Module 2Demand in any period that is outside the limits established by management policy. This demand may come from a new customer or from existing customers whose own demand is increasing or decreasing.
Demand in any period that is outside the limits established by management policy. This demand may come from a new customer or from existing customers whose own demand is increasing or decreasing.
abnormal demand
This is composed of customer orders (and often allocations of items, ingredients, or raw materials to production or distribution). It nets against or "consumes" the forecast, depending upon the rules chosen over a time horizon.
actual demand
A form of exponential smoothing in which the smoothing constant is automatically adjusted as a function of forecast error measurement.
adaptive smoothing
Techniques that deal with analysis and planning of logistics and manufacturing during short, intermediate, and long-term time periods. This describes any computer program that uses advanced mathematical algorithms or logic to perform optimization or simulation on finite capacity scheduling, sourcing, capital planning, resource planning, forecasting, demand management, and others.
advanced planning and scheduling (APS)
An estimate of sales, often time-phased, for a grouping of products or product families produced by a facility or firm. Stated in terms of units, dollars, or both, this is used for sales and production planning (or for sales and operations planning) purposes.
aggregate forecast
The inventory for any grouping of items or products involving multiple stockkeeping units.
aggregate inventory
A plan that includes budgeted levels of finished goods, inventory, production backlogs, and changes in the workforce to support the production strategy.
aggregate plan
A methodology for locating distribution centers at approximately the location representing the minimum transportation costs between the plants, the distribution centers, and the markets, in order to maximize revenue.
center-of-gravity approach
A production planning method that maintains a stable inventory level while varying production to meet demand. Companies may combine chase and level production schedule methods.
chase production method
1) A collaboration process whereby supply chain trading partners can jointly plan key supply chain activities from production and delivery of raw materials to production and delivery of final products to end customers.
collaborative planning, forecasting, and replenishment (CPFR)
A type of planning bill that groups common components for a product or family of products into one bill of material, structured to a pseudoparent item number.
common parts bill of material
The process of reducing the forecast by customer orders or other types of actual demands as they are received. The adjustments yield the value of the remaining forecast for each period.
consuming the forecast
A production system in which the productive equipment is organized and sequenced according to the steps involved to produce the product.
continuous production
The relationship between two sets of data such that when one changes, the other is likely to make a corresponding change. If the changes are in the same direction, there is positive correlation. When changes tend to occur in opposite directions, there is negative correlation. When there is little correspondence or changes are random, there is not one.
correlation
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.
distribution center
The distribution route, from raw materials through consumption, along which products travel.
distribution channel
The planned channels of inventory disbursement from one or more sources to field warehouses and ultimately to the customer.
distribution network structure
The planning activities associated with transportation, warehousing, inventory levels, materials handling, order administration, site and location planning, industrial packaging, data processing,
distribution planning
A level of supply chain nodes. For example, a supply chain with two independent factory warehouses and nine wholesale warehouses delivering product to 350 retail stores is a supply chain with three echelons between the factory and the end customer. One echelon consists of the two independent factory warehouses, one echelon consists of the nine wholesale warehouses, and one echelon consists of the 350 retail stores.
echelon
A qualitative forecasting technique where the opinions of experts are combined in a series of iterations. The results of each iteration are used to develop the next, so that convergence of the experts' opinions is obtained.
Delphi method
1) In operations, the uncommitted portion of a company's inventory and planned production maintained in the master schedule to support customer-order promising. The quantity is the uncommitted inventory balance in the first period and is normally calculated for each period in which an MPS receipt is scheduled. In the first period, it includes on-hand inventory less customer orders that are due and overdue. Three methods of calculation are used: discrete, cumulative with look-ahead, and cumulative without look-ahead. 2) In logistics, the quantity of a finished good that is or will be available to commit to a customer order based on the customer's required ship date. To accommodate deliveries on future dates, it is usually time-phased to include anticipated purchases or production receipts.
available-to-promise (ATP)
A technique for calculating operation start dates and due dates. The schedule is computed starting with the due date for the order and working backward to determine the required start date and/or due dates for each operation.
back scheduling
A list of financial and operational measurements used to evaluate organizational or supply chain performance. The dimensions might include customer perspective, business process perspective, financial perspective, and innovation and learning perspectives. It formally connects overall objectives, strategies, and measurements. Each dimension has goals and measurements.
balanced scorecard
A standard succession of values of demand-over-time data used in forecasting seasonal items. This series of factors is usually based on the relative level of demand during the corresponding period of previous years. The average value of the base series over a seasonal cycle is 1.0. A figure higher than 1.0 indicates that demand for that period is higher than average; a figure less than 1.0 indicates less-than-average demand.
base series
A method of inventory control that includes most of the systems in practice as special cases. In this system, when an order is received for any item, it is used as a picking ticket, and duplicate copies, called replenishment orders, are sent back to all stages of production to initiate replenishment of stocks.
base stock system
A consistent deviation from the mean in one direction (high or low).
bias
A listing of all the subassemblies, 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 of display formats exists for bills of material, including the single-level, indented, modular (planning), transient, matrix, and costed.
bill of material (BOM)
A listing of the required capacity and key resources needed to manufacture one unit of a selected item or family. Rough-cut capacity planning uses these bills to calculate the approximate capacity requirements of the master production schedule.
bill of resources
In MRP, the process of using pegging data to solve material availability or other problems. This process is accomplished by the planner (not the computer system), who evaluates the effects of possible solutions. Potential solutions include compressing lead time, cutting order quantity, substituting material, and changing the master schedule.
bottom-up replanning
An MRP, DRP, or other time-phased system in which all time-phased data is accumulated into time periods
bucketed system
An MRP, DRP, or other time-phased system in which all time-phased data is processed, stored, and usually displayed using dated records rather than defined time periods
bucketless system
The process of committing orders against available capacity as well as inventory. This process may involve multiple manufacturing or distribution sites. Used to determine when a new or unscheduled customer order can be delivered. Employs a finite-scheduling model of the manufacturing system to determine when an item can be delivered. Includes any constraints that might restrict the production, such as availability of resources, lead times for raw materials or purchased parts, and requirements for lower-level components or subassemblies. The resulting delivery date takes into consideration production capacity, the current manufacturing environment, and future order commitments.
capable-to-promise
A rough-cut capacity planning technique. The master schedule items and quantities are multiplied by the total time required to build each item to provide the total number of hours to produce the schedule.
capacity planning using overall factors (CPOF)
An indicator of how efficiently a company manages its assets to improve cash flow. Calculated as inventory days plus accounts receivable days minus accounts payable days.
cash-to-cash cycle time
A calculation based on the available-to-promise (ATP) figure in the master schedule. Two methods of computing this are used, with and without look-ahead calculation. The look-ahead ATP equals the ATP from the previous period plus the MPS of the period minus the backlog of the period minus the sum of the differences between the backlogs and MPSs of all future periods until, but not to include, the period where point production exceeds the backlogs. The without look-ahead procedure equals the ATP from the previous period plus the MPS, minus the backlog in the period being considered.
cumulative available-to-promise
An approach to forecasting based on a straight line, polynomial, or other curve that describes some historical time series data.
curve fitting
A marketing philosophy based on putting the customer first. Involves the collection and analysis of information designed for sales and marketing decision support (in contrast to enterprise resources planning information) to understand and support existing and potential customer needs.
customer relationship management (CRM)
The results of delivering a good or service that meets customer requirements.
customer satisfaction
The practice of dividing a customer base into groups of individuals who are similar in specific ways relevant to marketing.
customer segmentation
In information systems, a model that describes the customer relationship as having four phases: requirements, acquisition, ownership, and retirement.
customer service life cycle
A measure of delivery performance of finished goods or other cargo, usually expressed as a percentage. In a make-to-stock company, this percentage usually represents the number of items or dollars (on one or more customer orders) that were shipped on schedule for a specific time period, compared to the total that were supposed to be shipped in that time period.
customer service ratio
The probability of not having a stockout in any one ordering cycle, which begins at the time an order is placed and ends when the goods are placed in stock.
cycle service level
A method of forecasting where time series data is separated into up to three components—trend, seasonal, and cyclical—where trend includes the general horizontal upward or downward movement over time; seasonal includes a recurring demand pattern such as day of the week, weekly, monthly, or quarterly; and cyclical includes any repeating, nonseasonal pattern.
decomposition
The locations in the product structure or distribution network where inventory is placed to create independence between processes or entities.
decoupling points
A standard set to monitor sales data for individual items in forecasting models. Usually set to be tripped when the demand for a period differs from the forecast by more than some number of mean absolute deviations.
demand filter
1) The function of recognizing all demands for goods and services to support the marketplace. It involves prioritizing demand when supply is lacking. Proper demand management facilitates the planning and use of resources for profitable business results. 2) In marketing, the process of planning, executing, controlling, and monitoring the design, pricing, promotion, and distribution of products and services to bring about transactions that meet organizational and individual needs.
demand management
1) That point in time inside of which the forecast is no longer included in total demand and projected available inventory calculations; inside this point, only customer orders are considered. Beyond this point, total demand is a combination of actual orders and forecasts, depending on the forecast consumption technique chosen.
demand time fence (DTF)
Demand that is directly related to or derived from the bill-of-material structure for other items or end products. Such demands are therefore calculated and need not and should not be forecast.
dependent demand
The difference (usually the absolute difference) between a number and the mean of a set of numbers, or between a forecast value and the actual value.
deviation
A calculation based on the available-to-promise figure in the master schedule. For the first period, the ATP is the sum of the beginning inventory plus the MPS quantity minus backlog for all periods until the item is master scheduled again. For all other periods, if a quantity has been scheduled for that time period, then the ATP is this quantity minus all customer commitments for this and other periods until another quantity is scheduled in the MPS. For those periods where the quantity scheduled is zero, the ATP is zero (even if deliveries have been promised). The promised customer commitments are accumulated and shown in the period where the item was most recently scheduled.
discrete available-to-promise
