Part I Execution

Question 1

advance ship notice (ASN)

Answer 1

An electronic data interchange (EDI) notification of shipment of product.

Question 2

backhauling

Answer 2

The process of a transportation vehicle returning from the original destination point to the point of origin. The 1980 Motor Carrier Act deregulated interstate commercial trucking and thereby allowed carriers to contract for the return trip. [This] can be with a full, partial, or empty load. [If empty, this] is called deadheading.

Question 3

bar code

Answer 3

A series of alternating bars and spaces printed or stamped on parts, containers, labels, or other media, representing encoded information that can be read by electronic readers. [This] is used to facilitate timely and accurate input of data to a computer system.

Question 4

batch picking

Answer 4

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.

Question 5

bill of lading (uniform) (B/L)

Answer 5

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, [this] is the basis for filing freight claims.

Question 6

bonded warehouse

Answer 6

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

Question 7

bottleneck

Answer 7

A facility, function, department, or resource whose capacity is less than the demand placed upon it. For example, [this type of] machine or work center exists where jobs are processed at a slower rate than they are demanded.

Question 8

break-bulk

Answer 8

1) Dividing truckloads, railcars, or containers of homogeneous items into smaller, more appropriate quantities for use. 2) A distribution center that specializes in [these types of] activities. 3) Unitized cargo in bales, boxes, or crates that is placed directly in a ship’s holds rather than in containers.

Question 9

buffer

Answer 9

1) A quantity of materials awaiting further processing. It can refer to raw materials, semifinished stores or hold points, or a work backlog that is purposely maintained behind a work center. 2) In the theory of constraints, [these] can be time or material and support throughput and/or due date performance. [These] can be maintained at the constraint, convergent points (with a constraint part), divergent points, and shipping points.

Question 10

buffer management

Answer 10

In the theory of constraints, a process in which all expediting in a shop is driven by what is scheduled to be in the buffers (constraint, shipping, and assembly buffers). By expediting this material into the buffers, the system helps avoid idleness at the constraint and missed customer due dates. In addition, the reasons items are missing from the buffer are identified, and the frequency of occurrence is used to prioritize improvement activities.

Question 11

centralized inventory control

Answer 11

Inventory decision making for all storekeeping units exercised from one office or department for an entire company.

Question 12

common carrier

Answer 12

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. [It] must obtain a certificate of public convenience and necessity from the Federal Trade Commission for interstate traffic.

Question 13

consolidation

Answer 13

The grouping of shipments to obtain reduced costs or improved utilization of the transportation function. Consolidation can occur by market area grouping, grouping according to scheduled deliveries, or using third-party pooling services such as public warehouses and freight forwarders.

Question 14

constraint

Answer 14

1) Any element or factor that prevents a system from achieving a higher level of performance with respect to its goal. [These] can be physical, such as a machine center or lack of material, but they can also be managerial, such as a policy or procedure. 2) One of a set of equations that cannot be violated in an optimization procedure.

Question 15

contract carrier

Answer 15

A carrier that does not serve the general public, but provides transportation for hire for one or a limited number of shippers under a specific contract.

Question 16

critical chain method

Answer 16

In the theory of constraints, a network planning technique for the analysis of a project’s completion time, used for planning and controlling project activities. The critical chain, which determines project duration, is based on technological and resource constraints. Strategic buffering of paths and resources is used to increase project completion success.

Question 17

critical path method (CPM)

Answer 17

A network planning technique for the analysis of a project’s completion time used for planning and controlling the activities in a project. By showing each of these activities and their associated times, the critical path, which identifies those elements that actually constrain the total time for the project, can be determined.

Question 18

cross-docking

Answer 18

The concept of packing products on incoming shipments so they can be easily sorted at intermediate warehouses or for outgoing shipments based on final destination. The items are carried from the incoming vehicle docking point to the outgoing vehicle docking point without being stored in inventory at the warehouse. [It] reduces inventory investment and storage space requirements.

Question 19

customs broker

Answer 19

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

Question 20

cycle time

Answer 20

1) In industrial engineering, the time between the completion of two discrete units of production. For example, [if] motors [are] assembled at a rate of 120 per hour, [this] is 30 seconds. 2) In materials management, the length of time from when material enters a production facility until it exits.

Question 21

decentralized inventory control

Answer 21

Inventory decision making exercised at each stocking location for SKUs at that location.

Question 22

demurrage

Answer 22

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

Question 23

detention

Answer 23

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

Question 24

discrete order picking

Answer 24

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

Question 25

dispatching

Answer 25

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

Question 26

distribution

Answer 26

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. [...] In many cases, this movement is made through one or more levels of field warehouses. 2) The systematic division of a whole into discrete parts having distinctive characteristics.

Question 27

distribution center

Answer 27

A location used to store inventory. Decisions driving warehouse management include site selection, number of facilities in the system, layout, and methods of receiving, storing, and retrieving goods.

Question 28

distribution channel

Answer 28

The distribution route, from raw materials through consumption, along which products travel.

Question 29

distribution requirements planning (DRP)

Answer 29

1) The function of determining the need to replenish inventory at branch warehouses. A time-phased order point approach is used where the planned orders at the branch warehouse level are “exploded” via MRP logic to become gross requirements of the supplying source. In the case of multilevel distribution networks, this explosion process can continue down through the various levels of regional warehouses (master warehouse, factory warehouse, etc.) and become input to the master production schedule. Demand on the supplying sources is recognized as dependent, and standard MRP logic applies. 2) More generally, replenishment inventory calculations, which may be based on other planning approaches such as period order quantities or “replace exactly what was used,” rather than being limited to the time-phased order point approach.

Question 30

distribution warehouse

Answer 30

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

Question 31

drop ship

Answer 31

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

Question 32

drum schedule

Answer 32

The detailed production schedule for a resource that sets the pace for the entire system. [It] must reconcile the customer requirements with the system's constraint(s).

Question 33

drum-buffer-rope (DBR)

Answer 33

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

Question 34

duty

Answer 34

A tax levied by a government on the importation, exportation, or use and consumption of goods.

Question 35

final assembly schedule (FAS)

Answer 35

A schedule of end items to finish the product for specific customers’ orders in a make-to-order or assemble-to-order environment. It is also referred to as the finishing schedule because it may involve operations other than the final assembly; also, it may not involve assembly (e.g., final mixing, cutting, packaging). [This] is prepared after receipt of a customer order as constrained by the availability of material and capacity, and it schedules the operations required to complete the product from the level where it is stocked (or master scheduled) to the end-item level.

Question 36

finite forward scheduling

Answer 36

An equipment scheduling technique that builds a schedule by proceeding sequentially from the initial period to the final period while observing capacity limits. A Gantt chart may be used with this technique.

Question 37

finite loading

Answer 37

Assigning no more work to a work center than the work center can be expected to execute in a given time period. The specific term usually refers to a computer technique that involves calculating shop priority revisions in order to level load operation by operation.

Question 38

five focusing steps

Answer 38

In the theory of constraints, a process to continuously improve organizational profit by evaluating the production system and market mix to determine how to make the most profit using the system constraint. The steps consist of (1) identifying the constraint to the system, (2) deciding how to exploit the constraint to the system, (3) subordinating all nonconstraints to the constraint, (4) elevating the constraint to the system, and (5) returning to step 1 if the constraint is broken in any previous step, while not allowing inertia to set in.

Question 39

fixed-location storage

Answer 39

A method of storage in which a relatively permanent location is assigned for the storage of each item in a storeroom or warehouse. Although more space is needed to store parts than in a random-location storage system, fixed locations become familiar, and therefore a locator file may not be needed.

Question 40

forward scheduling

Answer 40

A scheduling technique where the scheduler proceeds from a known start date and computes the completion date for an order, usually proceeding from the first operation to the last. Dates generated by this technique are generally the earliest start dates for operations.

Question 41

freight forwarder

Answer 41

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

Question 42

green reverse logistics

Answer 42

The responsibility of the supplier to dispose of packaging materials or environmentally sensitive materials such as heavy metals.

Question 43

idle capacity

Answer 43

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

Question 44

incoterms

Answer 44

A series of pre-defined commercial terms published by the International Chamber of Commerce relating to international commercial law. These terms do not cover property rights.

Question 45

infinite loading

Answer 45

Calculation of the capacity required at work centers in the time periods required regardless of the capacity available to perform this work.

Question 46

input/output control (I/O)

Answer 46

A technique for capacity control where planned and actual inputs and planned and actual outputs of a work center are monitored. Planned inputs and outputs for each work center are developed by capacity requirements planning and approved by manufacturing management. Actual input is compared to planned input to identify when work center output might vary from the plan because work is not available at the work center. Actual output is also compared to planned output to identify problems within the work center.

Question 47

intermodal transport

Answer 47

1) Shipments moved by different types of equipment combining the best features of each mode. 2) The use of two or more different carrier modes in the through movement of a shipment.

Question 48

job shop scheduling

Answer 48

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

Question 49

line haul costs

Answer 49

Basic costs of carrier operation to move a container of freight, including drivers’ wages and usage depreciation. These vary with the cost per mile, the distance shipped, and the weight moved.

Question 50

manufacturing order

Answer 50

A document, group of documents, or schedule conveying authority for the manufacture of specified parts or products in specified quantities.

Question 51

materials handling

Answer 51

Movement and storage of goods inside the distribution center. This represents a capital cost and is balanced against the operating costs of the facility.

Question 52

milk run

Answer 52

A regular route for pickup of mixed loads from several suppliers. For example, instead of each of five suppliers sending a truckload per week to meet the weekly needs of the customer, one truck visits each of the suppliers on a daily basis before delivering to the customer’s plant. Five truckloads per week are still shipped, but each truckload contains the daily requirement from each supplier.

Question 53

operating expense

Answer 53

All the money an organization spends in generating goal units.

Question 54

order picking

Answer 54

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.

Question 55

overlapped schedule

Answer 55

A manufacturing schedule that “overlaps” successive operations. Overlapping occurs when the completed portion of an order at one work center is processed at one or more succeeding work centers before the pieces left behind are finished at the preceding work centers.

Question 56

pallet positions

Answer 56

A calculation that determines the space needed for the number of pallets for inventory storage or transportation based on a standard pallet size. Pallet dimensions vary around the globe, but are typically a constant in regional markets. The term is frequently used to quote storage and transportation rates.

Question 57

picking list

Answer 57

A document that lists the material to be picked for manufacturing or shipping orders.

Question 58

pickup and delivery costs

Answer 58

Carrier charges for each shipment pickup and the weight of that shipment. Costs can be reduced if several smaller shipments are consolidated and picked up in one trip.

Question 59

priority control

Answer 59

The process of communicating start and completion dates to manufacturing departments in order to execute a plan. The dispatch list is the tool normally used to provide these dates and priorities based on the current plan and status of all open orders.

Question 60

private carrier

Answer 60

A group that provides transportation exclusively within an organization.

Question 61

production activity control (PAC)

Answer 61

The function of routing and dispatching the work to be accomplished through the production facility and of performing supplier control. [It] encompasses the principles, approaches, and techniques needed to schedule, control, measure, and evaluate the effectiveness of production operations.

Question 62

productive capacity

Answer 62

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.

Question 63

protective capacity

Answer 63

The resource capacity needed to protect system throughput—ensuring that some capacity above the capacity required to exploit the constraint is available to catch up when disruptions inevitably occur. Nonconstraint resources need protective capacity to rebuild the bank in front of the constraint or capacity-constrained resource (CCR) and/or on the shipping dock before throughput is lost and to empty the space buffer when it fills.

Question 64

protective packaging

Answer 64

Wrapping or covering of material that provides containment, protection, and identification of inventory in a warehouse. The material must be contained in such a way that will support movement and storage and will fit into the dimension of storage space and transportation vehicles.

Question 65

quantity discount

Answer 65

A price reduction allowance determined by the quantity or value of a purchase.

Question 66

radio frequency identification (RFID)

Answer 66

A system using electronic tags to store data about items. Accessing or retrieving this data is accomplished through a specific radio frequency and does not require close proximity or line-of-sight access.

Question 67

random-location storage

Answer 67

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 fixed-location storage method.

Question 68

receiving

Answer 68

The function encompassing the physical receipt of material, the inspection of the shipment for conformance with the purchase order (quantity and damage), the identification and delivery to destination, and the preparation of receiving reports.

Question 69

remanufacturing

Answer 69

1) An industrial process in which worn-out products are restored to like-new condition. In contrast, a repaired product normally retains its identity, and only those parts that have failed or are badly worn are replaced or serviced. 2) The manufacturing environment where worn-out products are restored to like-new condition.

Question 70

reverse logistics

Answer 70

A complete supply chain dedicated to the reverse flow of products and materials for the purpose of returns, repair, remanufactured, and/or recycling.

Question 71

shipping manifest

Answer 71

A document that lists the pieces in a shipment. [This] usually covers an entire load regardless of whether the load is to be delivered to a single destination or to many destinations. [It also usually lists] the items, piece count, total weight, and the destination name and address for each destination in the load.

Question 72

split lot

Answer 72

A manufacturing order quantity that has been divided into two or more smaller quantities, usually after the order has been released. The quantities of [this] may be worked on in parallel, or a portion of the original quantity may be sent ahead to a subsequent operation to be worked on while work on the remainder of the quantity is being completed at the current operation. The [purpose...] is to reduce the lead time of the order.

Question 73

store

Answer 73

A storage point located upstream of a work station, intended to make it easier to see customer requirements.

Question 74

tariff

Answer 74

An official schedule of taxes and fees imposed by a country on imports or exports.

Question 75

terminal-handling charges

Answer 75

1) Carrier charges dependent on the number of times a shipment must be loaded, handled, and unloaded. Cost can be reduced by consolidating shipments into fewer parcels or by shipping in truckload quantities. 2) For shipping lines, the costs of paying container terminals for unloading and loading during shipment. These costs are borne by the shipping lines at the port of shipment or destination.

Question 76

terminals

Answer 76

In transportation, locations where carriers load and unload goods to and from vehicles. Also used to make connections between local pickup and delivery service and line-haul service. Functions performed in [these] include weighing connections with other routes and carriers, vehicle routing, dispatching, maintenance, paperwork, and administration. [They] may be owned and operated by the carrier or the public.

Question 77

theory of constraints (TOC)

Answer 77

A holistic management philosophy developed by Dr. Eliyahu M. Goldratt, based on the principle that complex systems exhibit inherent simplicity. Even a very complex system comprising thousands of people and pieces of equipment can have, at any given time, only a very, very small number of variables—perhaps only one, known as a constraint—that actually limit the ability to generate more of the system’s goal.

Question 78

theory of constraints (TOC) accounting

Answer 78

A cost and managerial accounting system that accumulates costs and revenues into three areas—throughput, inventory, and operating expense. Does not create incentives (through allocation of overhead) to build up inventory. Is considered to provide a truer reflection of actual revenues and costs than traditional cost accounting, and is closer to a cash flow concept of income than is traditional accounting. Provides a simplified and more accurate form of direct costing that subtracts true variable costs (those costs that vary with throughput quantity). Unlike traditional cost accounting systems in which the focus is generally placed on reducing costs in all the various accounts, the primary focus of [this] is on aggressively exploiting the constraint(s) to make more money for the firm.

Question 79

third-party logistics (3PL)

Answer 79

A buyer and supplier team with a third party that provides product delivery services. This third party may provide added supply chain expertise.

Question 80

throughput

Answer 80

The rate at which the system generates “goal units.” Because [this] is a rate, it is always expressed for a given time period—such as per month, week, day, or even minute. If the goal units are money, [this] is an amount of money per time period. In that case, [it] is calculated as revenues received minus totally variable costs divided by units of the chosen time period.

Question 81

time buffer

Answer 81

Protection against uncertainty that takes the form of time.

Question 82

time-phased order point (TPOP)

Answer 82

MRP-like time planning logic technique for independent demand items, where gross requirements come from a forecast, not via explosion. Can be used to plan distribution center inventories as well as to plan for service (repair) parts, because MRP logic can readily handle items with dependent demand, independent demand, or a combination of both. An approach that uses time periods, thus allowing for lumpy withdrawals instead of average demand. When used in distribution environments, the planned order releases are input to the master schedule dependent demands.

Question 83

total line-haul cost

Answer 83

Basic costs of carrier operation to move a container of freight, including drivers’ wages and usage depreciation, which vary with the distance shipped and the cost per mile.

Question 84

traffic

Answer 84

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

Question 85

transaction channel

Answer 85

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

Question 86

transportation

Answer 86

The function of planning, scheduling, and controlling activities related to mode, vendor, and movement of inventories into and out of an organization.

Question 87

truckload (TL) carriers

Answer 87

Carriers that delivery/charge only for full truckload shipments.

Question 88

unit load

Answer 88

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

Question 89

unitization

Answer 89

In warehousing, the consolidation of several units into larger units for fewer handlings.

Question 90

warehousing

Answer 90

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

Question 91

wave picking

Answer 91

A method of selecting and sequencing picking lists or items to minimize the waiting time of the delivered material. Shipping orders may be picked in waves combined by common carrier or destination, and manufacturing orders in waves related to work centers.

Question 92

waybill

Answer 92

A document containing a list of goods with shipping instructions related to a shipment.

Question 93

ways

Answer 93

Paths over which a carrier operates, including right-of-way, roadbed, tracks, and other physical facilities. May be owned by the government, privately held by the carrier, or provided by nature.

Question 94

work order

Answer 94

1) An order to the machine shop for tool manufacture or equipment maintenance; not to be confused with a manufacturing order. 2) An authorization to start work on an activity (e.g., maintenance) or product.

Question 95

zone

Answer 95

1) A warehouse location methodology that includes some of the characteristics of fixed and random location methods. [These] locations hold certain kinds of items, depending on physical characteristics or frequency of use. 2) The specific warehouse location assigned to an order picker. In picking items for an order, the stock picker gets only the items for each order that are within [the specific one of these that he/she is assigned to.] The picker then fills the next order for items from [the same one of these.]

Question 96

zone picking

Answer 96

A method of subdividing a picking list by areas within a storeroom for more efficient and rapid order picking. [This kind of order] must be grouped to a single location before delivery or must be delivered to different locations such as work centers.