute measure of financial performance that is calculated as the difference between revenues and expenses. In throughput accounting, net N profit is calculated as throughput minus operating expense.N



The characteristics of a design that enable the item to be produced and inspected in the quantity required at least cost and minimum time.P


market-related criteria

the required level of delivery speed and reliability in a given market segment, (2)



An order picking system that allows the picker to transfer materials to the trailer from the pick source without any confirmation/checking stages.P



Abbreviation for current reality tree.C


strategic quality planning

Weaving quality considerations into strategic business plans.S


electronic bill presentment and payment (eBPP)

A system that connects the bill issuer, bill payer, and the payer’s bank to facilitate electronic payment. Payment is usually by credit card.E


process planning

Determining the technological steps and sequence required to produce a product or service at the required quality level and cost.P


and technical principles

including education and training for the detection, analysis, and minimization of hazards, with the objective of avoiding accidents.A


product cost

Cost allocated by some method to the products being produced. Initially recorded in asset (inventory) accounts, product costs become an expense (cost of sales) when the product is sold.P


freight collect

The freight and charges to be paid by the consignee.F



That period starting with the date of initial operation during which the unit is brought up to acceptable production capacity and quality within estimated production costs. Startup is the activity that commences on the date of initial activity and has significant duration on most projects, but is often confused (used interchangeably) with date of initial operation.S



A condition when the total hours of work outstanding at a work center exceed that work center’s capacity.O


queue length

The quantity of items in a queue that are awaiting service.Q R


kaizen blitz®

A rapid improvement of a limited process area, for example, a production cell. Part of the improvement team consists of workers in that area. The objectives are to use innovative thinking to eliminate non-value-added work and to immediately implement the changes within a week or less. Ownership of the improvement by the area work team and the development of the team’s problem-solving skills are additional benefits. See: kaizen event.K


direct materials cost

The acquisition cost of all materials used directly in the finished product.D



The process by which an independent third party is brought in to settle a dispute or to preserve the interest of two conflicting parties.A


dedicated equipment

Equipment whose use is restricted to specific operations on a limited set of components.D


operational planning

The process of setting goals and targets and establishing measures constrained by and targeted for achieving the strategic and tactical plans. See: operational plan, strategic planning, tactical planning.O



A person who provides financial support, in cash or in kind.S



Syn: pilot test.W


vertical dependency

The relationship between a parent item and a component in its bill of material that defines the need for the component based on producing the parent, without regard to the availability of other components at the same level in the bill of material. See: horizontal dependency.V


assembly line

An assembly process in which equipment and work centers are laid out to follow the sequence in which raw materials and parts are assembled. See: line, production line.A


homogeneous product

A product that is effectively identical from producer to producer.H


big Q, little q

A term used to contrast the difference between managing for quality in all business processes and products (big Q) and managing for quality in a limited


unit of measure (purchasing)

The unit used to purchase an item. This may or may not be the same unit of measure used in the internal systems. For example, purchasing buys steel by the ton, but it may be issued and used in square inches. Syn: purchasing unit of measure.U


time phasing

The technique of expressing future demand, supply, and inventories by time period. Time phasing is one of the key elements of material requirements planning.T


capacity strategy

One of the strategic choices that a firm must make as part of its manufacturing strategy. There are three commonly recognized capacity strategies: lead, lag, and tracking. A lead capacity strategy adds capacity in anticipation of increasing demand. A lag strategy does not add capacity until the firm is operating at or beyond full capacity. A tracking strategy adds C capacity in small amounts to attempt to respond to changing demand in the marketplace.C


analyze phase

One of the six sigma phases of quality. It consists of the following steps: (a) define performance objective, (b) identify independent variables, and (c) analyze sources of variability. See: design-measureanalyze- improve-control process.A


industry structure types

Economists have developed models of the types of competition faced by various



Abbreviation for house of quality.H


lot number traceability

Tracking parts by lot numbers to a group of items. This tracking can assist in tracing quality problems to their source. A lot number identifies a designated group of related items manufactured in a single run or received from a vendor in a single shipment.L


safety time

Syn: safety lead time.S


management information system (MIS)

Integrated approach for providing interpreted and relevant data that can help managers make decisions. This information can reflect the progress or lack of progress made in achieving major objectives.M



Syn: overlapped schedule.T



Abbreviation for service-oriented architecture.S


orthogonal arrays

Tools that help maintain independence between different iterations of a product design experiment; introduced to quality analysis by Genichi Taguchi.O


expensed stocks

Syn: floor stocks.E


production planning and control strategies

An element of manufacturing strategy that includes the design and development of manufacturing planning and control systems in relation to the following considerations: (1)



Syn: allocation.A



Syn: consumables.E


milestone chart

Syn: Gantt chart.M



The process of averaging data by a mathematical process or by curve fitting, such as the leastsquares method or exponential smoothing.S


weighted moving average

An averaging technique in which the data to be averaged are not uniformly weighted but are given values according to their importance. See: moving average, simple moving average.W


manufacturing environment

The framework in which manufacturing strategy is developed and implemented. Elements of the manufacturing environment include external environmental forces; corporate strategy; business unit strategy; other functional strategies (marketing, engineering, finance, etc.); product selection; product/process design; product/process technology; and management competencies. Often refers to whether a company, plant, product, or service is make-to-stock, make-to-order, or assemble-to-order. Syn: production environment.M


stores issue order

Syn: picking list.S


least unit cost

A dynamic lot-sizing technique that adds ordering cost and inventory carrying cost for each trial lot size and divides by the number of units in the lot size, picking the lot size with the lowest unit cost. See: discrete order quantity, dynamic lot sizing.L


functional layout

A facility configuration in which operations of a similar nature or function are grouped together; an organizational structure based on departmental specialty (e.g., saw, lathe, mill, heat treat, press). Syn: job shop layout, process layout.F


critical point backflush

Backflush performed at a specific point in the manufacturing process, at a critical operation, or at an operation where key components are consumed.C


operation overlapping

Syn: overlapped schedule.O


marketing cost analysis

The study and evaluation of the relative profitability or costs of different marketing operations in terms of customers, marketing units, commodities, territories, or marketing activities. Cost accounting is typically used.M


failure analysis

The collection, examination, review, and classification of failures to determine trends and to identify poorly performing parts or components.F


remote diagnostics

The capability of determining the cause of a problem from an off-site location.R


direct store delivery (DSD)

A shipment that bypasses the customer’s warehouse and goes directly from the manufacturer’s plant to the retail store.D


parking lot

A meeting device whereby off-agenda items are noted for possible inclusion in future agendas. Often a flip chart or whiteboard is used.P