Podcast
Questions and Answers
Which of the following best describes the primary goal of ABC analysis in inventory management?
Which of the following best describes the primary goal of ABC analysis in inventory management?
- To categorize SKUs based on their relative usage value, focusing on high-value items. (correct)
- To reduce the number of SKUs a company manages.
- To minimize the total inventory holding costs across all SKUs.
- To ensure all SKUs have equal inventory levels to meet demand.
In acceptance sampling, what does the acceptable quality level (AQL) represent?
In acceptance sampling, what does the acceptable quality level (AQL) represent?
- The maximum defect percentage a consumer is willing to accept.
- The desired quality level that the consumer finds satisfactory. (correct)
- The average quality level found during inspection sampling.
- The minimum quality level a producer is willing to ship.
What is the primary purpose of an action notice in the context of material requirements planning (MRP)?
What is the primary purpose of an action notice in the context of material requirements planning (MRP)?
- To notify the accounting department about invoices that need processing.
- To alert planners about the necessity of releasing new orders or adjusting due dates. (correct)
- To inform customers about potential delays in their orders.
- To update the production schedule based on real-time shop floor data.
How is activity slack calculated in project management, and what does it indicate?
How is activity slack calculated in project management, and what does it indicate?
In project management, what is the key difference between the Activity-on-Node (AON) and Activity-on-Arc (AOA) network diagrams?
In project management, what is the key difference between the Activity-on-Node (AON) and Activity-on-Arc (AOA) network diagrams?
What is a key characteristic of additive manufacturing (AM) technologies?
What is a key characteristic of additive manufacturing (AM) technologies?
How does an additive seasonal forecasting method differ from a multiplicative seasonal method?
How does an additive seasonal forecasting method differ from a multiplicative seasonal method?
What is the primary goal of Advanced Planning and Scheduling (APS) systems?
What is the primary goal of Advanced Planning and Scheduling (APS) systems?
In forecasting, what is meant by 'aggregation' and why is it used?
In forecasting, what is meant by 'aggregation' and why is it used?
What does 'allowance time' refer to in the context of work measurement?
What does 'allowance time' refer to in the context of work measurement?
What is the main difference between an annual plan in a nonprofit service organization versus a business plan in a for-profit company?
What is the main difference between an annual plan in a nonprofit service organization versus a business plan in a for-profit company?
What is the primary purpose of anticipation inventory?
What is the primary purpose of anticipation inventory?
What do appraisal costs primarily refer to in quality management?
What do appraisal costs primarily refer to in quality management?
Which of the following best captures the essence of artificial intelligence (AI) in modern business applications?
Which of the following best captures the essence of artificial intelligence (AI) in modern business applications?
What is the main characteristic of an assemble-to-order (ATO) strategy?
What is the main characteristic of an assemble-to-order (ATO) strategy?
What distinguishes assignable causes of variation from common causes of variation in statistical process control?
What distinguishes assignable causes of variation from common causes of variation in statistical process control?
In the context of service or product attributes, what does measuring them involve?
In the context of service or product attributes, what does measuring them involve?
What is the defining characteristic of an 'auction' as a type of marketplace?
What is the defining characteristic of an 'auction' as a type of marketplace?
In operations, what is the primary objective of 'automation'?
In operations, what is the primary objective of 'automation'?
In the context of order promising, what does 'available-to-promise' (ATP) inventory represent?
In the context of order promising, what does 'available-to-promise' (ATP) inventory represent?
How is 'average aggregate inventory value' calculated, and what does this metric provide?
How is 'average aggregate inventory value' calculated, and what does this metric provide?
In acceptance sampling, what does the 'average outgoing quality' (AOQ) represent?
In acceptance sampling, what does the 'average outgoing quality' (AOQ) represent?
What does the 'average outgoing quality limit' (AOQL) signify in quality control?
What does the 'average outgoing quality limit' (AOQL) signify in quality control?
What is the key distinction between a back-office and a front-office process?
What is the key distinction between a back-office and a front-office process?
What is a 'backlog' in the context of manufacturing operations?
What is a 'backlog' in the context of manufacturing operations?
What is a 'backorder', and how does it differ from a 'stockout'?
What is a 'backorder', and how does it differ from a 'stockout'?
What do 'backorder and stockout costs' primarily include?
What do 'backorder and stockout costs' primarily include?
What does the term 'backward integration' refer to in supply chain management?
What does the term 'backward integration' refer to in supply chain management?
What is 'balance delay' in the context of assembly line balancing?
What is 'balance delay' in the context of assembly line balancing?
What is the main objective of the Baldrige Performance Excellence Program?
What is the main objective of the Baldrige Performance Excellence Program?
What does a 'bar chart' typically represent in the context of quality control?
What does a 'bar chart' typically represent in the context of quality control?
In capacity planning, what does the 'base case' scenario typically involve?
In capacity planning, what does the 'base case' scenario typically involve?
What is the primary characteristic of a 'base-stock system' for inventory control?
What is the primary characteristic of a 'base-stock system' for inventory control?
How does a 'batch process' differ from a 'job process' in operations management?
How does a 'batch process' differ from a 'job process' in operations management?
What is the purpose of 'benchmarking' in operations management?
What is the purpose of 'benchmarking' in operations management?
What is 'big data', and why is it challenging to manage?
What is 'big data', and why is it challenging to manage?
What information does a 'bill of materials' (BOM) provide?
What information does a 'bill of materials' (BOM) provide?
What is the purpose of a 'bill of resources' (BOR) in a service firm?
What is the purpose of a 'bill of resources' (BOR) in a service firm?
Flashcards
ABC Analysis
ABC Analysis
Dividing SKUs into classes based on dollar usage to focus on high-value items.
Acceptance Sampling
Acceptance Sampling
Statistical techniques to decide whether to accept or reject a material quantity based on sample inspection.
Action Notice
Action Notice
Memo alerting planners to release orders or adjust scheduled receipt due dates.
Activity
Activity
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Activity Slack
Activity Slack
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Activity-on-Node Network (AON)
Activity-on-Node Network (AON)
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Additive Manufacturing (AM)
Additive Manufacturing (AM)
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Additive Seasonal Method
Additive Seasonal Method
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Advanced Planning and Scheduling Systems (APS)
Advanced Planning and Scheduling Systems (APS)
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Aggregation
Aggregation
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Allowance Time
Allowance Time
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Anticipation Inventory
Anticipation Inventory
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Appraisal Costs
Appraisal Costs
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Artificial Intelligence (AI)
Artificial Intelligence (AI)
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Assemble-to-Order Strategy
Assemble-to-Order Strategy
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Assignable Causes of Variation
Assignable Causes of Variation
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Attributes
Attributes
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Auction
Auction
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Automation
Automation
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Available-to-Promise Inventory (ATP)
Available-to-Promise Inventory (ATP)
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Average Aggregate Inventory Value
Average Aggregate Inventory Value
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Average Outgoing Quality (AOQ)
Average Outgoing Quality (AOQ)
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Average Outgoing Quality Limit (AOQL)
Average Outgoing Quality Limit (AOQL)
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Back-Office
Back-Office
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Backlog
Backlog
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Backorder
Backorder
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Backorder and Stockout Cost
Backorder and Stockout Cost
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Backward Integration
Backward Integration
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Balance Delay
Balance Delay
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Base-Stock System
Base-Stock System
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Batch Process
Batch Process
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Benchmarking
Benchmarking
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Big Data
Big Data
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Bill of Materials (BOM)
Bill of Materials (BOM)
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Bill of Resources (BOR)
Bill of Resources (BOR)
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Binding Constraint
Binding Constraint
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Black Belts
Black Belts
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Block Plan
Block Plan
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Blockchain
Blockchain
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Bottleneck
Bottleneck
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Study Notes
- ABC Analysis: A method for categorizing SKUs into three classes based on their dollar usage to help managers prioritize items with the highest value.
- Acceptable Quality Level (AQL): The level of quality that a consumer desires.
- Acceptance Sampling: Utilizes statistical techniques to determine if a batch of material should be accepted or rejected based on inspecting a sample.
- Action Notice: A computer-generated alert to inform planners about releasing new orders or adjusting due dates for scheduled receipts.
- Activity: The smallest unit of work that consumes time and resources, which a project manager can schedule and control.
- Activity Slack: The maximum time an activity can be delayed without delaying the entire project, calculated as S = LS − ES or S = LF − EF.
- Activity-on-Node Network (AON): A network diagram approach where nodes represent activities and arcs represent precedence relationships.
- Additive Manufacturing (AM): Technologies that create 3D objects by adding layers of material like plastic, metal, or concrete.
- Additive Seasonal Method: A forecasting method where seasonal forecasts are generated by adding or subtracting a seasonal constant from the average demand per season.
- Advanced Planning and Scheduling Systems (APS): Software systems designed to optimize resources across the supply chain and align operations with strategic objectives.
- Aggregate Plan: Another term for the sales and operations plan.
- Aggregation: Clustering similar services or products to make forecasts and plans for entire families.
- Allowance Time: Time added to the normal time to account for certain factors.
- Annual Plan (or Financial Plan): A plan used by nonprofit service organizations for financial assessment.
- Annuity: A series of fixed payments made over a specified number of years.
- Anticipation Inventory: Inventory used to absorb demand or supply fluctuations.
- Appraisal Costs: Costs incurred by a firm when assessing the performance level of its processes.
- Artificial Intelligence (AI): Various technologies, including machine learning and natural language processing, that enable machines to sense, understand, act, and learn.
- Assemble-to-Order Strategy: Producing a variety of products from a few subassemblies and components after receiving customer orders.
- Assignable Causes of Variation: Factors causing variation that can be identified and eliminated.
- Attributes: Service or product characteristics that can be counted for acceptable performance.
- Auction: A marketplace where firms submit competitive bids to buy items.
- Automation: A self-acting and self-regulating system, process, or piece of equipment.
- Available-to-Promise Inventory (ATP): The quantity of end items that can be promised to customers for delivery on specified dates.
- Average Aggregate Inventory Value: The total average value of all inventory held by a firm.
- Average Outgoing Quality (AOQ): The expected proportion of defects that a plan will allow to pass.
- Average Outgoing Quality Limit (AOQL): The maximum value of the average outgoing quality over all possible values of the proportion defective.
- Back-Office: A process with low customer contact and minimal service customization.
- Backlog: An accumulation of customer orders promised for delivery at a future date.
- Backorder: A customer order that is filled later because it could not be filled when promised or demanded.
- Backorder and Stockout Cost: Costs for expediting past-due orders, lost sales, and potential loss of customer goodwill.
- Backward Integration: A firm's movement upstream towards raw materials and services through acquisitions.
- Balance Delay: The amount by which efficiency falls short of 100 percent.
- Baldrige Performance Excellence Program: Promotes, recognizes, and publicizes quality strategies and achievements.
- Bar Chart: A chart with bars representing the frequency of data characteristics measured on a yes/no basis.
- Base Case: The scenario of taking no action, which may result in lost orders or excess capacity costs.
- Base-Stock System: An inventory control system that issues a replenishment order each time a withdrawal is made, for the same amount.
- Batch Process: A process that handles moderate volume and variety in discrete batches.
- Benchmarking: Measuring a firm’s processes, services, and products against industry leaders.
- Big Data: Extremely large or complex data sets that cannot be processed by traditional applications.
- Bill of Materials (BOM): A record of all components of an item, their relationships, and usage quantities.
- Bill of Resources (BOR): A record of a service firm’s relationships and all associated materials, equipment, staff, and other resources, including usage quantities.
- Binding Constraint: A constraint that helps form the optimal corner point and limits the ability to improve the objective function.
- Black Belts: Employees who have reached a high level of training in Six Sigma and lead Six Sigma projects.
- Block Plan: A plan that allocates available space to operations and indicates their placement relative to each other.
- Blockchain: A digital record of transactions where blocks are linked together in a chain.
- Bottleneck: A capacity constraint resource that limits the organization’s ability to meet required product volume, mix, or demand fluctuation.
- Brainstorming: A group proposes ideas for change by saying whatever comes to mind.
- Break-Even Analysis: Comparing processes by finding the volume at which total revenues equal total costs.
- Break-Even Quantity: The volume at which total revenues equal total costs.
- Bullwhip Effect: The phenomenon in supply chains where order patterns experience increasing variance upstream.
- Business Plan: A projected statement of income, costs, and profits.
- c-Chart: Used for controlling the number of defects when more than one defect can be present in a service or product.
- Capacity: The maximum rate of output of a process or system.
- Capacity Cushion: Reserve capacity used to handle sudden increases in demand or temporary losses of production capacity.
- Capacity Gap: The difference between projected demand and current capacity.
- Capacity Requirement: What a process’s capacity should be for a future time period to meet customer demand.
- Capacity Requirements Planning (CRP): Projects time-phased capacity requirements for workstations to match the materials requirements plan with process capacity.
- Capital Intensity: The mix of equipment and human skills in a process.
- Carbon Footprint: The total amount of greenhouse gases produced to support operations.
- Cash Flow: The difference between funds flowing into and out of an organization over a period.
- Catalog Hubs: Suppliers post their catalog of items on the Internet for buyers to purchase electronically.
- Causal Methods: Forecasting methods that use historical data on independent variables to predict demand.
- Cause-and-Effect Diagram: Relates a key performance problem to its potential causes.
- Center of Gravity: A starting point to evaluate locations using the load–distance model.
- Centralized Placement: Keeping all inventory at a single location and shipping directly to customers.
- Certainty: A fact known without doubt.
- Channel: One or more facilities required to perform a given service.
- Channel Assembly: Using members of the distribution channel as assembly stations in the factory.
- Chase Strategy: Hiring and laying off employees to match the demand forecast.
- Checklist: A form used to record the frequency of certain process failures.
- Closed-Loop Supply Chain: Integrates forward and reverse logistics, focusing on the complete chain from birth to death of a product.
- Closeness Matrix: A table measuring the relative importance of locating each pair of operations close together.
- Closeout: Writing final reports, completing deliverables, and compiling recommendations for improving the project process.
- Cloud Computing: Using a network of remote servers on the Internet to store, manage, and process data.
- Collaborative Planning, Forecasting, and Replenishment (CPFR): Suppliers and customers collaborate on making forecasts using the Internet.
- Combination Forecasts: Produced by averaging independent forecasts based on different methods, sources, or data.
- Common Causes of Variation: Random, unidentifiable sources of variation unavoidable with the current process.
- Competitive Capability: The measured ability of a process or supply chain to achieve its assigned competitive priorities.
- Competitive Orientation: Negotiations between buyer and seller are seen as a zero-sum game, prioritizing short-term advantages.
- Competitive Priorities: Critical dimensions a process or supply chain must possess to satisfy customers.
- Complementary Products: Services or products with similar resource requirements but different demand cycles.
- Component: An item that goes through operations to become part of one or more parents.
- Compounding Interest: Interest on an investment accumulates and earns interest itself.
- Concurrent Engineering: Product engineers, process engineers, and others work together to design a product and its processes.
- Constraint: Any factor limiting the performance of a system and restricting its output.
- Consumer’s Risk (β): The probability of accepting a lot with unacceptable quality (Type II error).
- Continuous Improvement: Continually seeking ways to improve processes, based on the Japanese concept of kaizen.
- Continuous Review System (Q): Tracks remaining inventory to determine when to reorder.
- Continuous-Flow Process: High-volume, standardized production with rigid line flows and long production intervals.
- Control Chart: A time-ordered diagram used to determine whether variations are abnormal.
- Cooperative Orientation: Buyer and seller are partners, helping each other.
- Core Competencies: Unique resources and strengths considered when formulating strategy.
- Core Process: Activities that deliver value to external customers.
- Corner Point: A point at the intersection of constraint lines on the boundary of the feasible region.
- Crash Cost (CC): The activity cost associated with the crash time.
- Crash Time (CT): The shortest possible time to complete an activity.
- Critical Mass: Several competing firms clustered in one location attract more customers.
- Critical Path: The longest sequence of activities between a project’s start and finish.
- Critical Path Method (CPM): A network planning method used for scheduling maintenance shutdowns.
- Critical Ratio (CR): Time remaining until due date divided by total shop time remaining for the job.
- Cross-Docking: Packing products for easy sorting at warehouses for outgoing shipments based on destinations.
- Cumulative Sum of Forecast Errors (CFE): Measures the total forecast error and assesses bias.
- Customer Contact: The extent to which the customer is present, involved, and receives attention during the service process.
- Customer Involvement: Ways customers become part of the process and the extent of their participation.
- Customer Population: Inputs that generate potential customers.
- Customer Relationship Process: Identifies, attracts, and builds relationships with customers.
- Cycle Counting: Inventory is physically counted and corrected daily,.
- Cycle Inventory: The portion of total inventory that varies with lot size.
- Cycle Time: The maximum time allowed for work on a unit at each station.
- Cycle-Service Level: The desired probability of not running out of stock in any one ordering cycle.
- Decision Theory: A general approach to decision-making when outcomes are uncertain.
- Decision Tree: A schematic model of alternatives and their possible consequences.
- Decision Variables: Choices the decision-maker can control.
- Defect: Any instance when a process fails to satisfy its customer.
- Degeneracy: When the number of nonzero variables is less than the number of constraints.
- Delphi Method: Gaining consensus from a group of experts while maintaining anonymity.
- Demand Management: Changing demand patterns using demand options.
- Dependent Demand: Demand that occurs because the quantity required varies with production plans for other items.
- Dependent Demand Items: Items whose required quantity varies with production plans for other items.
- Dependent Variable: The variable one wants to forecast.
- Design-to-Order Strategy: Designing new products and manufacturing them to meet customer specifications.
- Discount Rate: The interest rate used in discounting future value to present value.
- Discounting: Finding the present value of an investment when the future value and interest rate are known.
- Diseconomies of Scale: Average cost per unit increases as facility size increases.
- Distribution Center (DC): A warehouse where goods are stored for distribution to various parties.
- Double-Sampling Plan: Uses two sample sizes and two acceptance numbers to make a decision.
- Drum-Buffer-Rope (DBR): A planning and control system that regulates the flow of work-in-process at the bottleneck.
- Earliest Due Date (EDD): A priority sequencing rule that specifies the job or customer with the earliest due date is next.
- Earliest Finish Time (EF): An activity's earliest start time plus its estimated duration, t, or EF = ES + t.
- Earliest Start Time (ES): The earliest finish time of the immediately preceding activity.
- Early Supplier Involvement: Including suppliers in the design phase of a service or product.
- Economic Order Quantity (EOQ): Minimizes total annual cycle-inventory holding and ordering costs.
- Economic Production Lot Size (ELS): The optimal lot size when replenishment is not instantaneous.
- Economies of Scale: Average unit cost decreases as output rate increases.
- Economies of Scope: The ability to produce multiple products more cheaply in combination than separately.
- Electronic Commerce (e-commerce): Applying information and communication technology along the supply chain.
- Electronic Data Interchange (EDI): Transmitting routine business documents in a standard format from computer to computer.
- Elemental Standard Data: Standards compiled for basic elements to estimate time required for a job.
- Employee Empowerment: Moving responsibility for decisions to the employees doing the job.
- End Item: The final product sold to a customer.
- Enterprise Process: A company-wide process across functional areas, business units, and regions.
- Enterprise Resource Planning Systems (ERP): Integrated information systems that support enterprise processes and data storage.
- Environmental Responsibility: Addresses the ecological needs of the planet and stewardship of natural resources.
- Ethical Failure Costs: Societal and monetary costs associated with passing defective items to customers.
- Exchange: An electronic marketplace where firms come together to do business.
- Executive Opinion: Opinions of managers are summarized to arrive at a single forecast.
- Expediting: Completing a job or finishing with a customer sooner than would otherwise be done.
- Exponential Smoothing Method: A weighted moving average method that gives recent demands more weight.
- External Customers: End users or intermediaries buying finished services or products.
- External Failure Costs: Costs when a defect is discovered after the customer receives the service or product.
- External Suppliers: Provide resources, services, products, and materials for the firm’s needs.
- Facility Location: Determining geographical sites for a firm’s operations.
- Feasible Region: Combinations of decision variables in a linear programming model.
- Financial Responsibility: Addresses the financial needs of stakeholders.
- Finished Goods (FG): Items sold to customers in plants, warehouses, and retail outlets.
- First-Come, First-Served (FCFS): The job or customer arriving first has the highest priority.
- Five S (5S): Workplace practices that are conducive to visual controls and lean production.
- Fixed Automation: Manufacturing process that produces one type of part or product in a fixed sequence.
- Fixed Cost: Constant regardless of changes in output levels.
- Fixed Order Quantity (FOQ): The same order quantity is used each time an order is issued.
- Fixed Schedule: Employees work the same days and hours each week.
- Flexible Automation (or Programmable): Manufacturing process that can be changed easily to handle various products.
- Flexible Flow: Customers, materials, or information move in diverse ways.
- Flexible Workforce: Employees capable of doing many tasks.
- Flow Shop: Specializes in medium- to high-volume production and utilizes line or continuous flow processes.
- Flow Time: The amount of time a job spends in the service or manufacturing system.
- Flowchart: Diagram tracing the flow of information, customers, equipment, or materials.
- Focus Forecasting: Selects the best forecast from a group of forecasts generated by individual techniques.
- Focused Factories: Splitting large plants into specialized smaller plants.
- Forecast: A prediction of future events used for planning purposes.
- Forecast Error: The difference between the forecast and actual demand.
- Forward Integration: Acquiring more channels of distribution.
- Forward Placement: Locating stock closer to customers at a distribution center, warehouse, wholesaler, or retailer.
- Fourth Industrial Revolution (Industry 4.0): Automation of manufacturing and industrial practices using smart technology.
- Front-Office: A process with high customer contact and direct interaction.
- Future Value of an Investment: The value of an investment at the end of the compounding period.
- Gantt Chart: A project schedule superimposing activities, precedence relationships, and duration times on a timeline.
- Geographical Information System (GIS): Software, hardware, and data used to analyze information relevant to location decisions.
- Graphic Method of Linear Programming: Steps include plotting constraints, identifying the feasible region, and plotting an objective function line.
- Graphs: Representations of data in pictorial forms.
- Green Belts: Employees who have achieved the first level of training in Six Sigma.
- Green Purchasing: Managing and reducing environmental waste.
- Gross Requirements: The total demand derived from all parent production plans.
- Group Technology (GT): Creating cells not limited to just one worker for low volume processes.
- Heijunka: Leveling production load by both volume and product mix.
- Hiring and Layoff Cost: Costs of advertising, interviews, training, scrap, lost productivity, paperwork, exit interviews, severance pay, retaining workers, and lost productivity.
- Histogram: Summarizes data on a continuous scale, showing the frequency distribution of some process failure.
- Holdout Sample: Actual demands from recent time periods are set aside to test different models.
- Humanitarian Logistics: Planning, implementing, and controlling the efficient flow of goods to alleviate suffering.
- Hurdle Rate: Minimum desired return on an investment.
- Hybrid-Office: With moderate levels of customer contact and standard services with options.
- Immediate Predecessors: Work elements that must be done before the next element can begin.
- Independent Demand Items: Demand influenced by market conditions and not related to inventory decisions for other items.
- Independent Variables: Variables assumed to affect the dependent variable.
- Industrial Robot: Versatile, computer-controlled machine for various tasks.
- Interarrival Times: The time between customer arrivals.
- Intermediate Item: An item with at least one parent and one component.
- Intermodal Shipments: Mixing modes of transportation.
- Internal Customers: Employees or processes relying on inputs from other employees or processes.
- Internal Failure Costs: Costs resulting from defects discovered during production.
- Internal Rate of Return (IRR): The discount rate that makes the NPV of a project zero.
- Internal Suppliers: Employees or processes supplying information or materials.
- Internet of Things (IoT): Interconnectivity of objects embedded with software, sensors, and actuators that collect and exchange data.
- Inventory: A stock of materials used to satisfy customer demand or support production.
- Inventory Holding Costs: Vary with the level of inventory investment, including costs of capital, storage, pilferage, obsolescence, insurance, and taxes.
- Inventory Management: Planning and controlling inventories to meet competitive priorities.
- Inventory Pooling: Reduction in inventory and safety stock due to merging variable demands.
- Inventory Position (IP): A measurement of a SKU’s ability to satisfy future demand.
- Inventory Record: Shows lot-size policy, lead time, and time-phased data.
- Inventory Turnover: Annual sales at cost divided by the average aggregate inventory value.
- ISO 14001:2004: Environmental standards.
- ISO 26000:2010: International guidelines to help organizations assess social responsibilities.
- ISO 28000:2007: Requirements for a supply chain security management system.
- ISO 9001:2015: Standards governing documentation of a quality program.
- Jidoka: Automatically stopping the process when something is wrong and fixing the problems on the line.
- Job Process: Flexibility to produce a wide variety of products in significant quantities.
- Job Shop: Specializes in low- to medium-volume production utilizing job or batch processes.
- Johnson’s Rule: Minimizes makespan when scheduling jobs on two workstations.
- Judgment Methods: Translates opinions of managers, experts, consumer surveys, and salesforce estimates into quantitative estimates.
- Just-In-Time System (JIT): Collection of practices that eliminate waste by cutting excess capacity or inventory and removing non-value-added activities.
- Kanban: A Japanese word meaning “card” that refers to cards used to control the flow of production.
- Labor-Limited Environment: Where resource constraint is the amount of labor available.
- Latest Finish Time (LF): The latest start time of the activity that immediately follows.
- Latest Start Time (LS): The latest finish time minus its estimated duration t, or LS = LF − t.
- Layout: The physical arrangement of operations relative to each other.
- Lead Time: The elapsed time between receipt of a customer order and filling it.
- Lean Systems: Operations systems that maximize value added by each activity by removing waste and delays.
- Learning Curve: Displays the relationship between processing time and cumulative quantity of a product produced.
- Level Strategy: Keeps workforce constant, but varies utilization to match the demand forecast.
- Line Balancing: Assigning work to stations in a line process to achieve the desired output rate.
- Line Flow: Customers, materials, or information moves linearly from one operation to the next.
- Line Process: Volumes are high and products are standardized, which allows resources to be organized around products.
- Linear Programming: Allocates scarce resources among competing demands.
- Linear Regression: Relating one variable to one or more independent variables by a linear equation.
- Linearity: Proportionality and additivity, with no products or powers of decision variables.
- Little’s Law: Relates the number of customers in a waiting-line system to the arrival rate and waiting time.
- Load–Distance Method: Evaluates locations based on proximity factors.
- Logistics Management: Planning, implementing, and controlling the efficient flow and storage of goods from origin to consumption.
- Lot: A quantity of items processed together.
- Lot Size: The quantity of an inventory item that management buys or manufactures.
- Lot Sizing: Determining how frequently and in what quantity to order inventory.
- Lot Tolerance Proportion Defective (LTPD): The worst level of quality the consumer can tolerate.
- Lot-for-Lot Rule (L4L): The lot size covers the gross requirements of a single week.
- Machine Learning: Computers learn without explicitly being programmed.
- Make-or-Buy Decisions: A managerial choice between outsourcing a process or doing it in-house.
- Make-to-Order Strategy: Manufacturers make products to customer specifications in low volumes.
- Make-to-Stock Strategy: Involves holding items in stock for immediate delivery.
- Makespan: Total time required to complete a group of jobs.
- Manufacturing Execution Systems (MES): Track and document the transformation of raw materials to finished goods.
- Manufacturing Resource Planning (MRP II): Ties basic MRP system to the company’s financial system.
- Market Research: Determines external consumer interest in a service or product.
- Mass Customization: Uses highly divergent processes to generate customized products at low costs.
- Mass Production: A line process that uses the make-to-stock strategy.
- Master Black Belts: Full-time teachers and mentors to several Black Belts.
- Master Production Schedule (MPS): Details how many end items will be produced within specified periods.
- Material Requirements Planning (MRP): A computerized system to manage dependent demand inventory.
- Mean Absolute Deviation (MAD): A measurement of the dispersion of forecast errors.
- Mean Absolute Percent Error (MAPE): Relates forecast error to the level of demand.
- Mean Squared Error (MSE): A measurement of the dispersion of forecast errors.
- Methods Time Measurement (MTM): A commonly used predetermined data system.
- Metrics: Performance measures established for a process.
- Minimum-Cost Schedule: Crashing activities along the critical path to minimize costs.
- Mixed Strategy: Considers the full range of supply options.
- Mixed-Model Assembly: Produces a mix of models in smaller lots.
- Mixed-Model Line: A production line that produces several items belonging to the same family.
- Modified Accelerated Cost Recovery System (MACRS): Shortens lives of investments, giving firms larger early tax deductions.
- Monte Carlo Simulation: Uses random numbers to generate simulation events.
- Most Likely Time (m): The probable time required to perform an activity.
- MRP Explosion: Converts requirements of final products into a material requirements plan.
- Multiple-Dimension Rules: Rules that apply to more than one aspect of a job.
- Multiplicative Seasonal Method: Seasonal factors are multiplied by an estimate of average demand to arrive at a seasonal forecast.
- Naïve Forecast: The forecast for the next period equals the demand for the current period, or Forecast = Dt.
- Nested Process: A process within a process.
- Net Present Value Method (NPV): Evaluates an investment by calculating the present values of all after-tax cash flows and then subtracting the initial investment.
- Network Diagram: Visual display depicting relationships between activities.
- New Product Development Process: Designs new services or products.
- Next-Shoring: Locating processes close to customer demand or product R&D.
- Nominal Value: A target for design specifications.
- Nonnegativity: Decision variables must be positive or zero.
- Normal Cost (NC): The activity cost associated with the normal time.
- Normal Time (NT): Select time multiplied by frequency and rating factor.
- Normal Time for the Cycle (NTC): The sum of the normal time for each element.
- Objective Function: States mathematically what is being maximized or minimized.
- Offshoring: Moving processes to another country.
- One-Worker, Multiple-Machines Cell (OWMM): A one-person cell where a worker operates many machines simultaneously.
- Open Orders: Orders that have been placed but have not yet been received.
- Operating Characteristic Curve (OC): Describes how a sampling plan discriminates between good and bad lots.
- Operation: A group of resources performing process activities.
- Operations Management: Systematic design, direction, and control of processes that transform inputs into services and products.
- Operations Planning and Scheduling: Balancing supply with demand.
- Operations Scheduling: Assigning jobs to workstations or employees to jobs.
- Operations Strategy: Implements the firm’s corporate strategy.
- Optimistic Time (a): Shortest time in which an activity can be completed.
- Optional Replenishment System: Reviews inventory position at fixed intervals and places a variable-sized order to cover expected needs.
- Order Fulfillment Process: Activities to produce and deliver the service or product.
- Order Qualifier: Minimum level required for a firm to do business in a market segment.
- Order Winner: A criterion customers use to differentiate firms.
- Ordering Cost: Cost of preparing a purchase order or a production order.
- Organizational Learning: Gaining experience with products and processes.
- Outsourcing: Paying suppliers to perform processes.
- Overtime: Employees work longer than the regular workday or workweek for additional pay.
- Overtime Cost: Wages paid for extra work.
- p-Chart: Used for controlling the proportion of defective services or products.
- Pacing: Product movement from one station to the next as soon as the cycle time has elapsed.
- Parameter: A value that the decision-maker cannot control.
- Parent: A product manufactured from one or more components.
- Pareto Chart: Factors plotted in decreasing order of frequency.
- Part Commonality: The degree to which a component has more than one immediate parent.
- Past Due: The amount of time by which a job missed its due date.
- Path: The sequence of activities between a project’s start and finish.
- Payback Method: Determines how much time will elapse before after-tax flows equal the initial investment.
- Payoff Table: Shows the amount for each alternative if each possible event occurs.
- Performance Rating Factor (RF): Assessment of worker’s performance compared to average.
- Periodic Order Quantity (POQ): A different order quantity for each order issued at predetermined time intervals.
- Periodic Review System (P): Inventory position is reviewed periodically.
- Perpetual Inventory System: Inventory records are always current.
- Pessimistic Time (b): Longest estimated time required to perform an activity.
- Phase: A single step in providing a service.
- Pipeline Inventory: Inventory created when an order is issued but not yet received.
- Plan-Do-Check-Act Cycle: Used for continuous improvement.
- Planned Order Release: Indication of when an order for a quantity is to be issued.
- Planned Receipts: Orders not yet released to the shop or the supplier.
- Planning Horizon: Consecutive time periods for planning purposes.
- Plants Within Plants (PWPs): Different operations within a facility with individualized competitive priorities, processes, and workforces.
- Poka-Yoke: Mistake-proofing methods to minimize human error.
- Postponement: Delaying final activities in provision of a product until orders are received.
- Precedence Diagram: Visualizes immediate predecessors.
- Precedence Relationship: Sequence for undertaking activities.
- Predetermined Data Method: Database approach that divides each work element into micromotions.
- Preemptive Discipline: Customer of higher priority interrupts the service of another customer.
- Preference Matrix: Rates alternatives according to several performance criteria.
- Present Value of an Investment: Amount invested now to accumulate to a certain amount in the future.
- Presourcing: Suppliers are selected early and given significant responsibility for design.
- Prevention Costs: Costs associated with preventing defects.
- Priority Rule: Selects the next customer to be served by the service facility.
- Priority Sequencing Rule: Specifies the job or customer processing sequence.
- Process: Any activity or group of activities that transforms inputs into outputs for customers.
- Process Analysis: Documentation and detailed understanding of how work is performed and how it can be redesigned.
- Process Capability: Ability of the process to meet design specifications.
- Process Capability Index: Measures potential for a process to generate defective outputs.
- Process Capability Ratio: Tolerance width divided by 6 standard deviations.
- Process Chart: Documents activities performed by a person or group of people.
- Process Choice: Structuring the process by organizing resources around the process or around the products.
- Process Divergence: Extent to which the process is customized.
- Process Failure: Any performance shortfall.
- Process Improvement: Systematic study of activities and flows of each process to improve it.
- Process Simulation: Reproducing the behavior of a process.
- Process Strategy: Decisions made in managing processes.
- Process Structure: Process type relative to resources needed and their characteristics.
- Producer’s Risk (α): Risk of rejecting an acceptable lot (Type I error).
- Product Family: Services or products with similar demand requirements and common process, labor, and materials requirements.
- Product-Mix Problem: Optimal output quantities subject to resource capacity and market demand constraints.
- Production Plan: A sales and operations plan for a manufacturing firm that centers on production rates and inventory holdings.
- Productivity: Value of outputs divided by the values of input resources.
- Program: Interdependent set of projects with a common strategic purpose.
- Program Evaluation and Review Technique (PERT): Used for the U.S. Navy’s Polaris missile project.
- Project: Interrelated set of activities with a definite starting and ending point.
- Project Management: Systemized approach to defining, organizing, planning, monitoring, and controlling projects.
- Projected On-Hand Inventory: Estimate of inventory available after gross requirements are satisfied.
- Protection Interval: Period over which safety stock must protect the user from running out of stock.
- Pull Method: Customer demand activates production.
- Purchased Item: An item with one or more parents but no components.
- Purchasing: Decides which suppliers to use, negotiates contracts, and determines whether to buy locally.
- Push Method: Production begins in advance of customer needs.
- Quality: Customer satisfaction with a service or product.
- Quality at the Source: Defects are caught and corrected where they were created.
- Quality Function Deployment (QFD): Translates customer requirements into technical requirements.
- Quality of Life: Considers the availability of good schools, recreational facilities, cultural events, and an attractive lifestyle.
- Quantity Discount: Drop in the price per unit when an order is sufficiently large.
- R-Chart: Monitors process variability.
- Radio Frequency Identification (RFID): Identifies items through radio signals from a tag attached to an item.
- Random Number: A number with the same probability of being selected.
- Raw Materials (RM): Inventories needed for production.
- Rectified Inspection: Defective items are replaced if the lot is rejected and any defective sample of items will be replaced if the lot is accepted.
- Reengineering: Fundamental rethinking and radical redesign of processes.
- Regular Time Cost: Regular-time wages paid to employees plus contributions to benefits.
- Reorder Point (R): The predetermined minimum level that an inventory position must reach before ordering.
- Reorder Point System (ROP): Tracks inventory to determine when to reorder.
- Repeatability: The degree to which the same work can be done again.
- Resource Flexibility: The ease with which employees and equipment can handle a variety of products, output levels, duties, and functions.
- Resource Plan: Determines requirements for materials and other resources.
- Resource Planning: Takes sales and operations plans and plans the input requirements.
- Revenue Management: Varying price for customer segments to maximize revenues.
- Reverse Logistics: Planning, implementing, and controlling the efficient flow of products from point of consumption back to point of origin.
- Risk-Management Plan: Identifies key risks and ways to circumvent them.
- Rotating Schedule: Employees through a series of workdays or hours.
- Route Planning: Finds the shortest route to deliver a service or product.
- SA8000:2014: Standards covering dimensions of ethical workforce management.
- Safety Stock Inventory: Protects against uncertainties in demand, lead time, and supply changes.
- Sales and Operations Plan (S&OP): A plan of future aggregate levels to balance with demand.
- Salesforce Estimates: Compiles forecasts from estimates of future demands made by salesforce members.
- Salvage Value: Cash flow from the sale of plant and equipment at the end of a project’s life.
- Sample Size: A quantity of randomly selected observations of process outputs.
- Sampling Plan: Specifies sample size, time between samples, and decision rules.
- Scatter Diagram: Plots two variables showing whether they are related.
- Scenario Forecasting: Generates forecasts based on plausible scenarios.
- Schedule: Allocates resources over time to accomplish specific tasks.
- Scheduled Receipts (SR): Orders that have been placed but not yet received.
- SCOR Model: Focuses on plan, source, make, deliver, and return processes.
- Scrum: Agile project management responding rapidly, efficiently, and effectively to change.
- Select Time (t): Average observed time based only on representative times.
- Sensitivity Analysis: Systematically changing parameters to determine effects.
- Sequencing: Determining the order in which jobs or customers are processed.
- Sequential-Sampling Plan: The consumer randomly selects items from the lot and inspects them one by one.
- Service Blueprint: Flowchart of a service process showing high customer contact steps.
- Service Facility: Person, machine, or both to perform the service.
- Service Level: Desired probability of not running out of stock in any one ordering cycle.
- Service Package: Collection of goods and services provided by a service process.
- Service System: The number of lines and arrangement of facilities.
- Setup Cost: Changing over a
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