Module 1 - C

Question 1

available inventory

Answer 1

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

Question 2

available-to-promise (ATP)

Answer 2

1) In operations, the uncommitted portion of a company’s inventory and planned production maintained in the master schedule to support customer-order promising. The quantity is the uncommitted inventory balance in the first period and is normally calculated for each period in which an MPS receipt is scheduled. In the first period, it includes on-hand inventory less customer orders that are due and overdue. Three methods of calculation are used: discrete, cumulative with look-ahead, and cumulative without look-ahead. 2) In logistics, the quantity of a finished good that is or will be available to commit to a customer order based on the customer’s required ship date. To accommodate deliveries on future dates, it is usually time-phased to include anticipated purchases or production receipts.

Question 3

backlog

Answer 3

All the customer orders received but not yet shipped. Sometimes referred to as open orders or the order board.

Question 4

batch

Answer 4

1) A quantity scheduled to be produced or in production. 2) For discrete products, it is planned to be the standard quantity, but during production, the standard quantity may be broken into smaller lots. 3) In nondiscrete products, it is a quantity that is planned to be produced in a given time period based on a formula or recipe that often is developed to produce a given number of end items. 4) A type of manufacturing process used to produce items with similar designs; it also may cover a wide range of order volumes. Typically, items ordered are of a repeat nature, and production may be for a specific customer order or for stock replenishment

Question 5

bill of resources

Answer 5

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.

Question 6

capable-to-promise (CTP)

Answer 6

The process of committing orders against available capacity as well as inventory. This process may involve multiple manufacturing or distribution sites. Used to determine when a new or unscheduled customer order can be delivered. Employs a finite-scheduling model of the manufacturing system to determine when an item can be delivered. Includes any constraints that might restrict the production, such as availability of resources, lead times for raw materials or purchased parts, and requirements for lower-level components or subassemblies. The resulting delivery date takes into consideration production capacity, the current manufacturing environment, and future order commitments. The objective is to reduce the time spent by production planners in expediting orders and adjusting plans because of inaccurate delivery-date promises.

Question 7

chase production method

Answer 7

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.

Question 8

cumulative lead time

Answer 8

The longest planned length of time to accomplish the activity in question. It is found by reviewing the lead time for each bill of material path below the item; whichever path adds up to the greatest number defines this.

Question 9

due date

Answer 9

The date when purchased material or production material is due to be available for use.

Question 10

level production method

Answer 10

A production planning method that maintains a stable production rate while varying inventory levels to meet demand.

Question 11

level schedule

Answer 11

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. 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.

Question 12

load leveling

Answer 12

Spreading orders out in time or rescheduling operations so that the amount of work to be done in sequential time periods tends to be distributed evenly and is achievable. Although both material and labor are ideally level loaded, specific businesses and industries may load to one or the other exclusively (e.g., service industries).

Question 13

lot

Answer 13

A quantity produced together and sharing the same production costs and specifications.

Question 14

master production schedule (MPS)

Answer 14

A line on the master schedule grid that reflects the anticipated build schedule for those items assigned to the master scheduler. The master scheduler maintains this schedule, and in turn, it becomes a set of planning numbers that drives material requirements planning. It represents what the company plans to produce, expressed in specific configurations, quantities, and dates. The MPS is not a sales item forecast that represents a statement of demand. It must take into account the forecast, the production plan, and other important considerations such as backlog, availability of material, availability of capacity, and management policies and goals.

Question 15

master schedule

Answer 15

A format that includes time periods (dates), the forecast, customer orders, projected available balance, available-to-promise, and the master production schedule. It takes into account the forecast; the production plan; and other important considerations such as backlog, availability of material, availability of capacity, and management policies and goals.

Question 16

master scheduling

Answer 16

The process where the master schedule is generated and reviewed and adjustments are made to the master production schedule to ensure consistency with the production plan. The master production schedule (the line on the grid) is the primary input to the material requirements plan. The sum of the master production schedules for the items within the product family must equal the production plan for that family.

Question 17

mixed-model production

Answer 17

Making several different parts or products in varying lot sizes so that a factory produces close to the same mix of products that will be sold that day. The mixed-model schedule governs the making and the delivery of component parts, including those provided by outside suppliers. The goal is to build every model every day, according to daily demand.

Question 18

mixed-model scheduling

Answer 18

The process of developing one or more schedules to enable mixed-model production. The goal is to achieve a day’s production each day.

Question 19

on-hand balance

Answer 19

The quantity shown in the inventory records as being physically in stock.

Question 20

order entry

Answer 20

The process of accepting and translating what a customer wants into terms used by the manufacturer or distributor. The commitment should be based on the available-to-promise (ATP) line in the master schedule. This can be as simple as creating shipping documents for finished goods in a make-to-stock environment, or it might be a more complicated series of activities, including design efforts for make-to-order products.

Question 21

order promising

Answer 21

The process of making a delivery commitment (i.e., answering the question, “When can you ship?”). For make-to-order products, this usually involves a check of uncommitted material and availability of capacity, often as represented by the master schedule available-to-promise

Question 22

pacemaker

Answer 22

In lean, the resource that is scheduled based on the customer demand rate for that specific value stream; this resource performs an operation or process that governs the flow of materials along the value stream. Its purpose is to maintain a smooth flow through the manufacturing plant. A larger buffer is provided for the pacemaker than other resources so that it can maintain continuous operation.

Question 23

planning horizon

Answer 23

The amount of time a plan extends into the future. For a master schedule, this is normally set to cover a minimum of cumulative lead time plus time for lot sizing low-level components and time for capacity changes of primary work centers or of key suppliers. For longer-term plans, the planning horizon must be long enough to permit any needed additions to capacity.

Question 24

priority planning

Answer 24

The function of determining what material is needed and when. Master production scheduling and material requirements planning are the elements used for the planning and replanning process to maintain proper due dates on required materials.

Question 25

production plan

Answer 25

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

Question 26

production planning

Answer 26

A process to develop tactical plans based on setting the overall level of manufacturing output (production plan) and other activities to best satisfy the current planned levels of sales (sales plan or forecasts), while meeting general business objectives of profitability, productivity, competitive customer lead times, etc., as expressed in the overall business plan. The sales and production capabilities are compared, and a business strategy that includes a sales plan, a production plan, budgets, pro forma financial statements, and supporting plans for materials and workforce requirements, and so on, is developed. A primary purpose is to establish production rates that will achieve management’s objective of satisfying customer demand by maintaining, raising, or lowering inventories or backlogs, while usually attempting to keep the workforce relatively stable. Because this plan affects many company functions, it is normally prepared with information from marketing and coordinated with the functions of manufacturing, sales, engineering, finance, human resources, etc.

Question 27

projected available balance

Answer 27

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

Question 28

resource planning

Answer 28

Capacity planning conducted at the business plan level. The process of establishing, measuring, and adjusting limits or levels of long-range capacity. Resource planning is normally based on the production plan but may be driven by higher-level plans beyond the time horizon of the production plan (e.g., the business plan). It addresses those resources that take long periods of time to acquire. Resource planning decisions always require top management approval

Question 29

rough-cut capacity planning (RCCP)

Answer 29

The process of converting the master production schedule into requirements for key resources often including labor, machinery, warehouse space, suppliers’ capabilities, and, in some cases, money. Comparison to available or demonstrated capacity is usually done for each key resource. This comparison assists the master scheduler in establishing a feasible master production schedule. Three approaches to performing RCCP are the bill of labor (resources, capacity) approach, the capacity planning using overall factors approach, and the resource profile approach.

Question 30

sales and operations planning (S&OP)

Answer 30

A process to develop tactical plans that provide management the ability to strategically direct its businesses to achieve competitive advantage on a continuous basis by integrating customer-focused marketing plans for new and existing products with the management of the supply chain. The process brings together all the plans for the business (sales, marketing, development, manufacturing, sourcing, and financial) into one integrated set of plans. S&OP is performed at least once a month and is reviewed by management at an aggregate (product family) level. The process must reconcile all supply, demand, and new product plans at both the detail and aggregate levels and tie to the business plan. It is the definitive statement of the company’s plans for the near to intermediate term, covering a horizon sufficient to plan for resources and to support the annual business planning process. Executed properly, the S&OP process links the strategic plans for the business with its execution and reviews performance measurements for continuous improvement

Question 31

sales plan

Answer 31

A time-phased statement of expected customer orders anticipated to be received (incoming sales, not outgoing shipments) for each major product family or item. Represents sales and marketing management’s commitment to take all reasonable steps necessary to achieve this level of actual customer orders. Is a necessary input to the production planning process (or sales and operations planning process). Expressed in units identical to those used for the production plan (as well as in sales dollars).

Question 32

scheduling

Answer 32

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

Question 33

time fence

Answer 33

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.

Question 34

uniform plant loading

Answer 34

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.

Question 35

available inventory

Answer 35

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

Question 36

available-to-promise (ATP)

Answer 36

1) In operations, the uncommitted portion of a company's inventory and planned production maintained in the master schedule to support customer-order promising. The quantity is the uncommitted inventory balance in the first period and is normally calculated for each period in which an MPS receipt is scheduled. In the first period, it includes on-hand inventory less customer orders that are due and overdue. Three methods of calculation are used: discrete, cumulative with look-ahead, and cumulative without look-ahead. 2) In logistics, the quantity of a finished good that is or will be available to commit to a customer order based on the customer's required ship date. To accommodate deliveries on future dates, it is usually time-phased to include anticipated purchases or production receipts.