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Flashcards in APICS Deck 9 OO Deck (499):

uniform-delivered pricing

A type of geographic pricing policy in which all customers pay the same delivered price regardless of their location. A company allocates the total transportation cost among all customers.U



1) A specialized product design and development process for developing a working model of a product. 2) A specialized system development process for performing a determination where user needs are extracted, presented, and developed by building a working model of the system. Generally, these tools make it possible to create all files and processing programs needed for a business application in a matter of days or hours for evaluation purposes.P


shortage cost

The marginal profit that is lost when a customer orders an item that is not immediately available in stock.S


excess issue

The removal from stock and assignment to a schedule of a quantity higher than the schedule quantity. Syn: overissue.E


Baldrige lite

A state or company quality award program modeled after the Malcolm Baldrige National Quality Award but with a simplified application process.B


run diagram

Syn: run chart.R


accident prevention

The application of basic scientific


planned start date

Syn: scheduled start date.P


semipassive tag

An RFID tag that sends out data, is self-powered, and widens its range by harnessing power from the reader. See: radio frequency identification (RFID).S


fixed order quantity

A lot-sizing technique in MRP or inventory management that will always cause planned or actual orders to be generated for a predetermined fixed quantity, or multiples thereof, if net requirements for the period exceed the fixed order quantity.F



Verifying and documenting the order selection in terms of both product number and quantity.C


support costs

In activity-based cost accounting, activity costs not directly related with producing a product, such as the cost of the information system.S


cost equalization point (CEP)

A point or quantity at which the cost curves of two manufacturing methods have an equal value.C


least total cost

A dynamic lot-sizing technique that calculates the order quantity by comparing the setup (or ordering) costs and the carrying cost for various lot sizes and selects the lot size where these costs are most nearly equal. See: discrete order quantity, dynamic lot sizing.L


redundant component

A backup part of a machine or product.R


operation/process yield

The ratio of usable output from a process, process stage, or operation to the input quantity, usually expressed as a percentage.O


unplanned repair

Repair and replacement requirements that are unknown until remanufacturing teardown and inspection.U



Abbreviation for overall equipment effectiveness.O


critical ratio

A dispatching rule that calculates a priority index number by dividing the time to due date remaining by the expected elapsed time to finish the job. For example, critical ratio



Abbreviation for strengths, weaknesses, opportunities, and threats.S



The function of following up on open orders before the scheduled delivery date, to ensure the timely delivery of materials in the specified quantity.P


process flow production

A production approach with minimal interruptions in the actual processing in any one production run or between production runs of similar products. Queue time is virtually eliminated by integrating the movement of the product into the actual operation of the resource performing the work.P


split-case order picking

A process for filling less-thanfull- case orders. This requires items to be picked from a case or other container.S


JIT master schedule

Syn: level schedule (second definition).J


import broker or sales agent

Purchasing agent who charges a fee for transactions but does not take the title of the goods.I


tool number

The identification number assigned to reference and control a specific tool.T


fault tree analysis

A logical approach to identify the probabilities and frequencies of events in a system that are most critical to uninterrupted and safe operation. This analysis may include failure mode effects analysis (determining the result of component failure interactions toward system safety) and techniques for human error prediction.F


order preparation

All activities relating to the administration, picking, and packaging of individual customer or work orders.O


six sigma quality

The six sigma approach is a set of concepts and practices that key on reducing variability in processes and reducing deficiencies in the product. Important elements are (1) Producing only 3.4 defects for every one million opportunities or operations; (2) Process improvement initiatives striving for six sigmalevel performance. Six sigma is a business process that permits organizations to improve bottom-line performance, creating and monitoring business activities to reduce waste and resource requirements while increasing customer satisfaction.S


survey research

A form of research (frequently used in marketing research) where data are collected by mailing questionnaires to a group of people within a target audience. See: marketing research.S


debt-to-equity ratio

The amount of bonds and preferred stocks relative to the owners’ equity position. The debt to equity ratio is a measurement of the use of borrowed funds to leverage owners’ equity.D


observational research

A form of research (frequently used in marketing research) where data are gathered by direct observation of consumers in the market place. See: marketing research.O


total float

In project management, the length of time an activity can be late without delaying succeeding activities. See: float, free float, independent float.T


demand-driven supply network

A situation where a customer purchase initiates real-time information flows through the supply chain which then causes movement of product through the network.D


cash cow

A highly profitable product in a low-growth market. See: growth-share matrix.C


plan-do-check-act cycle

Syn: plan-do-check-action.P



Additional charges that are added to a delivered bill that are not included in the original contract. These occur because of unforeseen increases to the deliverer’s cost base.U


deployment planning and scheduling

Planning how to use existing inventory to meet demand requirements.D


deterministic models

Models where no uncertainty is included (e.g., inventory models without safety stock considerations).D


annual inventory count

Syn: physical inventory.A


anticipation inventories

Additional inventory above basic pipeline stock to cover projected trends of increasing sales, planned sales promotion programs, seasonal fluctuations, plant shutdowns, and vacations.A


promotional product

A product that is subject to wide fluctuations in sales because it is usually sold at a reduced price or with some other sales incentive.P


cost estimation

(1) Specification of the relationship between cost and the underlying cost drivers. (2) In project management, creating an approximation of the resources and associated costs needed to complete a project.C


confidence interval

The range on either side of an estimated value from a sample that is likely to contain the true value for the whole population.C


net sales

Sales dollars the company receives; gross sales minus returns and allowances.N


National Labor Relations Board (NLRB)

In the United States, the federal agency that regulates labor law.N


branch warehouse demand

Syn: warehouse demand.B


pick date

The start date of picking components for a production order. On or before this date, the system produces a list of orders due to be picked, pick lists, tags, and turnaround cards.P


indirect materials

Syn: supplies.I


bill of lading (uniform)

A carrier’s contract and receipt for goods the carrier agrees to transport from one place to another and to deliver to a designated person. In case of loss, damage, or delay, the bill of lading is the basis for filing freight claims.B


five Ws

Syn: five whys.F


short-cycle manufacturing

Syn: just in time.S


diversification strategy

An expansion of the scope of the product line to exploit new markets. A key objective of a diversification strategy is to spread the company’s risk over several product lines in case there should be a downturn in any one product’s market.D


labor efficiency variance

Labor efficiency variance is (actual number of hours worked minus standard number of hours worked) multiplied by standard labor wage rate. The variance is unfavorable if the actual hours exceed the standard hours. Syn: labor usage variance.L


UN Global Compact Management Model

A framework for guiding companies through the process of formally committing to, assessing, defining, implementing, measuring, and communicating the United Nations Global Compact and its principles.U


competitive differentiator

A characteristic that makes a company or product unique within a marketplace.C



Official currency of the Eurozone, which forms a large part of the European Union.E


inspection ticket

Frequently used as a synonym for an inspection order; more properly a reporting of an inspection function performed.I


backup support

An alternate location or maintainer that can provide the same service response or support as the primary location or maintainer.B



1) Information detailing the method of manufacture of a particular item. It includes the operations to be performed, their sequence, the various work centers involved, and the standards for setup and run. In some companies, the routing also includes information on tooling, operator skill levels, inspection operations and testing requirements, and so on. Syn: bill of operations, instruction sheet, manufacturing data sheet, operation chart, operation list, operation sheet, route sheet, routing sheet. See: bill of labor, bill of resources. 2) In information systems, the process of defining the path a message will take from one computer to another computer.R


process batch

The quantity or volume of output that is to be completed at a workstation before switching to a different type of work or changing an equipment setup.P



Abbreviation for first expiry first out.F


setup time

The time required for a specific machine, resource, work center, process, or line to convert from the production of the last good piece of item A to the first good piece of item B. Syn: setup lead time.S


total employee involvement (TEI)

An empowerment program in which employees are invited to participate in actions and decision making that were traditionally reserved for management.T


inventory balance location accuracy

When the inventory count is accurate at specific locations.I


productive capacity

In the theory of constraints: The maximum of the output capabilities of a resource (or series of resources) or the market demand for that output for a given time period. See: excess capacity, idle capacity, protective capacity.P



The process of having suppliers provide goods and services that were previously provided internally.



Abbreviation for mean time between failures.M


procedure manual

A formal organization and indexing of a firm’s procedures. Manuals are usually printed and distributed to the appropriate functional areas.P


total quality engineering (TQE)

The discipline of designing quality into the product and manufacturing processes by understanding the needs of the customer and performance capabilities of the equipment. See: design for quality.T


caveat emptor

A Latin phrase meaning “Let the buyer beware.” (i.e., the purchase is at the buyer’s risk.)C


problems. In the first phase

the diagnostic journey team journeys from the symptom of a chronic problem



A designated location in an active area of operation into which material is placed and from which it is taken. Not necessarily a stockroom isolated from activity, it is a way of tracking and controlling active material.S


sole source

The situation where the supply of a product is available from only one organization. Usually technical barriers such as patents preclude other suppliers from offering the product. See: single sourcing.S


earnings before taxes (EBT)

Earnings before interest and taxes minus interest charges.E


distributed systems

Computer systems in multiple locations throughout an organization, working in a cooperative fashion, with the system at each location primarily serving the needs of that location but also able to receive and supply information from other systems within a network.D


near-critical activity

In project management, a project activity with a low slack or float value.N


moving average

An arithmetic average of a certain number (n) of the most recent observations. As each new observation is added, the oldest observation is dropped. The value of n (the number of periods to use for the average) reflects responsiveness versus stability in the same way that the choice of smoothing constant does in exponential smoothing. There are two types of moving average, simple and weighted. See: simple moving average, weighted moving average.M


schedule chart

Usually a large piece of graph paper used in the same manner as a control board. Where the control board often uses strings and markers to represent plans and progress, the schedule chart is typically filled in with pencil. See: control board.S


random-location storage

A storage technique in which parts are placed in any space that is empty when they arrive at the storeroom. Although this random method requires the use of a locator file to identify part locations, it often requires less storage space than a fixedrandom R location storage method. Syn: floating inventory location system, floating storage location. See: fixed-location storage.R



A ratio of an organization’s operating profit to revenues, measuring management’s ability to control operating expenses.M


acquisition cost

The cost required to obtain one or more units of an item. It is order quantity times unit cost. See: ordering cost.A


cybernetic system

The information flow or information system (electronic, mechanical, logical) that controls an industrial process.C


order-fill ratio

Syn: customer service ratio.O


transmission acknowledgement

The receiver of a transmission notifies the sender that the transmission was received error free.T transmission control protocol/internet protocol (TCP/



The neutralizing of the effects of production just completed. It may involve cleaning residues, sanitation, equipment refixturing, and so on.C


supplier quality assurance

The confidence that a supplier’s goods or services will fulfill its customers’ needs. This confidence is achieved by creating a relationship between the customer and supplier that ensures that the product will be fit for use with minimal corrective action and inspection. According to J.M. Juran, nine primary activities are needed: (1) define product and program quality requirements, (2) evaluate alternative suppliers, (3) select suppliers, (4) conduct joint quality planning, (5) cooperate with the supplier during the execution of the contract, (6) obtain proof of conformance to requirements, (7) certify qualified suppliers, (8) conduct quality improvement programs as required, and (9) create and use supplier quality ratings.S


The ceiling is the target selling price

what the seller


pro forma financial statements

Financial statements that are based on an assumed scenario rather than an actual experience.P


independent float

In project management, the amount of float on an activity that does not affect float on preceding or succeeding activities. See: float, free float, total float.I


production network

The complete set of all work centers, processes, and inventory points, from raw materials sequentially to finished products and product families. It represents the logical system that provides the framework to attain the strategic objectives of the firm based on its resources and the products’ volumes and processes. It provides the general sequential flow and capacity requirement relationships among raw materials, parts, resources, and product families.P


fabrication order

A manufacturing order to a component-making department authorizing it to produce component parts. See: batch card, manufacturing order.F



Occurs when customers buy additional products or services after the initial purchase.C


total variable costs

Costs that vary in total in proportion to changes in activity.T


replacement order

An order for the replacement of material that has been scrapped.R



In project management, graphic display of cumulative project attributes such as costs, labor hours, or percentage of work. The name derives from the typical shape of the curve.S



Acronym for computer-integrated manufacturing.C


marketing strategy

The basic plan marketing expects to use to achieve its business and marketing objectives in a particular market. This plan includes marketing expenditures, marketing mix, and marketing allocation.M


projected start date

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


production calendar

Syn: manufacturing calendar.P


customer segmentation

The practice of dividing a customer base into groups of individuals that are similar in specific ways relevant to marketing. Traditional segmentation focuses on identifying customer groups based on demographics and attributes such as attitude and psychological profiles.C


direct numerical control (DNC)

A system in which sets of numerical control machines are connected to a computer, allowing direct control of machines by the computer without use of external storage media.D



A long-term debt of a firm.B


ABC inventory control

An inventory control approach based on the ABC classification.A


quality chart

Syn: Q chart.Q


other than direct labor and direct materials

that continue even if products are not produced. Although fixed overhead is necessary to produce the product, it cannot be directly traced to the final product.F



Sole control of a market by a company. In the United States, a monopoly is a violation of Article 2 of the Sherman Act.M


Federal Trade Commission (FTC)

The United States governmental agency charged with protecting businesses and consumers from unfair business practices. It also regulates advertising and promotion at the national level.F


field warehouse

Syn: distribution center.F


order picking

Selecting or “picking” the required quantity of specific products for movement to a packaging area (usually in response to one or more shipping orders) and documenting that the material was moved from one location to shipping. Syn: order selection. See: batch picking, discrete order picking, zone picking.O


time period safety stock

A safety stock that is based on usage over a designated time frame. The period can be set as days, weeks, or months. Safety stock varies directly with the demand. This differs from statisticalbased safety stocks in that the amount is not based on deviation from demand.T


warehouse demand

The need for an item to replenish stock at a branch warehouse. Syn: branch warehouse demand.W warehouse management and transportation execution


reverse supply chain

The planning and controlling of the processes of moving goods from the point of consumption back to the point of origin for repair, reclamation, recycling, or disposal. See: reverse logistics.R



Abbreviation for theory of constraints.T


job shop scheduling

The production planning and control techniques used to sequence and prioritize production quantities across operations in a job shop.J



All the customer orders received but not yet shipped. Sometimes referred to as open orders or the order board. See: order backlog, past due order.B



activity A must start before activity B can finish.L


statistical control charts

Data are collected from physical measurements, or customer surveys, and plotted on a chart so that conformance to specifications or customer satisfaction can be tracked and improved.S



Abbreviation for Interstate Commerce Commission.I I


order point

A set inventory level where, if the total stock on hand plus on order falls to or below that point, action is taken to replenish the stock. The order point is normally calculated as forecasted usage during the replenishment lead time plus safety stock. Syn: reorder point, statistical order point, trigger level. See: fixed reorder quantity inventory model.O


discrete available-to-promise

A calculation based on the available-to-promise figure in the master schedule. For the first period, the ATP is the sum of the beginning inventory plus the MPS quantity minus backlog for all periods until the item is master scheduled again. For all other periods, if a quantity has been scheduled for that time period then the ATP is this quantity minus all customer commitments for this and other periods until another quantity are scheduled in the MPS. For those periods where the quantity scheduled is zero, the ATP is zero (even if deliveries have been promised). The promised customer commitments are accumulated and shown in the period where the item was most recently scheduled. Syn: incremental available-to-promise. See: available-to-promise.D


trade bloc

An agreement between countries intended to reduce or remove barriers to trade within member countries. Frequently, but not always, those countries are geographically close. Examples of trade blocs are the European Economic Community and the North American Free Trade Agreement (NAFTA). Syn: trading bloc.T


constraint accounting

Syn: theory of constraints accounting.C


change order

A formal notification that a purchase order or shop order must be modified in some way. This change can result from modifications such as a revised quantity, date, or customer specification; an engineering change; or a change in inventory requirement date.C


change management

The business process that coordinates and monitors all changes to the business processes and applications operated by the business as well as to their internal equipment, resources, operating systems, and procedures. The change management discipline is carried out in a way that minimizes the risk C of problems that will affect the operating environment and service delivery to the users.C


asynchronous process

A condition with two related processes run to finish independently of each other.A



1) A specific physical space for the manufacture of a product that in a flow shop layout is represented by a straight line. In actuality, this may be a series of pieces of equipment connected by piping or conveyor systems. 2) A type of manufacturing process used to produce a narrow range of standard items with identical or highly L similar designs. Production volumes are high, production and material handling equipment is specialized, and all products typically pass through the same sequence of operations. See: assembly line.L


partial productivity factor

Syn: single-factor productivity.P


competitive edge

Syn: competitive advantage.C


allowed time

A normal time value increased by appropriate allowances.A


resource requirements planning

Syn: resource planning.R



Abbreviation for demand time fence.D


supplier scheduler

A person whose main job is working with suppliers regarding what is needed and when. Supplier schedulers are in direct contact with both MRP and the suppliers. They do the material planning for the items under their control, communicate the resultant schedules to their assigned suppliers, do follow-up, resolve problems, and advise other planners and the master scheduler when purchased items will not arrive on time to support the schedule. The supplier schedulers are normally organized by commodity, as are the buyers. By using the supplier scheduler approach, the buyers are freed from day-to-day order placement and expediting, and therefore have the time to do cost reduction, negotiation, supplier selection, alternate sourcing, and so forth. Syn: planner/buyer, vendor scheduler.S



The degree of freedom from error or the degree of conformity to a standard. Accuracy is different from precision. For example, four-significant-digit numbers are less precise than six-significant-digit numbers; however, a properly computed four-significant-digit number might be more accurate than an improperly computed six-significant-digit number.A


incremental analysis

A method of economic analysis in which the cost of a single additional unit is compared to its revenue. When the net contribution of an additional unit is zero, total contribution is maximized.I



To reschedule or use alternate routings to reduce the workload on a machine, work center, or facility.O


American Society for Quality (ASQ)

Founded in 1946, a not-for-profit educational organization with more than 100,000 individual and organizational members who are interested in quality improvement.A American Standard Code for Information Interchange



Abbreviation for over, short, and damaged.O



An agreement between two or more competent persons or companies to perform or not to perform specific acts or services or to deliver merchandise. A contract may be oral or written. A purchase order, when accepted by a supplier, becomes a contract. Acceptance may be in writing or by performance, unless the purchase order requires acceptance in writing.C



Syn: listserver.L L


nonscheduled hours

Hours when a machine is not generally available to be scheduled for operation; for example, nights, weekends, holidays, lunch breaks, major repair, and rebuilding.N



Abbreviation for standard industrial classification.S S


new product development team

Syn: participative design/engineering.N


interstate commerce

The movement of persons or property across one or more state lines for business purposes.I


transaction channel

A distribution network that deals with change of ownership of goods and services including the activities of negotiation, selling, and contracting.T


trend forecasting models

Methods for forecasting sales data when a definite upward or downward pattern exists. Models include double exponential smoothing, regression, and triple smoothing. See: trend analysis.T


earliest operation due date (ODD)

A dispatching rule that selects the job having the earliest due date for the impending operation. See: earliest due date.E


finished good waivers

Approvals for deviation from normal product specifications.F


zone price

A standard product price which applies to all geographic locations within a zone.Z


pre-deduct inventory transaction processing

A method of inventory bookkeeping where the book (computer) inventory of components is reduced before issue, at the time a scheduled receipt for their parents or assemblies is created via a bill-of-material explosion. This approach has the disadvantage of a built-in differential between the book record and what is physically in stock. See: backflush.P



Abbreviation for vendor-owned inventory.V


interest rate

The ratio of the interest payment to the principal for a given unit of time. It is usually expressed as a percentage of the principal.I


cost center

The smallest segment of an organization for which costs are collected and formally reported, typically a department. The criteria in defining cost centers are that the cost be significant and that the area of responsibility be clearly defined. A cost center is not necessarily identical to a work center; normally, a cost center encompasses more than one work center, but this may not always be the case.C


physical inventory

1) The actual inventory itself. 2) The determination of inventory quantity by actual count. Physical inventories can be taken on a continuous, periodic, or annual basis. Syn: annual inventory count, annual physical inventory. See: periodic inventory.P



Abbreviation for management by objectives.M


total lead time

Syn: lead time.T


indirect labor

Work required to support production in general without being related to a specific product (e.g., floor sweeping).I



The function of maintaining, analyzing, and explaining the financial records and status of an organization.A


bucketless system

An MRP, DRP, or other time-phased system in which all time-phased data are processed, stored, and usually displayed using dated records rather than defined time periods (buckets).B



Acronym for binary digit. It can have only the values 0 or 1.B


systems rollup

Integrating computer systems; this enables faster data retrieval and better information system responsiveness.S


run standards

Syn: run time.R


summary judgment

A judicial ruling that no essential facts are in dispute and that one party to the suit merits judgment as a matter of law.S


fixed-period requirements

A lot-sizing technique that sets the order quantity to the demand for a given number of periods. See: discrete order quantity.F


triple smoothing

A method of exponential smoothing that accounts for accelerating or decelerating trends, such as would be experienced in a fad cycle. Syn: thirdorder smoothing.T



A stream of fixed payments for a stipulated time, yearly or at other intervals.A


law of variability

The more that variability exists in a process, the less productive that process will be.L



Abbreviation for late finish date.L


earned hours

A statement reflecting the standard hour assigned for actual production reported during the period. Syn: earned volume.E



Syn: excess issue.O


work breakdown structure

In project management, a hierarchical description of a project in which each lower level is more detailed. See: project summary work breakdown structure.W


common carrier

Transportation available to the public that does not provide special treatment to any one party and is regulated as to the rates charged, the liability assumed, and the service provided. A common carrier must obtain a certificate of public convenience and necessity from the Federal Trade Commission for interstate traffic. Ant: private carrier.C



Acronym for lot-size inventory management interpolation technique.L


service function

A mathematical relationship of the safety factor to service level (i.e., the fraction of demand routinely met from stock).S


delivery cycle

Syn: delivery lead time.D



Any increase in the capacity of a plant, facility, or unit, usually by added investment. The scope of this increase extends from the elimination of problem areas to the complete replacement of an existing facility with a larger one.E


cycle reduction stock

Stock held to reduce delivery time.C



Abbreviation for structured query language.S


total value analysis

A method of economic analysis in which a model expresses the dependent variable of interest as a function of independent variables, some of which are controllable.T


project management

The use of skills and knowledge in coordinating the organizing, planning, scheduling, directing, controlling, monitoring, and evaluating of prescribed activities to ensure that the stated objectives of a project, manufactured good, or service are achieved. See: project.P


order processing and communication

All activities needed to fill customer orders.O


sole proprietorship

A form of business in which one person has ownership and control. See: corporation, partnership.S


vendor measurement

The act of measuring the vendor’s performance to a contract. Measurements usually cover delivery reliability, lead time, quality, and price. See: supplier measurement.V



The fraudulent taking of another’s property while acting in a fiduciary capacity.E


repetitive manufacturing

The repeated production of the same discrete products or families of products. Repetitive methodology minimizes setups, inventory, and manufacturing lead times by using production lines, assembly lines, or cells. Work orders are no longer necessary; production scheduling and control are based on production rates. Products may be standard or assembled from modules. Repetitive is not a function of speed or volume. Syn: repetitive process, repetitive production. See: project manufacturing.R



The shared perception of the organization’s future what the organization will achieve and a supporting philosophy. This shared vision must be supported by strategic objectives, strategies, and action plans to move it in the desired direction. See: vision statement.V



The worth of an item, good, or service.V


part family

A collection of parts grouped for some managerial purpose.P



1) An action taken in an attempt to shield the company from an uncertain event such as a strike, price increase, or currency reevaluation. 2) In master scheduling, a scheduled quantity to protect against uncertainty in demand or supply. The hedge is similar to safety stock, except that a hedge has the dimension of timing as well as amount. A volume hedge or market hedge is carried at the master schedule or production plan level. The master scheduler plans excess quantities over and above the demand quantities in given periods beyond some time fence such that, if the hedge is not needed, it can be rolled forward before major resources must be committed to produce the hedge and put it in inventory. A product mix hedge is an approach where several interrelated optional items are overplanned. Sometimes, using a planning bill, the sum of the percent mix can exceed 100 percent by a defined amount, thus triggering additional hedge planning. 3) In purchasing, any purchase or sale transaction having as its purpose the elimination of the negative aspects of price fluctuations. See: market hedge, option overplanning, planning bill of material, safety stock, time fence, two-level master.H


flow manufacturing

Syn: flow shop.F


logical relationship

In project management, a dependency between two activities or between a milestone and an activity. The four possible relationships are (1)


material requirements planning (MRP)

A set of techniques that uses bill of material data, inventory data, and the master production schedule to calculate requirements for materials. It makes recommendations to release replenishment orders for material. Further, because it is time-phased, it makes recommendations to reschedule open orders when due dates and need dates are not in phase. Time-phased MRP begins with the items listed on the MPS and determines (1) the quantity of all components and materials required to fabricate those items and (2) the date that the components and material are required. Time-phased MRP is accomplished by exploding the bill of material, adjusting for inventory quantities on hand or on order, and offsetting the net requirements by the appropriate lead times.M


late start date (LS)

In the critical path method of project management, the last date upon which a given activity can be started without delaying the completion date of the project.L


Global Reporting Initiative (GRI)

A network-based organization that pioneered the world's most widely used sustainability reporting framework.G Global Reporting Initiative (GRI) Reporting Framework The framework that sets out the principles and perforglobal G mance indicators organizations can use to measure and report their human rights, labor, environment, and anticorruption practices and outcomes.G


contingency reserve

A budget of money or time allowed over an initial estimate to reduce the likelihood of overruns.C



A statistic that is used to determine efficiency for costing/pricing functions. A touch is anytime that a labor activity is utilized during the manufacturing or service creation process. This brought about the term “touch labor” for direct labor personnel.T


customer defection analysis

Analyzing the customers who have stopped buying to determine why.C


standard batch quantity (SBQ)

The quantity of a parent that is used as the basis for specifying the material requirements for production. The quantity per is expressed as the quantity to make the SBQ, not to make only one of the parent. Often used by manufacturers that use some components in standard quantities or by process-related manufacturers. Syn: run size.S


diseconomies of scale

Occurs when more outputs are required than the efficient quantity that the facility is designed to produce; this causes an increase in unit cost.D


earliest start date

The earliest date an operation or order can start. It may be restricted by the current date, material availability, or management-specified “maximum advance.”E


electronic communities

Communities of people who communicate exclusively electronically.E



Syn: lead-time offset.O


uniform plant loading

In lean, the distribution of work between work stations so that the time required for each station to complete all tasks is as close to equal as possible. See: line balancing.U


relevant range

The range of activity planned for a firm.R


raw materials inventory

Inventory of material that has not undergone processing at a facility.R


short-range planning horizon

A planning/forecasting time frame encompassing a few days to at most a few weeks.S


service parts

Those modules, components, and elements that are planned to be used without modification to replace an original part. Syn: repair parts, spare parts.S


indifference point

The point at which two options create the same costs for a specific output level.I


nonexempt positions

Employees not meeting the test of executive, supervisory, or administrative personnel who are paid overtime, as defined by the Fair Labor Standards Act. See: nonexempt employee.N



Abbreviation for frequently asked questions.F F


process steps

The operations or stages within the manufacturing cycle required to transform components into intermediates or finished goods. From a larger perspective, the operations or stages within any business required to turn inputs into outputs.P



The raw material, part, or subassembly that goes into a higher level assembly, compound, or other item. This term may also include packaging materials for finished items. See: ingredient, intermediate part.C


operation start date

The date when an operation should be started so that its order due date can be met. It can be calculated based on scheduled quantities and lead times or on the work remaining and the time remaining to complete the job.O


transient bill of material

Syn: phantom bill of material.T


invitation for bid (IFB)

Syn: request for proposal.I


nominal interest rate

The noninflation-adjusted interest rate.N



A lot-sizing technique that generates planned orders in quantities equal to the net requirements in each period. See: discrete order quantity.L


profit sharing

A plan by which employees receive compensation, above their normal wages, based on company profitability. The purpose is to motivate employees and recognize their efforts.P


quality characteristic

A property of a product or service that is important enough to count or measure. See: performance measurement system.Q


average fixed cost

The total fixed cost divided by units produced. This value declines as output increases.A


production scheduling

The process of developing the production schedule.P



Dividing truckloads of homogeneous items into smaller, more appropriate quantities for use.B


variable yield

The condition that occurs when the output of a process is not consistently repeatable either in quantity, quality, or combinations of these.V


cumulative yield

Syn: cascading yield loss, composite yield.C


stock record card

A ledger card that contains inventory status for a given item.S



Acronym for computer-aided process planning.C



Definitive statements of what should be done in the business.P


setup flexibility

The ability for a change to a different product to be made with little delay.S


low-cost-provider strategy

A strategy of offering the lowest prices in the market to gain share and increase sales volume in industries composed by numerous players offering the same type of products.L


continuous flow distribution

A pull system diverting products in response to customer requirements while keeping distribution costs low.C


quality control circle

Syn: quality circle.Q


profit ratio

Profit divided by sales.P


system nervousness

See: nervousness.S


operating efficiency

A ratio (represented as a percentage) of the actual output of a piece of equipment, department, or plant as compared to the planned or standard output.O


closely held

A description of an organization owned by a small number of people.C


closeness ratings

In layout analysis, to begin yielding. In layout analysis, measures of how beneficial it would be for one department to be located near another.C


relational database

A software program that allows users to obtain information drawn from two or more datarelationship R bases that are made up of two-dimensional arrays of data.R


material safety data sheet (MSDS)

A document that is part of the materials information system and accompanies the product. Prepared by the manufacturer, the MSDS provides information regarding the safety and chemical properties and (if necessary) the long-term storage, handling, and disposal of the product. Among other factors, the MSDS describes the hazardous components of a product; how to treat leaks, spills, and fires; and how to treat improper human contact with the product.M


performance efficiency

A ratio, usually expressed as a percentage, of the standard processing time for a part divided by its actual processing time. Setups are excluded from this calculation to prevent distortion. A traditional definition includes setup time as part of operation time, but significant distortions can occur as a result of dependent setups.P


scheduling rules

Basic rules that can be used consistently in a scheduling system. Scheduling rules usually specify the amount of time to allow for a move, queue, load calculation, and so forth. Syn: scheduling algorithm.S



A business that does not manufacture its own products, but purchases and resells these products. Such a business usually maintains a finished goods inventory. Syn: wholesaler.D


supervisor estimate

An estimate, made by a knowledgeable manager, of the labor required for an operation.S



The effort and discipline required to continually enforce changes made in an organization. See: five Ss.S S


alternate feedstock

A backup supply of an item that either acts as a substitute or is used with alternate equipment.A


post-transaction elements

Customer services that are provided after a product or service is sold, including warranties, returns, and complaint resolution.P



An abbreviation for forty-foot equivalent unit.F


cycle service level

The probability of not having a stockout in any one ordering cycle, which begins at the time an order is placed and ends when the goods are placed in stock. Syn: measure of service, service level.C


machine loading

The accumulation by workstation, machine, or machine group of the hours generated from the scheduling of operations for released orders by time period. Machine loading differs from capacity requirements planning in that it does not use the planned orders from MRP but operates solely from released orders. It may be of limited value because of its limited visibility of resources.M


internal environment

The chosen domain or scope of activities within which an organization operates, for example, the tasks associated with goods or services to be delivered by the organization. See: external environment, organizational environment.I


funds flow statement

A financial statement showing the flow of cash and its timing into and out of an organization or project. Syn: cash flow statement, statement of cash flows.F


expected demand

The quantity expected to be consumed during a given time period when usage is at the forecast rate. See: demand during lead time.E


customer profitability

Estimating the profit retained on business with a specific customer.C


safety lead time

An element of time added to normal lead time to protect against fluctuations in lead time so that an order can be completed before its real need date. When used, the MRP system, in offsetting for lead time, will plan both order release and order completion for earlier dates than it would otherwise. Syn: protection time, safety time.S


finished products inventory

Syn: finished goods inventory.F


supplier development

Technical and financial assistance given to existing and potential suppliers to improve quality and/or due date/performance.S


parts planner

Syn: material planner.P


line manager

A manager involved in managing a department that is directly involved in making a product.L


international logistics

All functions concerned with the movement of materials and finished goods on a global scale.I International Organization for Standardization (ISO) Group of cooperating institutes from 155 countries working to develop and publish international standards. It acts as a bridge between public and private sectors.I



A special class of ingredients characterized either by being used in minimal quantities or by being introduced into the processing cycle after the initial stage.A


tree diagram

1) A management technique used to analyze a situation in increasing detail. The full range of tasks to be accomplished to achieve a primary goal and supporting subgoal may be illustrated. 2) In the theory of constraints, a diagram relating effects to underlying causes. See: current reality tree, future reality tree.T


diagnostic study

A brief investigation or cursory methods study of an operation, process, group, or individual to discover causes of operational difficulties or problems for which more detailed remedial studies may be feasible. An appropriate work measurement technique may be used to evaluate alternatives or to locate major areas requiring improvement.D


wall-to-wall inventory

An inventory management technique in which material enters a plant and is processed through the plant into finished goods without ever having entered a formal stock area. Syn: four-wall inventory.W W



1) A form of business ownership that is not organized as a separate legal entity (i.e., unincorporated business), but entailing ownership by two or more persons. See: corporation, private ownership, public ownership, sole proprietorship. 2) In a supply chain, a relationship based on trust, shared risk, and rewards aimed toward achieving a competitive advantage.P


supply chain design

The determination of how to structure a supply chain. Design decisions include the selection of partners, the location and capacity of warehouse and production facilities, the products, the modes of transportation, and supporting information systems.S


average outgoing quality limit (AOQL)

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


total make cycle time

Average cumulative processing time between a part entering a manufacturing system and completion of manufacturing activities (not including packaging).T


machine utilization

A measure of how intensively a machine is being used. Machine utilization compares the actual machine time (setup and run time) to available time.M


chargeback provisions

Contractual terms specifying how a company may charge a supplier for failure to perform.C


simple interest

1) Interest that is not compounded (i.e., interest not added to the income-producing investment or loan). 2) The interest charged under the condition that interest in any time period is only charged on the principal.S


single-level backflush

A form of backflush that reduces inventory of only the parts used in the next level down in an assembly or subassembly.S



The party authorizing an agent to act on his or her behalf.P



The total time required to design, build, and deliver a product (timed from concept to delivery). See: procurement lead time.T


past due order

A line item on an open customer order that has an original scheduled ship date that is earlier than the current date. Syn: delinquent order, late order, order backlog. See: backlog.P


level production schedule

Syn: level schedule.L


problem-solving storyboard

A technique based on the plan/do/check/action problem-solving process. The steps being taken and the progress toward the resolution of a problem are continuously planned and updated.P



Abbreviation for on-the-job training.O


freight equalization

The practice by more distant suppliers of absorbing the additional freight charges to match the freight charges of a supplier geographically closer to the customer. This is done to eliminate the competitive advantage of lower freight charges that the nearest supplier has.F


closed period

The accounting time period for which the adjusting and closing entries have been posted. Ant: open period.C


critical success factor

One of a few organizational objectives whose achievement should be sufficient for organizational success.C


beta distribution

A type of probability distribution often used to model activity times.B


forecast period

Syn: forecast interval.F


network planning

A generic term for techniques that are used to plan complex projects. Two of the best known network planning techniques are the critical path method (CPM) and the program evaluation and review technique (PERT).N


manufacturing authorization

Syn: manufacturing order.M


stock code

Syn: item number.S



1) Abbreviation for average outgoing quality limit. 2) Abbreviation for acceptable outgoing quality level.A


double order point system

A distribution inventory management system that has two order points. The smallest equals the original order point, which covers demand during replenishment lead time. The second order point is the sum of the first order point plus normal usage during manufacturing lead time. It enables warehouses to forewarn manufacturing of future replenishment orders.D


custom service

A service that is created to meet the requirements of specific customers.C


production environment

Syn: manufacturing environment.P


VATI Analysis

In the theory of constraints, a procedure for determining the general flow of parts and products from raw materials to finished products (logical product structure). A V logical structure starts with one or a few raw materials, and the product expands into a number of different products as it flows through divergent points in its routings. The shape of an A logical structure is dominated by converging points. Many raw materials are fabricated and assembled into a few finished products. A T logical structure consists of numerous similar finished products assembled from common assemblies, subassemblies, and parts. An I logical structure is the simplest of production flows, where resources are shared between different products and the flow is in a straight line sequence, such as an assembly line. Once the general parts flow is determined, the system control points (gating operations, convergent points, divergent points, constraints, and shipping points) can be identified and managed.V


manufacturing execution systems (MES)

Programs and systems that participate in shop floor control, including programmed logic controllers and process control computers for direct and supervisory control of manufacturing equipment; process information systems that gather historical performance information, then generate reports; graphical displays; and alarms that inform operations personnel what is going on in the plant currently and a very short history into the past. Quality control information is also gathered and a laboratory information management system may be part of this configuration to tie process conditions to the quality data that are generated. Thereby, cause-and-effect relationships can be determined. The quality data at times affect the control parameters that are used to meet product specifications either dynamically or off line.M


profitability ratio

An indicator of whether or not a company is generating profits at an acceptable rate. It includes such measurements as return on total assets, return on equity, and profit margin.P


balance-of-stores record

A double-entry record system that shows the balance of inventory items on hand and the balances of items on order and available for future orders. Where a reserve system of materials control is used, the balance of material on reserve is also shown.B



Abbreviation for simple, measurable, achievable, reasonable, and trackable.S


repair order

Syn: rework order.R



A daily record kept by an interstate driver of driving and duty-related and non-duty-related activities.L



Conformance to requirements or fitness for use. Quality can be defined through five principal approaches: (1) Transcendent quality is an ideal, a condition of excellence. (2) Product-based quality is based on a product attribute. (3) User-based quality is fitness for use. (4) Manufacturing-based quality is conformance to requirements. (5) Value-based quality is the degree of excellence at an acceptable price. Also, quality has two


explosion level

Syn: low-level code.E


distribution of forecast errors

Tabulation of the forecast errors according to the frequency of occurrence of each error value. The errors in forecasting are, in many cases, normally distributed even when the observed data do not come from a normal distribution.D


payback period

The period of time required for a stream of cash flows resulting from a project to equal the project’s initial investment.P



1) The activities associated with the movement of material, usually finished goods or service parts, from the manufacturer to the customer. These activities encompass the functions of transportation, warehousing, inventory control, material handling, order administration, site and location analysis, industrial packaging, data processing, and the communications network necessary for effective management. It includes all activities related to physical distribution, as well as the return of goods to the manufacturer. In many cases, this movement is made through one or more levels of field warehouses. Syn: physical distribution. 2) The systematic division of a whole into discrete parts having distinctive characteristics.D


political environment

External factors related to the political process, including laws and regulations, taxation codes, and others, at the local, state, federal, and international levels of government.P


order-up-to level

Syn: target inventory level.O


time series analysis

Analysis of any variable classified by time in which the values of the variable are functions of the time periods. Time series analysis is used in forecasting. A time series consists of seasonal, cyclical, trend, and random components. See: cyclical component, random component, seasonal component, trend component.T



A Japanese word meaning sharing information.Y Z


time-based order system

Syn: fixed reorder cycle inventory model.T T


joint rate

A rate for a route involving two or more carriers to move a shipment.J


B can start; (2) finish-to-finish

activity A must be finished before activity B can finish; (3) start-to-start activity A must start before activity B can start; and (4)


performance measurement system

A system for collecting, measuring, and comparing a measure to a standard for a specific criterion for an operation, item, good, service, business, etc. A performance measurement system consists of a criterion, a standard, and a measure. Syn: metrics. See: performance criterion, performance measure, performance standard.P



The act of one organization committing to a long-term relationship with another organization based on trust and a shared concept of how to satisfy the customer.P


trading partner agreement

A contract between trading partners that describes all facets of their business together. This is a legal and binding agreement suitable for legal purposes as well as standard working agreements.T


input/output devices

Modems, terminals, or various pieces of equipment whose designed purpose relates to manual, mechanical, electronic, visual, or audio entry to and from the computer’s processing unit.I


hedge inventory

A form of inventory buildup to buffer against some event that may not happen. Hedge inventory planning involves speculation related to potential labor strikes, price increases, unsettled governments, and events that could severely impair a company’s strategic initiatives. Risk and consequences are unusually high, and top management approval is often required.H


decision table

A means of displaying logical conditions in an array that graphically illustrates actions associated with stated conditions.D


point-of-use delivery

Direct delivery of material to a specified location on a plant floor near the operation where it is to be used.P


exception message

Syn: action message.E


rapid prototyping

1) The transformation of product designs into physical prototypes. Rapid prototyping relies on techniques such as cross-functional teams, data sharing, and advanced computer and communication technology (e.g., CAD, CAM, stereolithography, data links). Rapid prototyping involves producing the prototype on production equipment as often as possible. It improves product development times and allows for cheaper and faster product testing, assessment of the ease of assembly and costs, and validation before actual production tooling. 2) The transformation of system designs into computer system prototypes with which the users can experiment to determine the adequacy of the design to address their needs. See: 3D printing.R



The condition requiring a work center that has parts to process to remain idle as long as the queue to which the parts would be sent is full or kanbans authorizing production are not present.B



1) A planned series of actions or operations (e.g., mechanical, electrical, chemical, inspection, test) that advances a material or procedure from one stage of completion to another. 2) A planned and controlled treatment that subjects materials or procedures to the influence of one or more types of energy (e.g., human, mechanical, electrical, chemical, thermal) for the time required to bring about the desired reactions or results.P


mental model

A paradigm of how the world works formed by a person’s experiences and assumptions.M


common cause variability

The variability in product quality that results from numerous uncontrollable everyday factors, such as temperature, humidity, and tool wear. Syn: common variation. See: common causes.C


concurrent engineering

Syn: participative design/ engineering. C


asset value

The adjusted purchase price of the asset plus any costs necessary to prepare the asset for use.A


inventory management

The branch of business management concerned with planning and controlling inventories.I


volume flexibility

The ability of the transformation process to quickly accommodate large variations in production levels.V


lot control

A set of procedures (e.g., assigning unique batch numbers and tracking each batch) used to maintain lot integrity from raw materials, from the supplier through manufacturing to consumers.L


digital cash or money

An electronic currency equivalent of currency or coins.D


price to earnings (PE) ratio

The current price of a stock relative to its earnings per share.P


dispatching rule

The logic used to assign priorities to jobs at a work center.D


chase strategy

Syn: chase production method.C



The value of all sales after discounts and rebates have been applied.B


best practices

In benchmarking, the measurement or performance standard by which similar items are evaluated. Defining a best practice identifies opportunities to improve effectiveness. The process of comparing an actual result to a best practice may be applied to resources, activities, or cost objects.B


operating exposure

The risk introduced by flexible exchange rates when operating in the global environment, including production, storage, and buying and selling prices.O


order entry complete to start manufacture

The average time starting when an order is placed by a customer and ending when the manufacturing of that order is completed.O


hurdle rate

The minimum acceptable rate of return on a project.H


linear production

Actual production to a level schedule, so that a plotting of actual output versus planned output forms a straight line, even when plotted for a short segment of time.L


risk register

A report that has summary information on qualitative risk analysis, quantitative risk analysis, and risk response planning. This register contains all identified risks and associated details.R


pacing process

The process in a production line used to signal all other processes in line of the time to produce another unit. It generally is the final process, but it does not have to be.P


pegged requirement

A requirement that shows the next-level parent item (or customer order) as the source of the demand.P


line of credit

A contract that enables a company to borrow funds at any time up to a predetermined limit.L


bucketed system

An MRP, DRP, or other time-phased system in which all time-phased data are accumulated into time periods called buckets. If the period of accumulation is one week, then the system is said to have weekly buckets.B


job description

A formal statement of duties, qualifications, and responsibilities associated with a particular job.J


response time

The elapse of time or average delay between the initiation of a transaction and the results of the transaction.R


refurbished goods

Syn: remanufactured parts.R



An event is an identifiable point in time among a set of related activities. Graphically, an event can be represented by two approaches: (1) in activity-on-node networks, it is represented by a node; (2) in activity-onarrow networks, the event is represented by the arrow.E


quality score chart

Syn: Q chart.Q


define-measure-analyze-improve-control (DMAIC)

The sequence of steps for improvement projects within sixsigma quality control.D define, measure, analyze, improve, control (DMAIC)



An activity that does not add value to a product, for example, moving the product from one work center to another inside a facility. One aspect of continuous improvement is the elimination or reduction of non-value-added activities.N


collaborative supply relationship

Syn: supplier partnership.C


voluntary layoff

Layoffs where the employees are given the option of taking a non-paid leave from their work for a short, specified period of time.V


causal forecast

A type of forecasting that uses causeand- effect associations to predict and explain relationships between the independent and dependent variables. An example of a causal model is an econometric model used to explain the demand for housing starts based on consumer base, interest rates, personal incomes, and land availability.C


program management

The activities involved in the realization of a product or service offered to customers. The responsibilities include planning, directing, and controlling one or more projects of a new or continuing nature; initiating any acquisition processes necessary to get the project work under way; and monitoring performance. See: program manager.P


simultaneous design/engineering

Syn: participative design/engineering.S


exponential distribution

A continuous probability distribution where the probability of occurrence either steadily increases or decreases. The steady increase case (positive exponential distribution) is used to model phenomena such as customer service level versus cost. The steady decrease case (negative exponential distribution) is used to model phenomena such as the weight given to any one time period of demand in exponential smoothing.E


macro environment

The environment external to a business including technological, economic, natural, and regulatory forces that marketing efforts cannot control.M


description by brand

A method to identify a product or service required; requesting by brand usually means the product or service provides some advantage over other brands.D


marquis partners

Key strategic relationships. By partnering with big players, via equity offerings if necessary, a company creates barriers to entry into supply chain relationships for competitors.M


registration to standards

A process in which an accredited, independent third-party organization conducts an on-site audit of a company’s operations against the requirements of the standard to which the company wants to be registered. Upon successful completion of the audit, the company receives a certificate indicating that it has met the standard requirements.R


line balancing

1) The balancing of the assignment of the tasks to workstations in a manner that minimizes the number of workstations and minimizes the total amount of idle time at all stations for a given output level. In balancing these tasks, the specified time requirement per unit of product for each task and its sequential relationship with the other tasks must be considered. See: uniform plant loading. 2) A technique for determining the product mix that can be run down an assembly line to provide a fairly consistent flow of work through that assembly line at the planned line rate.L


transfer batch

The quantity of an item moved between sequential work centers during production. See: batch, overlap quantity.T



Abbreviation for statistical quality control.S


marginal cost

The incremental costs incurred when the level of output of some operation or process is increased by one unit.M



1) Financial share in a project or enterprise. 2) Periodic compensation for lending money. 3) In an economy study, synonymous with required return, expected profit, or charge for the use of capital. 4) The cost for the use of capital. Sometimes referred to as the time value of money.I


additive manufacturing

Syn: 3D printing.A


repetitive production

Syn: repetitive manufacturing.R


bin location file

A file that specifically identifies the location where each item in inventory is stored.B


break-even point

The level of production or the volume of sales at which operations are neither profitable nor unprofitable. The break-even point is the intersection of the total revenue and total cost curves. See: total cost curve.B



Abbreviation for early supplier involvement.E


strategic benchmarking

Benchmarking how others compete. It often involves benchmarking across industries. See: benchmarking.S



A value, expressed as a percentage, giving the relationship of a measurement to a base value. A result of 100 would be average while numbers greater than 100 would be above average and those less than 100 would be below average.I


control number

Typically, the manufacturing order or schedule number used to identify a specific instance or period of production.C


product line

A group of products whose similarity in manufacturing procedures, marketing characteristics, or specifications enables them to be aggregated for planning; marketing; or, occasionally, costing. Syn: product family, product group.P


residence time

Syn: process time.R


nominal trading partner

Any organization external to the firm that provides an essential material or service, but whose financial success is largely independent of the financial success of the supply chain community.N


computer-aided inspection and test (CAIT)

The use of computer technology in the inspection and testing of manufactured products.C


knowledge creation

The propensity for generating knowledge.K


linear programming

Mathematical models for solving linear optimization problems through minimization or maximization of a linear function subject to linear constraints. For example, in blending gasoline and other petroleum products, many intermediate distillates may be available. Prices and octane ratings as well as upper limits on capacities of input materials that can be used to produce various grades of fuel are given. The problem is to blend the various inputs in such a way that (1) cost will be minimized (profit will be maximized), (2) specified optimum octane ratings will be met, and (3) the need for additional storage capacity will be avoided.L


service positioning

Syn: product positioning.S


design simplification

A process of reducing the number of pieces in a product or machine, eliminating features that are seldom needed, and eliminating steps in the production process.D


technical/office protocol (TOP)

An application-specific protocol based on open systems interconnection (OSI) standards. It is designed to allow communication between computers from different suppliers in the technical development and office environments.T


abnormal demand

Demand in any period that is outside the limits established by management policy. This demand may come from a new customer or from existing customers whose own demand is increasing or decreasing. Care must be taken in evaluating the nature of the demand: is it a volume change; is it a change in product mix; or is it related to the timing of the order? See: outlier.A



A tangible product, merchandise, or ware.G


associative forecasting

Uses one or more variables that are believed to affect demand in order to forecast future demand.A


world-class quality

A term used to indicate a standard of excellence: the best of the best.W



A technique for looking at the lot sizes for groups of similar products to determine the effect economic lot sizes will have on the total inventory, total setup costs, and machine availability.L


inventory control

The activities and techniques of maintaining the desired levels of items, whether raw materials, work in process, or finished products. Syn: material control.I



User-input parameters to suppress the reporting of insignificant or unimportant action messages.D


mix forecast

Forecast of the proportion of products that will be sold within a given product family, or the proportion of options offered within a product line. Product and option mix as well as aggregate product families must be forecasted. Even though the appropriate level of units is forecasted for a given product line, an inaccurate mix forecast can create material shortages and inventory problems.M



A unit of measure representing one person working for one hour. The combination of “n” people working for “h” hours produces nh man-hours. Frequent qualifications to the definition include (1) designation of work effort as normal effort; (2) designation of time spent as actual hours.M


item master file

A file containing all item master records for a product, product line, plant, or company. See: master file.I


progressive operations

Passing work from station to station.P


bill of batches

A method of tracking the specific multilevel batch composition of a manufactured item. The bill of batches provides the necessary where-used and where-from relationships required for lot traceability.B


terminal value

The value of an operation or entity at the end of the period considered.T


mix flexibility

The ability to handle a wide range of products or variants by using equipment that has short setup times.M


continuous review system

The inventory level on-hand and on-order for this system is checked whenever a change in inventory level occurs and when the reorder point is reached a restocking order is released. See: fixed reorder cycle inventory model.C


environmentally sensitive engineering

Designing with consideration of how a product or its packaging will ultimately be disposed.E


planning values

Values that decision makers use to translate the sales forecast into resource requirements to determine the feasibility and costs of alternative approaches.P


remanufacturing resource planning

A manufacturing resource planning system designed for remanufacturing facilities.R


gap analysis

A tool designed to assess the distance that exists between a service that is offered and customer expectations.G G



Syn: trailer on a flatcar.P


job sequencing rules

A set of priorities and conditions that specify the order in which jobs are processed because of scarce resources.J



The strategy of designing a product initially intended for one market in such a way that it can also be sold in other markets. It is a form of standardization.U


design changeover flexibility

The capability of the existing production system to accommodate and introduce a large variety of major design changes quickly.D


Shewhart circle of quality

Syn: plan-do-check-action.S


projected available balance

An inventory balance projected into the future. It is the running sum of on-hand inventory minus requirements plus scheduled receipts and planned orders. Syn: projected available inventory.P


leveraging purchase volume

Buying in large quantities to take advantage of volume price or shipping discounts.L


time value of money

1) The cumulative effect of elapsed time on the money value of an event, based on the earning power of equivalent invested funds. See: future worth, present value. 2) The interest rate that capital is expected to earn.T


capacity control

The process of measuring production output and comparing it with the capacity plan, determining if the variance exceeds pre-established limits, and taking corrective action to get back on plan if the limits are exceeded. See: input/output control.C


idle capacity

The available capacity that exists on nonconstraint resources beyond the capacity required to support the constraint. Idle capacity has two components: protective capacity and excess capacity.I


core competencies

Bundles of skills or knowledge sets that enable a firm to provide the greatest level of value to its customers in a way that is difficult for competitors to emulate and that provides for future growth. Core competencies are embodied in the skills of the workers and in the organization. They are developed through collective learning, communication, and commitment to work across levels and functions in the organization and with the customers and suppliers. For example, a core competency could be the capability of a firm to coordinate and harmonize diverse production skills and multiple technologies. To illustrate, advanced casting processes for making steel require the integration of machine design with sophisticated sensors to track temperature and speed, and the sensors require mathematical modeling of heat transfer. For rapid and effective development of such a process, materials scientists must work closely with machine designers, software engineers, process specialists, and operating personnel. Core competencies are not directly related to the product or market.C


instantaneous receipt

The receipt of an entire lot-size quantity in a very short period of time.I


four Ps

A set of marketing tools to direct the business offering to the customer. The four Ps are product, price, place, and promotion.F


publicly traded corporation

A corporation whose stock is available on a national exchange.P


product/service hierarchy

In sales and operations planning, a general approach to dividing products or services into families, brands, and subfamilies for various planning levels. This ensures that a correct topdown or bottom-up approach is taken to grouping (or aggregating) demand at each subsequent level. Forecasts are more accurate the higher up the product hierarchy they are developed; consequently, forecasts should usually be driven down from the top.P


outsourced cost of goods sold

Costs of goods sold that are not created within the producing company’s manufacturing process. Instead, they are outsourced to another company and include the costs of purchasing the service from another company.O



Abbreviation for time to reliably replenish.T



Abbreviation for business-to-consumer sales.B


public warehouse

The warehouse space that is rented or leased by an independent business providing a variety of services for a fee or on a contract basis.P


database management system (DBMS)

The software designed for organizing data and providing the mechanism for storing, maintaining, and retrieving that data on a physical medium (i.e., a database). A DBMS separates data from the application programs and people who use the data and permits many different views of the data.D


return to supplier

Material that has been rejected by the buyer’s inspection department and is awaiting shipment back to the supplier for repair or replacement.R


visual review system

A simple inventory control system where the inventory reordering is based on actually looking at the amount of inventory on hand. Usually used for low-value items, such as nuts and bolts. See: two-bin inventory system.V



A breakdown of the total demand or production that identifies different products in an aggregate demand or production run.M


level-demand strategy

A strategy of keeping capacity level and not variable with demand.L


sawtooth diagram

A quantity-versus-time graphic representation of the order point/order quantity inventory system showing inventory being received and then used up and reordered.S


activity sequencing

The process of defining and documenting dependencies among project activities.A



Abbreviation for warehouse management system.W



Individual events reported to the system (e.g., issues, receipts, transfers, adjustments).T



Abbreviation for direct store delivery.D



The condition of a product or process design that remains relatively stable with a minimum of variation even though factors that influence operations or usage, such as environment and wear, are constantly changing.R


anti-dumping duty

An imposed responsibility in which a company sells imported goods at prices below what is charged in their domestic market.A



Acronym for local area network.L


functional strategy

A strategy that is built from the business strategy for the various business functions, such as finance, marketing, and production. See: strategic planning.F


path divergence

Having parallel network paths exiting from a single node.P


valid schedule

A detailed, feasible calendar of specific items flowing into and through a factory.V


automated clearinghouse

A U.S. nationwide system for electronic payments preferred by a myriad of banks, consumers, and corporations. This system can carry payment information in a standardized, computer accessible format.A


Interstate Commerce Commission (ICC)

A U.S. regulatory agency charged with enforcing regulations controlling railroads, motor carriers, pipelines, domestic water carriers, domestic surface freight forwarders, and brokers.I


job enrichment

An increase in the number of tasks that an employee performs and an increase in the control over those tasks. It is associated with the design of jobs and especially the production worker’s job. Job enrichment is an extension of job enlargement.J


stop work order

Syn: hold order.S


local measures

The set of measurements that relates to a resource, operation, process, or part and usually has low correlation to global organization measures. Examples are errors per printed page, departmental efficiency, and volume discounts.L


systems network

A group of interconnected nodes. This implies redundancy in connections and some means (e.g., machines) for implementing the connection.S


Malcolm Baldrige National Quality Award (MB QA)

An award established by Congress in 1987 to raise awareness of quality management and to recognize U.S. companies that have implemented successful quality management systems. Up to four awards may be given annually in each of three categories: manufacturing company, service company, and small business. The award is named after the late Secretary of Commerce, Malcolm Baldrige, a proponent of quality management. The U.S. Commerce Department’s National Institute of Standards and Technology manages the award, and the American Society for Quality (ASQ) administers it. Syn: Baldrige Award.M


step-function scheduling

Scheduling logic that recognizes run length to be a multiple of the number of batches to be run rather than simply a linear relationship of run time to total production quantity.S



One who sells contract rights to a third person.A


project network

A diagram showing the technological relationships among activities in a project.P


batch picking

A method of picking orders in which order requirements are aggregated by product across orders to reduce movement to and from product locations. The aggregated quantities of each product are then transported to a common area where the individual orders are constructed. See: discrete order picking, order picking, zone picking.B


inventory conversion period

The time period needed to produce and sell a product, measured from procurement of raw materials to the sale of the product.I


manufacturing process

The series of operations performed upon material to convert it from the raw material or a semifinished state to a state of further completion. Manufacturing processes can be arranged in a process layout, product layout, cellular layout, or fixed-position layout. Manufacturing processes can be planned to support make-to-stock, make-to-order, assemble-to-order, and so forth, based on the strategic use and placement of inventories. See: production process, transformation process.M


absentee policy

The policy that discusses allowed job absences and the penalties from too many absences.A



A material of value produced as a residual of or incidental to the production process. The ratio of by-product to primary product is usually predictable. Byproducts may be recycled, sold as-is, or used for other purposes. See: co-product.B


net requirements

In MRP, the net requirements for a part or an assembly are derived as a result of applying gross requirements and allocations against inventory on hand, scheduled receipts, and safety stock. Net requirements, lot-sized and offset for lead time, become planned orders.N


cross-functional integration

Thread that weaves the entire organization and manufacturing process into one fabric in which each of the different parts serves and supports the whole. See: integrated enterprise.C


resource management

1) The planning and validation of all organizational resources. 2) The effective identification, planning, scheduling, execution, and control of all organizational resources to produce a good or service that provides customer satisfaction and supports the organization’s competitive edge and, ultimately, organizational goals. 3) An emerging field of study emphasizing the systems perspective, encompassing both the product and process life cycles, and focusing on the integration of organizational resources toward the effective realization of organizational goals. Resources include materials; maintenance, repair, and operating supplies; production and supporting equipment; facilities; direct and indirect employees; staff; administrative R and professional employees; information; knowledge; and capital. Syn: integrated resource management.R



The act of creating a schedule, such as a shipping schedule, master production schedule, maintenance schedule, or supplier schedule.S


detailed scheduling

Syn: operations scheduling.D D


marketing management

Syn: demand management.M


integrating mechanism

A physical, organizational, or informational entity that allows people and functions to interact freely by transcending boundaries.I



Transmission of voice and image data at a distance by electronic means.T



Abbreviation for available-to-promise.A


supply chain mastery

A firm’s ability to achieve superior results through exceptional management of revenue generation, segmented supplier and customer management, collaboration and information sharing, risk management, data analysis, and appropriate use of technology.S


primary process

A process that performs the main value-added activities of an organization.P


market dominance

When a firm has very little competition.M



Abbreviation for service level agreement.S


anticipated delay report

A report, normally issued by both manufacturing and purchasing to the material planning function, regarding jobs or purchase orders that will not be completed on time. This report explains why the jobs or purchases are delayed and when they will be completed. This report is an essential ingredient of the closed-loop MRP system. It is normally a handwritten report. Syn: delay report.A


market driven

Responding to customers’ needs.M


American National Standards Institute (ANSI)

The parent organization of the interindustry electronic interchange of the business transaction standard. This group is the clearinghouse on U.S. electronic data interchange standards.A


order multiples

An order quantity modifier applied after the lot size has been calculated that increases the order quantity to a predetermined multiple.O


acceptance number

1) A number used in acceptance sampling as a cutoff at which the lot will be accepted or rejected. For example, if x or more units are bad within the sample, the lot will be rejected. 2) The value of the test statistic that divides all possible values into acceptance and rejection regions.A


fixed order period system

A method of inventory planning that measures actual inventory levels at regular intervals of time; either an order is placed every time or a check of inventory levels is made and an order placed if needed. Often the quantity ordered varies from period to period as inventory is restored to a predetermined level. See: fixed order quantity system.F


organizational change management

The fostering and support of people who champion new technologies, new operating practices, and new products and services that will transform the organization, maintaining its viability and improving its competitive position in step with the change in the business environment in which it functions.O



The period of product specification, design, and design review.P


order consolidation profile

The process of filling an entire order of one customer by bringing all parts of their order together in one place. These items may or may not come from different places or departments.O


production materials requisition

Syn: materials requisition.P


data integrity

Assurance that data accurately reflects the environment it is representing.D



A term referring to the Pareto principle. The principle suggests that most effects come from relatively few causes; that is, 80 percent of the effects (or sales or costs) come from 20 percent of the possible causes (or items). See: ABC classification.8


packing slip

A document that itemizes in detail the contents of a particular package, carton, pallet, or container for shipment to a customer. The detail includes a description of the items, the shipper’s or customer’s part number, the quantity shipped, and the stockkeeping unit (SKU) of items shipped.P



A dimension of product quality that intends to appeal to the senses.A


cost driver

Syn: driver (first definition).C


blanket order release

A message that is used to release a quantity from a blanket order.B


shortage gaming

When suppliers ration or apportion supplies, and buyers, in response, inflate their orders in an attempt to receive what they actually need.S



Contingency funds set aside to mitigate risk.R


new product introduction

The development and release of an item that is new to a company’s set of offerings.N


detailed planning and control

The planning of a project in the short term, covering the present time up until a few weeks out.D


floating inventory location system

Syn: random-location storage.F



The concept that pooling random variables reduces the relative variance of the resulting aggregated variable. For example, the relative variance in sales of all models of automobiles sold by a firm is less than that for a single model.A



Abbreviation for container on a railroad flatcar.C



1) In transportation, the facility with which a carrier provides service from one point to another. 2) In warehousing, the ability to get to and within the point of storage easily.A


per one million defect opportunities

a potential problem that is important to the customer.D


market demand

In marketing, the total demand that would exist within a defined customer group in a given geographical area during a particular time period given a known marketing program.M



The communication protocol used by the internet.T



Having a common location with a variety of other companies.A


Box-Jenkins model

A forecasting method based on regression and moving average models. The model is based not on regression of independent variables, but on past observations of the item to be forecast at varying time lags and on previous error values from forecasting. See: forecast.B


spot buy

A purchase made for standard off-the-shelf material or equipment, on a one-time basis.S


average inventory

One-half the average lot size plus the safety stock, when demand and lot sizes are expected to be relatively uniform over time. The average can be calculated as an average of several inventory observations taken over several historical time periods; for example, 12-month ending inventories may be averaged. When demand and lot sizes are not uniform, the stock level versus time can be graphed to determine the average.A


implied authority

The right of an agent, when directed by a principal to accomplish a task, to do what is reasonably necessary to accomplish it.I


discrete order picking

A method of picking orders in which the items on one order are picked before the next order is picked. See: batch picking, order picking, zone picking.D


mixed loads

A load having both regulated and exempt items in the same vehicle.M


profitability index

In financial management, the net present value of a projected stream of income from a project (potential investment) divided by the investment in the project. It is used to select among competing potential investments.P



Abbreviation for electronic data interchange.E


nonsignificant part number

A part number that is assigned to each part but does not convey any information about the part. Nonsignificant part numbers are identifiers, not descriptors. Ant: significant part number.N


part number

Syn: item number.P