APIC's Exam
Consignment
an arrangement in which goods are left in the possession of an authorized third party to sell.
An andon
an electronic board that provides visibility of floor status and supplies information to help coordinate the efforts of linked work centers.
Infinite Loading
assumes that capacity is infinite at any work station
Jidoka
automatically stopping the process when something is wrong and then fixing the problems on the line itself as they occur
Extrinsic forecasting
correlates with indicators external to an organization that may influence demand.
break-even point
the product the point at which total revenue equals total costs or expenses.
Routing
the sequence of operations through which the product must pass
Pareto Chart
the significant few from the trivial many by easily visualizing the most common occurrences.
Exponential Smoothing
new forecast = last period's forecast + alpha (last period's actual demand - last period's forecast)
Customer Relationship Management(CRM)
putting the customer first, collaborate, want loyal customers
Hansei
refers to the concept of self-criticism and finding areas for improvement.
Average Inventory Formula
(Beginning Inventory + Ending Inventory) / 2
Critical Ratio Formula
(Due Date-Present Date)/Lead Time Remaining
Plant Location(light to heavy)
(EX: soda) locate factory near customers
Plant Location(heavy to light)
(EX: steel) by raw materials
Genchi Genbutsu
A Japanese phrase meaning visit the shop floor to observe what is occurring.
Chase Production
A S&OP plan with low inventory, hire and fire a lot(retail holiday)
x-bar chart
A control chart used to monitor changes in the mean value of a process. A bell curve on it's side
Detention
A penalty charge against road shippers when truck is delayed beyond a specified loading or unloading time
Voice of the Customer
A planning technique used to provide products, services, and results that truly reflect customer requirements by translating those customer requirements into the appropriate technical requirements for each phase of project product development.
Finite Loading
A scheduling approach that recognizes capacity constraints.
Bonded Warehouse
A warehouse authorized by customs authorities for storage of goods on which payment of duties is deferred until the goods are removed.
Mean Absolute Deviation(formula)
Absolute sum of deviations/number of periods
Backward Scheduling
Activities are scheduled back from the due date
Mean Absolute Deviation(MAD)
Actual demand - fcst/Number of periods
Decoupling Inventory
An amount of inventory kept between entities in a manufacturing or distribution network to create independence between processes or entities. The objective of decoupling inventory is to disconnect the rate of use from the rate of supply of the item.
Inventory Turnover
Annual COGS/Average Inventory in Dollars
Rated Capacity
Available Time x Utilization x Efficiency
Enterprise Resource Planning (ERP)
Business management software, usually a suite of integrated applications, that a company can use to collect, store, manage and interpret data from many business activities.
Capable to Promise vs Available to Promise
Capable to Promise (CTP) takes into account capacity information. Whereas ATP only considers material availability and assumes infinite capacity resources, CTP considers availability of both materials and capacity, giving a more realistic picture of whether demand can be satisfied within a given time fence.
Carrying Cost
Carrying Cost Rate x Average Inventory level in dollars
Statistical Process Control(SPC)
Checking a product in process before scrap and rework, catching errors early vs inspection afterwards
Bias
Consistent deviation from the mean in one direction
DMAIC
Define, Measure, Analyze, Improve, Control
Postponement
Delay final differentiation(at DC)
Hedge Inventory
Doing it as an investment against price increases
VATI(V)
EX: Steel products
VATI(A)
Ex: Jet Engine
VATI(I)
Ex: Packaged Food
VATI(T)
Ex: Personal Computers
Average Ordering Cost Per Order
Fixed Cost/Number of orders + variable cost
Make to Stock(MTS)
High Cost, distribution network can shorten lead times, made before customer orders.
Total Cost
Item, capacity related, stock out, ordering carrying
Assets Formula
Liabilities + Owners Equity
Cellular Layout
Machines are grouped into what is referred to as a cell. Grouping is determined by the operations needed to perform work for a set of similar items or part families that requires similar processing.(U shaped)
Buffer in Drum-buffer-rope
Materials arrive at a specific time before they are needed
Fixed Position Layout
Move workers rather than parts, avoid high costs to move EX: Home
Normal Distribution and Standard Distribution
One SD 68.3% Two SD 95.4% Three SD 99.7%
Functional Layout
Organized by the type of work. Equipment can handle a wide variety of products
Takt Time
Pace of Production
Capital Expenditures
Plant, property, equipment
Total Productive Maintenance
Prevent maintenance rather than react, workers maintain their own equipment
Hoshin Planning
Proactive planning. A Japanese strategic planning process in which a company develops up to four vision statements that indicate where the company should be in the next five years. Company goals and work plans are developed based on the vision statements. Periodic audits are then conducted to monitor progress.
Intermittent Layout
Produced in lots rather than continuous basis, very flexible, high WIP
4Ps
Product, Price, Promotion, Place
Assemble to Order(ATO)
Products that are customized only at the very end of the manufacturing process.
Demonstrated Capacity
Proven capacity calculated from actual performance data
Regular Purchases
Raw materials, maintenance, services
Manufacturing Lead Time
Represents the total time required to manufacture an item, exclusive of lower-level purchasing lead time
What is in Priority Planning
S&OP(Product Fam), Master Scheduling(End Items), MRP(components)
Seasonal Index
Seasonal Index = Period Average demand / average demand for all periods
S.M.A.R.T
Specific Measurable Achievable Relevant Timely
Single Minute Exchange of Die(SMED)
Speeding up set up of production(reducing changeovers)
Level Production
Stable labor/demand, higher inventory holding costs
Measures of Performance
Strategic KPI's, Tactical KPI's, Operational KPI's
Moving Average Forecast
Sum of Demand for most recent set of periods/ number of periods
Demurrage
The carrier charges and fees applied when rail freight cars and ships are retained beyond a specified loading or unloading time.
Priority Planning
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.
Muda
To eliminate waste
The Largest Distribution Cost
Transportation
Job Shop
Typically small manufacturing systems that handle job production, that is, custom or semi-custom manufacturing processes such as small to medium-size customer orders or batch jobs.(farm equipment)
Engineer to Order(ETO)
Unique, high customer involvement, and extensive lead time
Total Cost Concept
View the sum of logistics operations as a system and seek to minimize the total cost of the system rather than the individual functions
Load
What we need to do
frieght forwarder
a business that handles overseas shipments and combines customers into one order
Total Quality Management (TQM)
a management philosophy that focuses on satisfying customers through empowering employees to be an active part of continuous quality improvement
Delphi Method
a process used to arrive at a group opinion or decision by surveying a panel of experts
Product Based Layout
a type of layout where resources are arranged sequentially, according to the steps required to make a product
Forward Scheduling
actives are scheduled from a known start date through a finish date
Make to Order(MTO)
begins after confirmed order is received, less customer involvement
Theory of Constraints
concentration on exploiting and elevating constraints that slow production or service
Kaizen
continuous improvement
6 Sigma
data driven approach for quality improvement hoping to get little variation 6 sigma=6 standard deviations from the mean (very few)99.999
Dependent Demand
demand for items that are subassemblies or component parts to be used in the production of finished goods.(calculated)
Control charts
detect assignable causes of variation in a process as opposed to random variations.
Qualitative Forecasting
experience, intuition, educated guesses, mainly for new products
Utilization
hours actually worked/available time
Pegging
in material requirements planning systems, tracing upward in the bill of material from the component to the parent item
repetitive manufacturing
is dedicated to a single product or a small range of products, where products are passed through the same sequence of operations.
Subcontracting Production
lower profit margin and can lose control
Poka-Yoke
mistake-proofing methods aimed at designing fail-safe systems that minimize human error
Drum in Drum-buffer-rope
sets pace for entire system, but based on constraint rate
Rope in drum-buffer-rope
signal is constraint throughput rate
Independent Demand
sources outside of control need to be fcsted
Flow Process Type
standardized products with devoted line, low WIP, hard to change
Heijunka
the leveling of production load by both volume and product mix
Quantitative Forecasting
uses mathematical models and historical data to make forecasts