MGMT 434 Chapter 3
Utilization
1) A measure ( usually expressed as a %) of how intensively a resource is being used to produce a good or service. Utilization compares actual time used to available time. Traditionally, utilization is the ratio of direct time lost due to the unavailability of machines, tools, workers,, and so forth. 2) In the theory of constraints, activation of a resource does not productively utilize a resource.
Process
1) A planned series of actions or operations (e.g. mechanical, electrical, chemical, inspection, test) that advances a material or procedure from one stage of completion to another. 2) A planned and controlled treatment that subject material or procedures to the influence of one or more types of energy (e.g. human, mechanical, electrical, electrical, chemical, and thermal) for the time required to bring about the desired reactions or results.
Routing
1) Information detailing the method of manufacture of a particular item. It includes the operations to be performed, their sequence, the various work centers involved, and the standard for setup and run. In some companies, the routing also includes information on tooling, operator skill level, inspection operations and testing requirements, and so on.
Phantom Bill of Material
A BOM coding and structuring techniques used primarily for transient (non stocked) sub assemblies. For the transient item, lead time is set to 0 and the order quantity o lot-for-lot. A phantom BOM represents an item that is physically built, but rarely stocked, before being used in the next step or level of mfg. This permits MRP logic to drive requirements straight through the phantom item to its components, but the MRP system usually retains its ability to net against any occasional inventories of the item. This technique also facilitates the use of common BOM for engineering and mfg.
Process Chart
A chart that represents the sequence of work or the nature of events in process. It serves as a basis for examining and possibly improving the way the work is carried out.
Product Structure Record
A computer record defining the relationship of one component to its immediate parent and containing fields for quantity required, engineering effectivity, scrap factor, application selection switches, and so forth.
Process Costing
A cost accounting system in which the costs are collected by time period and averaged over all the units produced during the period. This system can be used with either actual or standard costs in the manufacture of large number of identical units.
Standard Cost Accounting System
A cost accounting system that uses cost units determined before production for estimating the cost of an order or product. For management control purposes, the standards are compared to actual costs, and variances are computed.
Multilevel bill of Material
A display of all the components directly or indirectly used in a parent, together with the quantity required of each components. If a components is a sub assembly, blend, intermediate, etc., all its components and all their components also will be exhibited, down to purchased parts and raw material.
Single-Level Bill of Material
A display of components that are directly used in a parent item. It shows only the relationship one level down.
Summarized where-used
A form of and indented where-used BOM that shows all parents in which a given component is used, the required quantities, and all the next level parents until the end item is reached. Unlike the indented where-used, it does not list the levels of manufacture.
Multi-indented bill of Material
A form of multilevel BOM. It exhibits the highest level parents closest to the left margin, and all the components are going into these parents are shown indented toward the right. All subsequent level of components are indented farther to the right. If a component is used more than one parent within a given product structure, it will appear more than once under every sub assembly in which it is used.
Summarized Bill of Material
A form of multilevel bill that lists all the parts ad their quantities required in a given product structure. Unlike the indented BOM, it does not list the levels of manufacture and lists a components only once for the total quantity used.
Product Tree
A graphical (or tree) representation of the BOM.
Where-Used List
A list of every parent item that calls for a given component, and the respective quantity required, from a BOM file.
Bill of Material (BOM)
A listing of all the sub assemblies, intermediates, parts, and raw ,materials that go into a parent assembly showing the quantity of each required to make an assembly. It is used in conjunction with the master production schedule to determine the items for which purchase requisitions and production orders must be released. A variety if display formats exist for BOM, including the single level BOM, matrix BOM, and costed BOM. A list of all materials needed to make one production run of a product, by a contract manufacturer, of piece parts/components for its customers. The BOM may also be called the formula, recipe, or ingredients list in certain process industries.
Indented Where-Used
A listing of every parent item, and the respective quantities required, as well as each of their respective parent items, continuing until the ultimate end items id level-0 item is referenced. Each of these parent items calls for a given components item in a BOM file. The component item is shown closest to the let margin of the listing with each parent indented to the right, and each of their respective parents indented even further to the right.
Batch Manufacturing
A type of manufacturing process in which sets of items are moved through the different manufacturing steps in a group or batch.
Process Focused
A type of mfg. organization in which both plant and staff mgmt. responsibilities are delineated by production process. A highly centralized staff coordinates plant activities and intracompany material movements. This type of organization is best suited to companies whose dominate orientation is to a technology or a material and whose mfg. process tend to be complete and capital intensive.
Modular Bill of Material
A type of planning bill that is arranged in product modules or options. It is often used in companies where the product has many optional features (e.g. assemble to order companies automobile manufactures).
Queue
A waiting line. In mfg., the jobs at a given work center waiting to be processed. As queues increase, so do average queue time and work-in-process inventory.
Planning Bill of Material
An artificial grouping of items or events in BOM format used to facilitate master scheduling and material planning. It may include the historical average of demand expressed as a % of total demand for all options within a feature or for a specific end item within a product family and is used as the quantity per in the planning BOM.
Enterprise Resource Planning (ERP)
Framework for organizing, defining, and standardizing the business processes necessary to effectively plan and control and organization so the organization can use its internal knowledge to seek external advantage.
Overhead Allocation
In accounting, the process of applying OH to a product on the basis of a predetermined OH rate.
Bill of Activities
In activity based cost accounting, a summary of activities needed by a product or other cost object. The bill of activities includes volume and cost of each activity.
Efficiency Variance
In cost accounting, the difference between the actual volume of a resource used and the budgeted volume, multiplied by the budgeted or standard price.
Overhead (OH)
The costs incurred in the operation of a business that cannot be directly related to the individual goods or services produced. These costs, such as light, jet, supervision, and maintenance are grouped in several pools (e.g., department OH, factory OH, general OH) and distribution to units of good or services by some standard allocation method such as direct labor hours, direct labor dollars, or direct material dollars.
Overhead Base
The denominator used to calculate the predetermined OH rate used in applying OH (e.g. estimated direct labor hours, estimated direct labor dollars).
Process industries
The group of manufactures that produce products by mixing, separating, forming, and/or performing chemical reactions. Paint mfgs., refineries, and breweries are examples of process industries.
Process Steps
The operations or stages within the mfg. cycle required to transform components into intermediates or finished goods. From a larger perspective, the operations or stages within any business required to turn inputs into outputs.
Enterprise Resource Management
The planning, execution, control, and measurement functions required to effectively operate an enterprise.
Bill-Of-Material Structuring
The process of organizing BOM to perform specific functions.
Discrete Manufacturing
The production of distinct items such as automobiles, appliances, or computers.
Process Flow
The sequence of activities that when followed results in a product or service deliverable.
Product Structure
The sequence of operations that components follow during there mfg. into a product. A typical product structure would show raw material converted into fabricated components, components put together to make sub assemblies sub assemblies going into assemblies, and so forth.
Modular Design strategy
The strategy of planning and designing products so that components or sub assemblies can be used in current and future products or assembled to produce multiple configurations of a product. Automobiles and personal computer are examples of modular designs.
Standard Cost
The target costs of an operation, process, or product including direct material, direct labor and OH charges.
Wait Time
The time a job remains at a work center after an operation is completed until it is moved to the next operation. It is often expressed as a part of move time.
Move Time
The time a job spends in transit from one operation to another in the plant.
Inoperation Time
The time between the completion of one operation and the start of the next.
Setup Time
The time required for a specific machine, resource, work center, process, or line to convert from the production of the last good piece of item A to the first good piece of item B.
Operation Duration
The total time that elapses between the start of the setup an operation and the completion of the operation.
Modularization
Using the same set of components in a variety of finished goods.
Efficiency
A measurement (usually expressed as a %) of the actual output to the standard output expected. Efficiency measures how well something is performing relative to existing standards; in contrast , productivity measures output relative to a specific input ( e.g. tons/labor hour). Efficiency is the ratio of (1) actual units produced to the standard rate of production expected in a time period or (2) standard hours produced to actual hours worked ( taking longer means less efficiency or (3) actual dollar volume of output to a standard dollar volume in a time period. Illustrations of these calculations follow. (1) There is a standard of 100 pieces per hour and 780 units are produced in one 8 hour shift; the efficiency is 780/800 converted to a percentage, or 97.5%. (2) The work measured in hours and took 8.21 hours to produce 8 standard hours; the efficiency is 8/8.21 converted to a % or 97.5%. (3) The work is measured in dollars and produces $780 with a standard of $800; the efficiency is $780/$800 converted to a %, or 97.5%.
Backflush
A method of inventory bookkeeping where the book (computer) inventory of components is automatically reduced by the computer after completion of activity on the components upper-level parent item based on what should have been used as a specified on the BOM and allocation records. This approach has the disadvantage of a built-in differential between the nook record and what is physically in stock.
Bill of Batches
A method of tracking the specific multilevel batch composition of a manufactured item. The bill of batches provides the necessary where-used and where-from relationships required for lot tractability.
Process Flow Production
A production approach with minimal interruptions in the actual processing in any one production run or between production runs of similar products. Queue time is virtually eliminated by integrating the movement of the product into the actual operation of the resource performing the work.
Run
A quantity of production being processed.
Batch bill of Materials
A recipe or formula in which the statement of quality per is based on the standard batch quantity of the parent.
Engineering Change
A revision to a drawing or design released by engineering to modify or correct a part. The request to change can from a customer or from production quality control, another department, or a supplier.
Work Center
A specific production area, consisting of one or more people and/or machines with similar capabilities that can be considered as one innit for purposes of capacity requirements planning and detailed scheduling.
Bill of Labor
A structured listing of all labor requirements for the fabrication, assembly, and testing of the parent item.
Queue Time
The amount of time a job waits at a work center before setup or work is performed on the job. Queue time is one element of total mfg. lead time. Increases in queue time results in direct increases to mfg. lead time and work-in-process inventories.
Backflush costing
The application of costs based on the output of a process. Backflush costing is usually associated with repetitive manufacturing environments.
Process Manufacturing
Production that adds value by mixing, separating, forming, and/or performing chemical reactions. It may be done in either batch or continuous mode.
Single-Level Where-Used
Single-level where-used for a component lists each parent in which that component is directly used and in what quantity. This information is usually made available through the technique known as implosion.