CPIM Prep

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Capable-to-Promise

(CTP) The process of committing orders against available capacity and inventory.

Factory order Ordering Costs

1. production control costs-costs include salaries, supplies, and operating expenses for production control staff 2. setup and teardown costs-costs depend on the number of factory orders 3. lost capacity cost-directly related to the number of orders placed and is particularly costly at bottleneck work centers.

Consignment

1.) A shipment that is handled by a common carrier. 2.) The process of a supplier placing goods at a customer location without receiving payment until after the goods are used or sold

tactical, operational, strategic

3 types of plans

Third-party logistics (3PL)

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

Pallet position

A calculation that determines the space needed for the number of pallets for inventory storage or transportation based on 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 ***NOTE: if pallets can be stacked -- only one pallet position is used for those stacked pallets

MRP

A computer-based information system that translates master schedule requirements for end items into time-phased requirements for subassemblies, components, and raw materials. Plans for dependent demand items

Earliest job due date

A dispatching rule: Jobs are performed according to end-item due dates

Transaction channel

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

Random variation

A fluctuation in data that is caused by uncertain or random occurrences.

Optional replenishment model

A form of independent demand item management model in which a review of inventory on hand plus inventory on order is made at fixed intervals. If the actual quantity is lower than some predetermined threshold, a reorder is placed for a quantity M minus x, where M is the maximum allowable inventory and x is the current inventory. The reorder point R may be deterministic or stochastic, and in either instance is large enough to cover the maximum expected demand during the review interval plus the replenishment lead time. Sometimes called hybrid (uses parts of fixed reorder cycle and fixed reorder quantity)

Hedge inventory

A form of inventory buildup buffer against events that may not happen Some products are traded on he worldwide market so when buyers expect these prices to rise, they hedge inventory when prices are low

ABC classification

A items = fewer orders, but tighter constraints on inventory C items = more orders, but looser constraints on inventory B items = in the middle ------------------------------------------------------- The classification of a group of items in decreasing order of annual dollar volume (price multiplied by projected volume) or other criteria. This array is then split into three classes, called A, B, and C. The A group usually represents 10 percent to 20 percent by number of items and 50 percent to 70 percent by projected dollar volume. The next grouping, B, usually represents about 20 percent of the items and about 20 percent of the dollar volume. The C class contains 60 percent to 70 percent of the items and represents about 10 percent to 30 percent of the dollar volume. The ABC principle states that effort and money can be saved through applying looser controls to the low-dollar-volume class items than will be applied to high-dollar-volume class items. The ABC principle is applicable to inventories, purchasing, and sales

Balanced Scorecard

A list of financial and operational measurements used to evaluate organizational or supply chain performance. The dimensions of the balanced scorecard might include customer perspective, business process perspective, financial perspective innovation and learning perspectives. Formally connects overall objectives, strategies, and measurements

Bill of Material (BOM)

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. The BOM is one of the most important documents in a manufacturing plant. Variants of the BOM include formulas for chemicals.

Dispatch list

A listing of manufacturing orders in priority sequence. The dispatch list, which is usually communicated to the manufacturing floor via paper or electronic media, contains detailed information on priority, location, quantity, and the capacity requirements of the manufacturing order by operation. Dispatch lists are normally generated daily and oriented by work center

Dispatch Lists

A listing of manufacturing orders in priority sequence. The dispatch list, which is usually communicated to the manufacturing floor via paper or electronic media, contains detailed information on priority, location, quantity, and the capacity requirements of the manufacturing order by operation. Normally generated daily and oriented by work center

Cellular manufacturing

A manufacturing process that produces families of parts within a single line or cell of machines controlled by operators who work only within the line or cell.

On-time schedule performance

A measure (percentage) of meeting the customer's originally negotiated delivery request date. Performance can be expressed as a percentage based on the number of orders, line items, or dollar value shipped on time.

utilization

Discrete order picking

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

Critical path method

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

quality at the source

A producer's responsibility to provide 100 percent acceptable quality material to the consumer of the material. The objective is to reduce or eliminate shipping or receiving quality inspections and line stoppages as a result of supplier defects

Continuous Production

A production system in which the productive equipment is organized and sequenced according to the steps involved to produce the product. This term denotes that material flow is continuous during the production process. The routing of the jobs is fixed and setups are seldom changed.

Dock-to-Stock

A program by which specific quality and packaging requirements are met before the product is released. Prequalified product is shipped directly into the customer's inventory. Dock-to-stock eliminates the costly handling of components, specifically in receiving and inspection and enables product to move directly into production.

Capacity-constrained resource (CCR)

A resource that is not a constraint but will become a constraint unless scheduled carefully. Any resource that, if its capacity is not carefully managed, is likely to compromise the throughput of the organization. (Also called capacity constraint resource).

Capacity Planning using Overall Factors (CPOF)

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. Historical work center percentages are then applied to the total number of hours to provide an estimate of the hours per work center to support the master schedule. This technique eliminates the need for engineered time standards. Syn: overall factors. See: bill of resources, capacity planning, resource profile, rough-cut capacity planning.

Production Line

A series of pieces of equipment dedicated to the manufacture of a specific number of products or families.

Order point

A set inventory level where, if the total stock on hand plus on order falls to or below that point, action is taken to replenish the stock. The order point is normally calculated as forecasted usage during the replenishment lead time plus safety stock

lot control

A set of procedures (e.g., assigning unique batch numbers and tracking each batch) used to maintain lot integrity from raw materials, from the supplier through manufacturing to consumers.

Unit load

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.

Andon

A sign board with signal lights used to make workers and management aware of a quality, quantity, or process problem.

metric

A standard of measurement used to monitor performance

quotation

A statement of price, terms of sale, and description of goods or services offered by a supplier to a prospective purchaser; a bid. When given in response to an inquiry, it is usually considered an offer to sell

Product differentiation

A strategy of making a product distinct from the competition on a nonprice basis such as availability, durability, quality, or reliability.

operation splitting

A synonym of lot splitting: Dividing a lot into two or more sublots and simultaneously processing each sublot on identical (or very similar) facilities as separate lots, usually to compress lead time or to expedite a small quantity

finite loading

A synonym: 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

Duty

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

Kaizen Event

A time boxed set of activity carried out by the cell team during the week of cell implementation. The Kaizen event is an implementation arm of a lean manufacturing program.

Project manufacturing

A type of manufacturing process used for large, often unique, items or structures that require a custom design capability (engineer-to-order). This type of process is highly flexible and can cope with a broad range of product designs and design changes. Product manufacturing usually uses a fixed-position type layout. See: batch (fourth definition), continuous production, job shop (second definition), process manufacturing, project, repetitive manufacturing.

Line-haul costs

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

Resource Planning

Capacity planning conducted at the business plan level. The process of establishing, measuring, and adjusting limits or levels of long-range capacity.

Detention

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

Pickup and delivery costs

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.

Truckload (TL) carriers

Carriers that deliver/charge only for full truckload shipments

Common Causes (Random Causes)

Causes of variation that are inherent in a process over time. They affect every outcome of the process and everyone working in the process. This is the random variation discussed in Section B. Identifying common causes by category can help, because people can design a process to minimize their impact (taller and narrower bell curve).

Supplier certification

Certification procedures verifying that a supplier operates, maintains, improves, and documents effective procedures that relate to the customer's requirements. Such requirements can include cost, quality, delivery, flexibility, maintenance, safety, and ISO quality and environmental standards.

Benchmarking

Comparing products, processes, and services to those of another organization thought to have superior performance. The benchmark target may or may not be a competitor or even in the same industry.

Supplier Relationship Management (SRM)

Comprehensive approach to managing an enterprise's interactions with the organizations that supply the goods and services the enterprise uses; goal is to streamline and make more effective the processes between an enterprise and its suppliers; often associated with automating procure-to-pay business processes, evaluating supplier performance, exchanging information with suppliers, and e-procurement systems

Cross-docking

Concept of packing products on the incoming shipments so they can be easily sorted at intermediate warehouses or for outgoing shipments based on final destinations; items are carried from incoming vehicle docking point to outgoing vehicle docking point without being stored in inventory in the warehouse

Materials Management

Coordinating function that must balance the conflicting objectives of marketing, production, and finance by managing the flow of materials

decoupling

Creating independence between supply and use of material. Commonly denotes providing inventory between operations so that fluctuations in the production rate of the supplying operation do not constrain production or use rates of the next operation.

Lot-size inventory

Cycle stock - when purchase or manufacture in larger lot size quantities than needed such as purchase discounts, reduced shipping, handling, ordering and setup costs, and supplier or production policies on minimum lot size

Work cell

Dissimilar machines grouped together into a production unit to produce a family of parts having similar routings.

Products are made to order Short-shelf life products Length of production run in unlimited Raw materials are on MRP Widely fluctuating demand

EOQ usually works well for finished goods with independent and uniform demand. However, many situations can lead to ineffective EOQ, what are some examples of these?

EDI

Electronic data interchange

ERP

Enterprise Resource Planning

ERP

Enterprise Resource Planning - Framework for organizing, defining, and standardizing the business processes necessary to effectively plan and control an organization so the organization can use its internal knowledge to seek external advantage. An ERP system provides extensive databanks of information including master file records, repositories of cost and sales, financial detail, analysis of product and customer hierarchies, and historic and current transactional data

Maintenance, repair, and operating (MRO) supplies

Items used in support of general operations and maintenance such as maintenance supplies, spare parts, and consumables Not included in cost of goods sold, average inventory and turns

Mixed Model Production

Making several different parts or products in varying lot sizes so that a factory produces close to the same mix of products that will be sold that day. The mixed-model schedule governs the making and the delivery of component parts, including those provided by outside suppliers. The goal is to build every model every day, according to daily demand.

mixed-model production

scrap

Material outside of specifications and possessing characteristics that make rework impractical

Packaging

Materials surrounding an item to protect it from damage during transportation. The higher type of packaging influences the danger of such damage

What does MAD stand for?

Mean Absolute Deviation

zone picking

Method of subdividing a picking list by areas within a storeroom for more efficient and rapid order picking; A zone-picked order must be grouped to a single location before delivery or must be delivered to different locations such as work centers i.e each "picker" is assigned to a different area in the warehouse

Zone picking

Method of subdividing a picking list by areas within a storeroom for more efficient and rapid order picking; must be grouped to a single location before delivery or must be delivered to different locations such as work centers

Quality Function Deployment (QFD)

Methodology designed to ensure that all the major requirements of the customer are identified and met or exceeded. Used to capture voice of the customer. Uses House of Quality which is a structured process that relates customer-defined attributes to the product's technical features needed to support and generate these attributes.

Materials Handling

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

What are the reasons for why we forecast?

New facility planning Production planning Work force scheduling Financial planning

Assembly buffer

Often from the release of raw materials to a process not passing through the constraint but that will eventually be combined with materials that did pass through the constraint.

Shipping buffer

Often from when materials exit the constraint until they reach shipping

Master Scheduler

Often the job title of the person charged with the responsibility of managing, establishing, reviewing, and maintaining a master schedule for select items. Ideally, the person should have substantial product, plant, process, and market knowledge because the consequences of this individual's actions often have a great impact on customer service, material, and capacity planning. See: master production schedule.

Constaint buffer

Often the total processing time from when raw materials are released to the gateway operation until they reach the constraint.

Generate Requisition

Part of the purchaing cycle: A user, an MRP system, requirement for replenishment, or a purchase plan identifies a need. A paper or electronic authorization (ERP) requisition is issued with the details needed by purchasing to buy the goods.

Approve Payment

Part of the purchaing scheduel: The PO is closed after goods are received and accepted and payment is approved.

Follow up

Part of the purchasing cycle: The PO is tracked against its scheduled due date (could be expedited if it would affect production). Ensure that the buyer is aware of the status of the order.

Post-manufacturing services

Postponement and other delayed manufacturing strategies may require light manufacturing to assemble-to-order or other delayed differentiation, such as adding the power supply, documentation, and packaging for a given country.

Costs of Controlling Quality

Prevention costs-preventing problems from occurring. Include: design improvements and statistical process control. Appraisal costs-checking and auditing quality. Include: inspections, audits, and associated calibrations and testing.

Rough-Cut Capacity Planning (RCCP)

Process of converting MPS into requirements for key resources (labor, machinery, WH space, supplier capability, $); comparison to available or demonstrated capacity is done to assist master scheduler in establishing feasible MPS; 3 approaches: (1) bill of labor, (2) capacity planning using overall factors, (3) resource profile

mixed-model scheduling

Process of developing one or more schedules to enable mixed-model production; goal is to achieve a day's production each day

throughput

Rate at which system generates "goal units"; always expressed for a given period of time (month, day, week)

Order quantity

Synonym to lot size: The amount of a particular item that is ordered from the plant or a supplier or issued as a standard quantity to the production process

Nesting

The act of combining several small processes to form one larger process.

Scheduling

The act of creating a schedule, such as a shipping schedule, master production schedule, maintenance schedule, or supplier schudule

Risk Management

The identification, assessment, and prioritization of risks followed by coordinated and economical application of resources to minimize, monitor, and control the probability and/or impact of unfortunate events or to maximize the realization of opportunities

Physical supply

The movement and storage of goods from suppliers to manufacturing. The cost of physical supply is ultimately passed on to the customer.

available time

The number of hours a work center can be used, based on management decisions regarding shift structure, extra shifts, regular overtime, observance of weekends and public holidays, shutdowns, and the like

strategic plan

The plan for how to marshal and determine actions to support the mission, goals, and objectives of an organization. Generally includes an organization's explicit mission, goals, and objectives and the specific actions needed to achieve those goals and objectives. See: business plan, operational plan, strategic planning, strategy, tactical plan.

External setup time

The time associated with elements of a setup procedure performed while the process or machine is running.

replenishment lead time

The total period of time that elapses from the moment it is determined that a product should be reordered until the product is back on the shelf and available for use.

value

The worth of an item, good or service

MPS; BOM; and Inventory records

Three primary inputs to Material Requirements Planning (MRP): _____ ***Note that Production plan is an input of MPS, not MRP.

Sales Plan

Time phased statement of expected customer orders anticipated to be received for each major product family or item; represents ales & mktg's commitment to take all reasonable steps necessary to achieve level of actual customer orders

Setup

Time spent getting ready for operation

Transportation consolidation Product mixing Customer service

What are 3 important roles of warehousing?

Receivers who take in material Setup costs Costs of material planners Cost of buyers

What are the costs of ordering?

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

What stage is input/output control used in? and How is input/output control used?

system nervousness

a production environment that has become inefficient due to many last-minute changes to production. Time fences and zones are helpful with system nervousness.

Incoterms

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

Two-card kanban system

a special form of the kanban system that uses one card to control production and another card to control movement of materials The move card authorizes the movement of a specific number of parts from a source to a point of use. The move card is attached to the standard container of parts during movement of the parts to the point of use The production card authorizes the production of a given number of parts for use or replenishment

Input/Output Control

a technique for capacity control where planned and actual inputs, and planned and actual outputs, 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 [and] . . . to identify problems within the work center.

Backlog

all customer orders received, but not yet shipped. Includes backorders

tolerance

allowable departure form a nominal value established by design engineer that is deemed acceptable for the functioning of the good or service over its life cycle

Yield

amount of good or acceptable material available after the completion of a process

Wall-to-wall inventory

an inventory mgmt. technique in which material enters a plant and is processed through the plant into finished goods without ever having entered a formal stock area.

productivity

an overall measure of the ability to produce a good or a service. It is the actual output of production compared to the actual input of resources

Jidoka

automation with human mind -- practice of stopping production when defect occurs

Flowcharts

commonly accepted symbols—ovals to represent process boundaries or terminators, rectangles (or sometimes circles) to represent operations, diamonds to represent decision points, and so on.

Due Dates

due dates are the date when purchased material or production material Is due to be available for use

Action Messages

generated when a planned order becomes due for release, or rolls into the action bucket.

net requirements

gross requirements - scheduled receipts -available inventory

saw tooth diagram

illustration of the pattern of ordering and inventory levels

Protective Capacity

no stock or time buffers at non-constraint resources. Instead a certain amount of idle capacity (protective) is maintained as a safeguard against unexpected events.

Costs of Failure

not meeting specs, not satisfying customers, and so on. 2 types: Internal failure costs-cost of correcting problems while goods are still in the production facility. These include rework and spoilage. External failure costs-the costs of correcting problems after the goods or services have been delivered to the customer. Include field service and warranty costs.

Stockout Costs

occur in mts environments when demand exceeds available supply and orders cannot be filled on time.

Productivity

overall measure of the ability to produce a good or a service. It is the actual output of production compared to the actual input of resources

Scheduled Receipts

planned orders, that before week 1, already have been released or placed with suppliers and the factory and have receipt dates within the planning horizon.

Scheduled Receipts

planned orders, that before week 1, already have been released or placed with suppliers and the factory and have receipt dates within the planning horizon. An open order that has an assigned due date

Top-Down planning

planning process that begins at the highest level in the organization and continues downward

Kaizen Blitz

rapid improvement of a limited process area; objective is to use innovative thinking to eliminate non-value added work and to implement changes immediately; includes basic training, analysis, and design

data governance

refers to the overall management of the availability, usability, integrity, and security of company data

VATI Analysis

results in diagrams of the logical flow of materials from the raw stage to finished goods. The analysis is based on product routings and bills of material. It reflects the conceptual flow of materials through the transformation process. Analyzes Product Flow

purchasing

the term used in industry and management to denote the function of and the responsibility for procuring materials, supplies and services.

load

the total amount of work that needs to get done in the time period for the given person, work center, production line, and so on. the amount of planned work scheduled for and actual released to a facility, work center, or operation for a specific span of time.

Standard cost accounting system

uses costs determined in advance of production. The costs are based on pre-established standards for labor, materials, and direct overhead allocations.

Average cost system

uses the weighted average cost of items, based on quantity, to determine the cost of goods sold and inventory valuation.

spread

variability of an action. Often measured by the range or standard deviation of a particular dimension

Exception Messages

will be generated when material availability is not sufficient to meet a planned order receipt date for a component or end item.

Waybill

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

Picking list

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

Shipping manifest

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

Pareto Chart

A bar graph that displays the results of a Pareto analysis. It may or may not display the 80-20 variation, but it does show a distinct variation from the few compared to the many.

Bill of lading (B/L)

A bill of lading by a non-vessel-operating common carrier (NVOCC) consolidator, or freight fowarder. It indicates the carrier's name and lists the master bill of lading

One piece flow

A concept that items are processed directly from one step to the next, one unit at a time. This helps to shorten lead times and lines of communication, thus more quickly identifying problems.

Histogram

A graph of contiguous vertical bars representing a frequency distribution in which the groups or classes of items are marked on the x axis and the number of items in each class is indicated on the y axis. The pictorial nature of the histogram lets people see patterns that are difficult to see in a simple table of numbers

Blanket order

A long-term commitment to a supplier for material against which short-term releases will be generated to satisfy requirements. Often blanket orders cover only one item with predetermined delivery dates

Blanket purchase order

A long-term commitment to a supplier for material against which short-term releases will be generated to satisfy requirements. Oftentimes, blanket orders cover only one item with predetermined delivery dates. AKA Standing Order.

overlapped schedule

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.

Customer Relationship Management (CRM)

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 resource planning information) to understand and support existing and potential customer needs.

Business Plan

A statement of long-range strategy and revenue, cost, and profit objectives usually accompanied by budgets, a projected balance sheet, and a cash flow (source and application of funds) statement. Usually stated in terms of dollars and grouped by product family

Certified Supplier

A status awarded to a supplier who consistently meets predetermined quality, cost, delivery, financial, and count objectives. Incoming inspection may not be required.

Store

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

Floating (random) location systems

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-loaction storage method

maintains, improves, and documents effective procedures

A supplier certification verifies a supplier:

United Nations Global Compact

A voluntary initiative whereby companies embrace, support, and enact, within their sphere of influence, a set of core values in the areas of human rights, labor standards, the environment, and anticorruption.

Zone location system

A warehouse location methodolgy that includes some of the characteristics of fixed and random location methods. Zone locations hold certain kinds of items, depending on physical characteristics or frequency of use

A-Type

Type of Product Flow: This consists primarily of converging operations; multiple raw materials end up in component parts and subassemblies and then in a final product. For example, a lawn mower

T-Type

Type of Product Flow: This typically but not always starts as an I-type with a limited number of basic units that are then configured during the final assembly stages into many different end products. For example, consumer electronics.

Kaizen

the Japanese term for improvements. In manufacturing, kaizen relates to finding and eliminating waste in machinery, labor or production methods.

customer service

the ability of a company to address the needs, inquiries, and requests of customers A measure of the delivery of a product to the customer at the time the customer specified

Service Levels

the ability to supply the customer with what is wanted when it is wanted. Carrying more safety stock increases the service level.

Purchase order costs

costs include order preparation, follow-up, expediting, receiving, authorizing payment, and invoicing

takt time

cycle time needed to match the rate of production to the rate of sales or consumption Daily demand rate = daily production rate

field service

Functions of installing and maintaining a product for a customer after the sale or during the lease; may also include training and implementation assistance

Pegging

In MRP and MPS, the ability to identify for given item the sources of its gross requirements and/or allocations. Pegging can be thought of as active where-used information

Bottom-up planning

Planning for resource requirements by starting at the bottom of the bill of material or services, estimating the resources required to produce each product or service, and then adding the resources up

U-lines

Production lines shaped like letter "u" to allow workers to easily perform several non-sequential tasks without much walk time; # of workstations is usually determined by line balancing

Buffer zones

Red zone-missing orders in this zone need to be immediately expedited. Yellow zone-expect fewer missing orders. Green zone-expect a few missing orders.

Final assembly schedule (FAS)

Schedule of end items to finish the product for specific customers' orders in a make-2-order or assemble-2-order environment; also referred to as finishing schedule because it may include operations other than final assembly (may exclude final assembly); prepared after receipt of customer order as constrained by availability of material and/or capacity and schedules operations required to complete the product from level where it's stocked to end-item level

Order picking

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. Synonym: order selection. See: batch picking, discrete order picking, zone picking.

Warehousing

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

Five whys

The common practice in total quality management is to ask "why" five times when confronted with a problem. By the time the answer to the fifth "why" is found, the ultimate cause of the problem is identified.

manufacturing planner

The decision of where to order raw materials is the responsibility of _____________________ ________________________

Capacity Planning

The process of determining the amount of capacity required to produce in the future. This process may be performed at an aggregate or product-line level (resource requirements planning), at the master-scheduling level (rough cut capacity planning), and at the material requirements planning level (capacity requirements planning)

Master Scheduling

The process where the master schedule is generated and reviewed and adjustments are made to the master production schedule to ensure consistency with the production plan.

planning horizon

the amount of time a plan extends into the future. It normally is set to cover a minimum of cumulative lead time plus time for lot sizing low-level components and for capacity changes of primary work centers.

Capacity available

the capability of a system or resource to produce a quantity of output in a particular time period.

Capacity required

the capacity of a system or resource needed to produce a desired output in a particular time period.

Capacity Management

the function of establishing, measuring, monitoring, and adjusting limits or levels of capacity in order to execute all manufacturing schedules.

Transportation

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

Three-way match

the matching of a purchase order to the related receiving report and invoice

Available-to-promise

the part of planned production that is not committed to a customer

Gemba

the place where humans create value; the real workplace

Operations Management

the planning, scheduling, and control of the activities that transform inputs into finished goods and services A field of study that focuses on the effective planning, scheduling, use, and control of a manufacturing or service organization through the study of concepts from design engineering, industrial engineering, management information systems, quality management, production management, inventory management, accounting, and other functions as they affect the operation

MRP Offsetting

Placing the requirements (planned order releases) in their proper time periods based on lead time

Work in Process (WIP)

". . . good or goods in various stages of completion throughout the plant, including all material from raw material that has been released for initial processing up to completely processed material awaiting final inspection and acceptance . . In a lean environment, relatively small amounts of WIP are created

House of quality

(1) identification of customer attributes; (2) identification of supporting technical features; (3) correlation of the customer attributes with the supporting technical features; (4) assignment of priorities to the customer requirements and technical features; (5) evaluation of competitive stances and competitive products; and (6) identification of those technical features to be used (deployed) in the final design of the product

Demand Time Fence

(DTF). The point in time inside of which the forecast is no longer included in total demand and projected available inventory calculations. ONLY CUSTOMER ORDERS ARE CONSIDERED. Changes inside the fence must be approved by an authority higher than the master scheduler.

Assets

(Liabilities + Owners' Equity) Items of value to the company - examples include cash, inventory, machinery, buildings, accounts receivable, patents)

Load Profile

A display of future capacity requirements based on released and/or planned orders over a given span of time.

Logistics

-1) In a supply chain management context, it is the subset of supply chain management that controls the forward and reverse movement, handling, and storage of goods between origin and distribution points. 2) In an industrial context, the art and science of obtaining, producing, and distributing material and product in the proper place and in proper quantities. 3) In a military sense (where it has greater usage), its meaning can also include the movement of personnel.

open order

1) A released manufacturing order or purchase order. 2) An unfilled customer order. Synonym: released order. See: scheduled receipt.

break-bulk

1) Dividing truckloads, railcars, or containers of homogenous items into smaller, more appropriate quantities for use. 2.) A distribution center that specializes in break-bulk activities 3.) Unitized cargo in bales, boxes, or crates that is placed directly in a ship's holds rather than in containers

accessibility

1) In transportation, the ease with which a carrier provides service from one point to another 2) In warehousing, the ability to get to and within the point of storage easily ***The balance of cube utilization in warehousing

Linearity

1) Production at a constant quantity 2) Use of resources at a level rate, typically measured daily or more frequently Achieving the plan: no more, no less

Capacity

1) The capability of a system to perform its expected function 2) The capability of a worker, machine, work center, plant, or organization to produce output per time period. Capacity required represents the system capability needed to make a given product mix. As a planning function, both capacity available and capacity required can be measured in the short term (capacity requirements plan), intermediate term (RCCP), and long term resource requirements plan. Capacity control is the execution through the I/O control report of the short-term plan. Capacity can be classified as budgeted, dedicated, demonstrated, productive, protective, rated, safety, standing or theoretical. 3) Required mental ability to enter into a contract

Terminal-handling charges

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

distribution

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, the communications network necessary for effective management. It inlcudes all activities related to physical distribution, as well as the return of goods to the manufacturer. 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

Less-than-truckload (LTL)

1.) A small shipment that does not fill the truck 2.) A shipment of insufficient weight to qualify for a truckload quantity rate discount (usually set at about 10,000 lbs.) normally offered to a general commodity trucker

safety stock

1.) In general, a quantity of stock planned to be inventory to protect against fluctuations in demand or supply 2.) In the context of master production scheduling, the additional inventory and capacith planned as protection against forecast errors and short-term changes in the backlog. Overplanning can be used to create safety stock

velocity

1.) The rate of change of an item with respect to time 2.) In supply chain management, a term used to indicate the relative speed of all transactions, collectively, within a supply chain community. A maximum velocity is most desirable because it indicates higher asset turnover for stockholders and faster order-to-deliver response for customers

What is the difference between VMI and consignment?

A VMI is when your vendor is managing the supply of your inventory. Whereas, a consignment relates to the ownership of the inventory. Neither of them is dependent on one another. You can have a VMI that is not a consignment inventory, you can have a consignment that's not a VMI, and you can have inventory that is both a VMI and consignment.

load profile

A display of future capacity requirements based on released and/or planned orders over a given span of time.

Genchi Genbutsu

A Japanese phrase meaning visit the shop floor to observe what is occurring.

Jishuken

A Japanese word meaning voluntary study groups

Hansei

A Japanese work meaning reflection

Phantom Bill of Material

A bill-of-material coding and structuring technique used primarily for transient (nonstocked) subassemblies. For the transient item, lead time is set to zero and the order quantity to lot-for-lot. A phantom bill of material represents an item that is physically built, but rarely stocked, before being used in the next step or level of manufacturing. 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 bills of material for engineering and manufacturing. Synonym: blowthrough, transient bill of material. See: pseudo bill of material.

Carrier

A company that provieds air, sea, or land transportation services For-hire (public) carrier: Services for hire -Common carrier: All customers treated the same; basically this is a commodity itself -Contract carrier: dedicated use based on contract; benefits of private with less cost or risk Specialists -Truckload (TL) carriers -Package shipping companies -Postal services

Reverse Logistics

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

perpetual inventory record

A computer record or manual document on which each inventory transaction is posted so that a current record of the inventory is maintained.

Participative Design/Engineering

A concept that refers to the simultaneous participation of all the functional areas of the firm in the product design activity. Suppliers and customers are often also included. The intent is to enhance the design with the inputs of all the key stakeholders. Such a process should ensure that the final design meets all the needs of the stakeholders and should ensure a product that can be quickly brought to the marketplace while maximizing quality and minimizing costs. Synonym: co-design, concurrent design, concurrent engineering, new product development team, parallel engineering, simultaneous design/engineering, simultaneous engineering, team design/ engineering. See: early manufacturing involvement.

bias

A consistent deviation form the mean in one direction (high or low). A normal property of a good forecast is that if is not biased.

Earliest operation due date

A dispatching rule: Jobs are performed according to operation due dates

First come, first served

A dispatching rule: Jobs are performed in order received

Shortest Process time

A dispatching rule: Jobs are sequenced according to process time

Critical ratio

A dispatching rule: Jobs are sequenced using an index of relative priority of orders at a work center Priority index number is calculated by dividing the time to due date remaining by the expected elapsed time to finish the job If less than 1, product is behind schedule If greater than 1, product is ahead of schedule If = 1 product is on schedule

Functional layout

A facility configuration in which operations of a similar nature or function are grouped together; an organizational structure based on departmental specialty (e.g., saw, lathe, mill, heat treat, press). Synonym: job shop layout, process layout.

Distribution Warehouse

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.

scrap factor

A factor that expresses the quantity of a particular component that is expected to be scrapped upon receipt from a vendor, completion of production, or while that component is being built into a given assembly. It is usually expressed as a decimal value. For a given operation or process, the scrap factor is 30 percent, then the yield is 70 percent. In manufacturing planning and control systems, the scrap factor is usually related to a specific item in the item master, but may be related to a specific component in the product structure. For example, if 50 units of a product are required by a customer and a scrap factor of 30 percent is expected, then 72 units should be started in the manufacturing process.

Intrinsic forecasting method

A forecast based on internal factors, such as an average of past sales

Extrinsic forecasting method

A forecast method using a correlated leading indicator; for example, estimating furniture sales based on housing starts.

Plan-do-check-action (PDCA)

A four-step process for quality improvement. In the first step (plan), a plan to effect improvement is developed. In the second step (do), the plan is carried out, preferable on a small scale. In the third step (check), the effects of the plan are observed. In the last step (action), the results are studied to determine what was learned and what can be predicted. The plan-do-check-action cycle is sometimes referred to as the Shewhart cycle (because statistical method from the viewpoint of quality control) and as the Deming circle (because W. Edwards Deming introduced the concept in Japan; the Japanese subsequently called it the Deming cycle)

Control Charts

A graphic comparison of process performance data with predetermined computed control limits. The process performance data usually consists of groups of measurements selected in the regular sequence of production that preserve the order. The primary use of control charts is to detect assignable causes of variation in the process as opposed to random variations. Variation exists in all processes. Control charts are a tool used to track process variation. Operators take random samples and plot to decide whether process still in control or if something has happened.

Scatter Chart

A graphical technique to analyze the relationship between two variables. Two sets of data are plotted on a graph, with the y axis used for the variable to be predicted and the x axis used for the variable to make the prediction. The graph will show possible relationships (although two variables might appear to be related, they might not be.

Theory of Constraints

A holistic managemnt philosophy develped by Dr. Eliyahu M. Goldratt, based on the principle that complex systems exhibit inherent simplicity. Even a very complex system comprising of 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 constaint -- that actually limit the ability to generate more of the system's goal

Value stream mapping

A lean production tool to visually understand the flow of materials from supplier to customer that includes the current process and flow as well as the value-added and non-value-added time of all the process steps. Used to lead to reduction of waste, decrease flow time, and make the process flow more efficient and effective.

vendor-managed inventory (VMI)

A means of optimizing supply chain performance in which the supplier has access to the customer's inventory data and is responsible for maintaining the inventory level required by the customer. Accomplished by a process in which resupply is performed by the vendor through regularly scheduled reviews of the on-site inventory. The on-site inventory is counted, damaged or outdated goods are removed, and the inventory is restocked to predefined levels. The vendor obtains a receipt for the restocked inventory and accordingly the customer •Similar to consignment, but the buyer owns the goods and the visibility of the buyer's forecasts is shared with the supplier. Can mitigate the bullwhip effect

Utilization

A measure (usually expressed as a percentage) of how intensively a resource is being used to produce a good or service. Compares actual time used to available time. Traditionally, calculated as the ratio of direct time charged (run time plus setup time) to the clock time available The percentage of time that the work center is active. It can be determined from historical data or from a work sampling study

stockout percentage

A measure of the effectiveness with which a company responds to actual demand or requirements. The stockout percentage can be a measurement of total orders containing a stockout to total orders, or of line items incurring stockouts to total line items ordered during a period. One formula is: stockout percentage = (1 - customer service ratio) × 100 percent. Antonym: customer service ratio.

efficiency

A measurement (usually expressed as a percentage) of the actual output relative 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

Periodic replenishment

A method of aggregating requirements to place deliveries of varying quantities at evenly spaced time intervals rather than variable spaced deliveries of equal quantities

Batch picking

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. See: discrete order picking, order picking, zone picking.

Wave picking

A method of selecting and sequencing picking lists 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.

Fixed location systems

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 loacator file may be needed

Lean six sigma

A methodolgy that combines the improvement concepts of lean and six sigma. It uses the seven wastes of lean and the DMAI process form six sigma, and awards recognition of competence through dudo-style belts

Six Sigma

A methodology that furnishes tools for the improvement of business processes. The intent is to decrease process variation and improve product quality. Is a set of concepts and practices that focus on reducing variation in processes, and therefore reduces defects and improves quality. 6-sigma means 99.999% defect free or 3.4 defects per million. Developed by Motorola in the 1980s

Time bucket

A number of days of data summarized into a columnar or row-wise display. In this example, we have weekly time buckets. An item is available at the beginning of the time bucket in which it is required.MRP

Customs broker

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

Lean Production

A philosophy of production that emphasizes the minimization of the amount of all the resources (including time) used in the various activities of the enterprise. It involves identifying and eliminating non-value-adding activities in design, production, supply chain management, and dealing with customers. Lean producers employ teams of multiskilled workers at all levels of the organization and use highly flexible, increasingly automated machines to produce volumes of products in potentially enormous variety. It contains a set of principles and practices to reduce cost through the relentless removal of waste and through the simplification of all manufacturing and support processes. Synonym: lean, lean manufacturing.

Firm planned order

A planned order that can be frozen in quantity and time. The computer is not allowed to change it automatically; this is the responsibility of the planner in charge of the item that is being planned. This technique can aid planners working with MRP systems to respond to material and capacity problems by firming up selected planned orders. In addition, firm planned orders are the normal method of stating the master production schedule

Focused Factory

A plant established to focus the entire manufacturing system on a limited, concise, manageable set of products, technologies, volumes, and markets precisely defined by the company's competitive strategy, technology, and economics.

Planning Time Fence

A point in time denoted in the planning horizon of the master scheduling process that marks a boundary inside of which changes to the schedule may adversely affect component schedules, capacity plans, customer deliveries, and cost.

Quantity discounts

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

Continuous Replenishment

A process by which a supplier is notified daily of actual sales or warehouse shipments and commits to replenishing these sales (for example, by size or color) without stock outs and without receiving replenishment orders. The result is a lowering of associated costs and an improvement of inventory turnover

Supply Chain Operations Reference (SCOR) Model

A process reference model developed by the Supply Chain Council and endorsed by the Association for Supply Chain Management (ASCM) as the standard cross-industry diagnostic tool for supply chain management. The SCOR model describes the business activities associated with satisfying a customer's demand, which plan, source, make, deliver, return, and enable. Developed a set of metrics for supply chain performance.

Production Planning

A process to develop tactical plans based on setting the overall level of manufacturing output (production plan) and other activities to best satisfy the current planned levels of sales (sales plan or forecasts), while meeting general business objectives of profitability, productivity, competitive customer lead times, and so on, as expressed in the overall business plan. The sales and production capabilities are compared, and a business strategy that includes a sales plan, a production plan, budgets, pro forma financial statements, and supporting plans for materials and workforce requirements, and so on, is developed. One of its primary purposes is to establish production rates that will achieve management's objective of satisfying customer demand by maintaining, raising, or lowering inventories or backlogs, while usually attempting to keep the workforce relatively stable. Because this plan affects many company functions, it is normally prepared with information from marketing and coordinated with the functions of manufacturing, sales, engineering, finance, materials, and so on. See: aggregate planning, production plan, sales and operations planning, sales plan.

Production planning

Sales and Operations Plan

A process to develop tactical plans that provide management the ability to strategically direct its businesses to achieve competitive advantage on a continuous basis by integrating customer-focused marketing plans for new and existing products with the management of the supply chain. The process brings together all the plans for the business (sales, marketing, development, manufacturing, sourcing, and financial) into one integrated set of plans. S&OP is performed at least once a month and is reviewed by management at an aggregate (product family) level. The process must reconcile all supply, demand, and new product plans at both the detail and aggregate levels and tie to the business plan. It is the definitive statement of the company's plans for the near to intermediate term, covering a horizon sufficient to plan for resources and to support the annual business planning process. Executed properly, the S&OP process links the strategic plans for the business with its execution and reviews performance measurements for continuous improvement.

postponement

A product design or supply chain strategy that deliberately delays final differentiation (assembly, production, packaging, tagging, etc.) until the latest possible time in the process. This shifts product differentiation closer to the consumer to reduce the anticipatory risk, eliminating excess inventory in the form of finished goods in the supply chain.

package to order

A production environment in which a good or service can be packaged after receipt of a customer order. The item is common across many different customers; packaging determines the end product.

Hybrid

A production planning method that combines the aspects of both the chase and level production planning methods.

Chase production method

A production planning method that maintains a stable inventory level while varying production to meet demand.

Level

A production planning method that maintains a stable production rate while varying inventory levels to meet demand

Check sheet

A simple data-recording device. The check sheet is designed by the user to facilitate the user's interpretation of the results . . . Often confused with data sheets and checklists Record number of times particular event occurs Interpret using other tools

Assignable cause (Special Cause)

A source of variation in a process that can be isolated, especially when its significantly larger magnitude or different origin readily distinguishes it from random causes of variation." An assignable cause is the result a specific factor or root cause. If a process has shifted from its mean, there is likely an assignable cause such as a worn part or miscalibrated instrument.

min-max system

A type of order point replenishment system where the minimum (min) is the order point, and the maximum (max) is the "order up to" inventory level. The order quantity is variable and is the result of the max minus available and on-order inventory. An order is recommended when the sum of the available and on-order inventory is at or below the min.

Super BOM

A type of planning bill, located at the top level in the structure, that ties together various modular bills (and possibly a common parts bill) to define an entire product or product family. The quantity per relationship of the super bill to its modules represents the forecasted percentage of demand of each module. The master-scheduled quantities of the super bill explode to create requirements for the modules that also are master scheduled.

Theory of Constraints Accounting

Accumulates costs and revenues into three areas—throughput, inventory, and operating expense. Does not create incentives (through allocation of overhead) to build up inventory . . . form of direct costing that subtracts true variable costs (those costs that vary with throughput quantity) . . . the primary focus of TOC accounting is on aggressively exploiting the constraint(s) to make more money for the firm

DMAIC

Acronym for define, measure, analyze, imprve, and control

Voice of the Customer

Actual customer descriptions in words for the functions and features customers desire for goods and services

order quantity modifiers

Adjustments made to a calculated order quantity. Order quantities are calculated based upon a given lot-sizing rule, but it may be necessary to adjust the calculated lot size because of special considerations (scrap, testing, etc.)

Production Plan

Agreed-upon plan that comes from production planning (S&OP) process, specifically the overall level of manufacturing output planned to be produced, usually stated as a monthly rate for each product family; various UOM can be used to express plan: units, tonnage, standard hours, # of workers, etc.; managements authorization for the master scheduler to convert it into a more detailed plan

Production plan

demand lead time

Amount of time potential customers are willing to wait for the delivery of a good or service (AKA customer tolerance time)

Liabilities

Amounts owed (obligations of the business - examples include accounts, payable, wages payable, long term debt)

planning bill of material

An artificial grouping of items or events in bill-of-material format used to facilitate master scheduling and material planning. It may include the historical average of demand expressed as a percentage 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 bill of material. Synonym: planning bill. See: hedge, option overplanning, production forecast, pseudo bill of material.

Planning bill

An artificial grouping of items or events in bill-of-material format used to facilitate master scheduling and material planning. It may include the historical average of demand expressed as a percentage of total demand for all options within a feature or for a specific end item within a product family. Used as the quantity per in the planning bill of material Synonym: Planning bill of material

Assembly Line

An assembly line is a manufacturing process which parts are added as the semi-finished assembly moves from workstation to workstation where the parts are added in sequence until the final assembly is produced.

parts requisition

An authorization that identifies the item and quantity required to be withdrawn from an inventory. Syn: requisition. See: purchase requisition.

purchase requisition

An authroization to the purchasing department to purchase specified materials in specified quantities within a specified time

Advance ship notice (ASN)

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

Finite forward scheduling

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. See: finite loading.

reverse auction

An internet auction in which suppliers attempt to underbid their competitors. Company identities are known only by the buyer.

Cycle counting

An inventory accuracy audit technique where inventory is counted on a cyclic schedule rather than once a year. Usually taken on a regular, defined basis (often more frequently for high-value or fast-moving items and less frequently for low-value or slow moving items) Most effective cycle counting systems require the counting of a certain number of items every workday with each item counted at a prescribed frequency. The key purpose of cycle counting is to identify items in error, thus triggering research, identification, and elimination of the cause of the errors`

Order Point System

An inventory replenishment system based on the stock on hand plus on order

order multiples

An order quantity modifier applied after the lot size has been calculated that increases the order quantity to a predetermined mutiple

Material Review Board (MRB)

An organization within a company, often a standing committee, that determines the resolution or disposition of items that have questionable quality or other attributes

sustainability

An organizational focus on activities that provide present benefit without compromising the needs of future generations

Root Cause Analysis

Analytical methods to determine the core problem(s) of an organization, process, product, market, and so forth

Statistical Process Control (SPC)

Application of statistical technique to monitor and adjust an operation. Often used interchangeably with statistical quality control, although statistical quality control includes acceptance sampling as well as statistical proces control Goal: to reduce defects and acheive customer satisfaction

Traceability

Attribute allowing the ongoing location of a shipment to be determined; registering and tracking of parts, processes, and materials used in production, by lot or serial #

Total line-haul costs

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

Slushy zone

Between the demand time fence and the planning time fence, priorities are not as easy to change as in the liquid zone. Demand consists of orders and forecasts, so tradeoffs are possible—unlike in the frozen zone. Materials are ordered, and some capacity might be allocated to assembly of low-level components. Planning software will not make the changes

Liquid zone

Beyond the planning time fence, changes to the MPS for the manufacture or purchase of components are easy to make if they are consistent with the production plan. For example: "Forecast changes may be made within the guidelines of XYZ without prior approval." Demand here usually consists mainly of forecasts, not actual orders. Planning software often will make routine changes. The horizon must extend beyond the planning time fence.

Hoshin Planning

Breakthrough 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.

Bonded warehouse

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

rated capacity

Expected output capability of a resource or system; capacity is traditionally calculated from such data as planned hours, efficiency, and utilization. The rated capacity is equal to hours available_efficiency_utilization that rated capacity is the output capability of a system or resource calculated from available time, utilization, and efficiency data. We want rated capacity to be as realistic as possible

break-bulk warehousing

Form of cross-docking in which the incoming shipments are from a single source or manufacturer

Master Schedule

Format that includes time periods (dates), forecast, customer orders, projected available balance, available-2-promise, and MPS; takes into account forecast, production plan, & other important considerations like backlog, material availability, available capacity, & mgmt goals

product families

Groups of product that have similar processing requirements.

release

If an annual contract is in place with a supplier, weekly amounts to be ordered will be done via _________________

Negative cushion

If the demand for the activity becomes greater than the total capacity available, then the business can experience a negative capacity cushion

Bottom-up replanning

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

priority

In a general sense, the relative importance of jobs (i.e., the sequence in which jobs should be worked on). It is a separate concept from capacity

Anticipation Inventory

In advance of peak selling seasons, sales promotions, and production shutdowns

50%

In general, materials make up what % of the cost of a product?

Heijunka

In just-in-time philosophy, an approach to level production throughout the supply chain to match the planned rate of end product sales. Heijunka scheduling may use a type of kanban called a heijunka box to signal when to shift between unit types. It does this by breaking the "box" into time slots equal to takt time. The result is that lean will often have much smaller batch sizes, with an ideal being a batch size of one. As fits with this one-piece flow, often master schedules will use daily time buckets rather than weekly to better schedule an uninterrupted flow to each workstation.

pacemaker

In lean, the resource that is scheduled based on the customer demand rate for that specific value stream This resource performs an operation or process that governs the flow of materials along the value stream. Its purpose is to maintain a smooth flow through the manufacturing plant. A larger buffer is provided for the pacemaker than other resources so that it can maintain continuous operation

Pacemaker

In lean, the resource that is scheduled based on the customer demand rate for that specific value stream; this resource performs an operation or process that governs the flow of materials along the value stream. Its purpose is to maintain a smooth flow through the manufacturing plant. A larger buffer is provided for the pacemaker than other resources so that it can maintain continuous operation

Total cost concept

In logistics, the idea that all logistical decision that provide equal service levels should favor the option that minimizes the total of all logistical costs and should not be used on cost reductions in one area (such as lower transportation charges) alone.

Closed loop system

In reverse logistics, a system that accounts for the return flow of products for reuse, asset recover, or recycling in a way that is cost-effective and maximizes returns.

Center

In statistics, values near the middle of results form a process

Total Cost of Ownership (TCO)

In supply chain management, the total cost of ownership of the supply delivery system is the sum of all the costs associated with every activity of the supply stream. The main insight that TCO offers to the supply chain manager is the understanding that the acquisition cost is often a very small portion of the total cost of ownership.

Critical chain method

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. See: critical chain, critical path method.

Buffer management

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 causes of items missing from the buffer are identified, and the frequency of occurrence is used to prioritize improvement activities.

productive capacity

In the theory of constraints, the maximum of the output capabilities of a resource (or a series of resources) or the market demand for that output for a given time period

Transportation Inventory (pipeline stock)

In transit in distribution network

Terminals

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 terminals include weighing connections with other routes and carriers, vehicle routing, dispatching, maintenance, paperwork, and administration. Terminals may be owned and operated by the carrier or the public.

Billing and collecting costs

In transportation, the costs related to issuing invoices or bills. These amounts can be reduced by combining shipments in an order to limit transportation frequency

cube utilization

In warehousing, a measurement of the utilization of the total storage capacity of a vehicle storage bay, container, type of warehouse equipment, or entire warehouse. The intent is to minimize unused horizontal or vertical space

Unitization

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

small quantities, widely dispersed areas

In what size quantities of shipments going to what range of areas would trucks be the appropriate mode of transportation?

Frozen zone

Inside the demand time fence, demand is based on customer orders, and capacity and materials are committed to specific orders. Changes have ripple effects and cause other orders to be late, so they require senior management approval. Extra costs are incurred to reroute, reschedule, and do additional setups.

Decentralized inventory control

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

Centralized Inventory control

Inventory decision making for all stock keeping units exercised from one office or department for an entire company

pipeline stock

Inventory in the transportation network and the distribution system, including the flow-thru intermediate stocking points; flow time thru the pipeline has major effect on amount of inventory required in pipeline; time factors involve order transmission, order processing, scheduling, shipping, transportation, receiving, stocking, review time, etc

Point-of-use inventory

Inventory placed in the production process near the operation in which it is to be used Common with dock-to-stock inventory since no additionally quality checks or procedures need to be performed after receiving Syn: point-of-use storage

Fluctuation Inventory

Inventory that is carried as a cushion to protect against forecast error

Inventory Buffer

Inventory used to protect the throughput of an operation or the schedule against the negative effects caused by delays in delivery, quality problems, delivery of incorrect quantity, and so on. Synonym: inventory cushion. See: fluctuation inventory, safety stock.

Distribution Inventory

Inventory, usually spare parts and finished goods, located in the distribution system (e.g., in warehouses or in transit between warehouses and the consumer).

Advanced Planning and Scheduling (APS)

Is an optimization system: Techniques that deal with analysis and planning of logistics and manufacturing during short, intermediate, and long-term time periods. APS 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. These techniques simultaneously consider a range of constraints and business rules to provide real-time planning and scheduling, decision support, available-to-promise, and capable-to-promise capabilities. APS often generates and evaluates multiple scenarios. Management then selects one scenario to use as the "official plan." The five main components of APS systems are (1) demand planning, (2) production planning, (3) production scheduling, (4) distribution planning, and (5) transportation planning.

One-Card Kanban System

Kanban system where only a move card is used; work centers are adjacent so no production card is needed

point-of-use storage

Keeping inventory in specified locations on a plant floor near the operation in which it is to be used Syn: point-of-use storage

standard time

Length of time that should be required to 1. set up a given machine or operation and 2. to run one batch or one or more parts, assemblies, or end products thru that operation. Used to determine machine requirements and labor requirements Assumes an average worker who follows prescribed methods, and allows time for personal rest to overcome fatigue and unavoidable delays. Also frequently used as a basis for incentive pay systems as a cost basis of allocating overhead in cost accounting systems

Master Production Schedule (MPS)

Line on the master schedule grid that reflects the anticipated build schedule for those items assigned to the master scheduler; master scheduler maintains schedule, and it becomes a set of planning numbers that drives MRP; represents what the company plans to produce expressed in specific configurations, quantities, and dates

Total Quality Management (TQM)

Long-term success through customer satisfaction . . . based on the participation of all members of an organization in improving processes, goods, services, and the culture

cumulative lead time

Longest planned length of time to accomplish the activity in question; found by reviewing the lead time for each bill of material path below the item and whichever path adds up to the greatest number defines it

MRP and Lean Relationship

MRP is inherently a push system while lean is a pull system, so lean does not use MRP for its pull components and instead uses kanban However, as was also true for master scheduling, lean systems may still have some push components for items with longer lead times than customer lead times allow, and MRP could be used to plan these items. Lean may also use MRP to plan for proper levels of capacity. Inventory levels for components in a lean system will be very low or zero most of the time. Lot sizes may also be for one unit (or some slightly larger amount) so that only what is needed is ordered and produced (called lot-for-lot). For some components, the lead times will be short enough so no offsetting is required. The gross requirement and production will occur in the same time bucket. Lean may also simplify and flatten bills of material. When a part is used directly in the next process rather than being entered into inventory, two or more conventional bills might be combined so there will be fewer bills in total, or some levels in bills of material may not be needed and the hierarchy can be flattened.

MRP Software

MRP software is not normally programmed to release planned orders. Role of planner. On the basis of action and exception messages, the planner will release planned orders, expedite or de-expedite component schedules, or change order quantities. Planner works with three types of orders: 1.Planned orders-orders yet to be released 2.Firm planned orders-orders that override the logic of the MRP system 3.Released orders-orders already released and showing scheduled receipts

time-phased order point (TPOP)

MRP-like time planning for independent demand items where gross requirements come from a forecast not from BOM explosion; can be used to plan distribution center inventories as well as service parts since MRP logic can plan items with dependent, independent, or both demand

Distribution inventory

Maintaining inventory in a variety of locations to provide better customer service

MRP II

Manufacturing Resource planning -plan and execute product inventory, people, and facilities

rope

One of the three devices required for proper management of operations. (The other two are dum and buffer) The rope is the information flow from the drum to the front of the line (material release), whcih chokes the release of materials to match the flow through the constraint The virtual rope releases materials to the gateway work center at a rate that protects the drum at the bottleneck

Receive Goods

Part of the purchasing cycle: Receiving uses the PO to verify the order and receipt, track partial shipments, conduct inspections, and forward goods to the user or storage. Inventory records are updated upon receipt. Metrics assess supplier performance.

Issue PO

Part of the purchasing schedule: Purchasing reviews the requisition and selects a supplier. The PO will include information needed by the supplier such as quantity, part number, delivery date, and so on. Once the PO is released, it is considered an open order.

Backorder

Past due customer orders or commitments. Must be replanned

What are Shingo's 7 wastes?

Processes, movement (transportation), product defects, waiting time, overproduction, excess inventory, unused people skills

What are the 4 marketing mix P's?

Product, price, promotion, place

Time buffer

Protection against uncertainty that takes the form of time Allows enough time for work to flow from the gateway to the bottleneck and to make sure the bottleneck is never idle

demonstrated capacity

Proven capacity calculated from actual performance data, usually expressed as the average number of items produced multiplied by the standard hours per item. The result is an average capacity estimate for a resource. Available time, utilization, and efficiency are included implicitly in the calculation; they are not calculated directly.

Capacity Requirements Planning (CRP)

Provides a check on the validity of the priority plan The function of establishing, measuring, and adjusting limits or levels of capacity. In this context, the term refers to the process of determining in detail the amount of labor and machine resources required to accomplish the tasks of production.

Staging (Marshalling)

Pulling material for an order from inventory before the material is required. This action is often taken to identify shortages, but it can lead to increased problems in availability and inventory accuracy

Raw material

Purchased items or extracted materials that are converted via the manufacturing process into components and products Lowest level in a BOM

Milk Run

Regular route for pickup of mixed loads from several suppliers; Example: one truck makes multiple stops at suppliers before delivering one load to customer's plant 5 truckloads per week are still shipped, but each truckload contains the daily requirement from each supplier

Put-away

Removing the material from the dock (or other location of receipt), transporting the material to a storage area, placing that material in a staging area, and then moving it to a specific location and recording the movement and identification of the location where the material has been place.

What are the 6 "Rights" of logistics?

Right goods and services Right quality Right quantity Right time Right place Right cost

Subcontracting

Sending production work outside to another manufacturer

manufacturing process

Series of operations performed upon material to convert it from raw or semi-finished state to state of further completion; can be arranged in process layout, cellular layout, fixed-position layout & can be planned to support make-2-stock, assemble-2-order, make-2-order, etc.

Fixed-position manufacturing

Similar to project manufacturing, this type of manufacturing is mostly used for large, complex projects, where the product remains in one locations for its full assembly period or may move from location to location after considerable work and time are spent on it. Examples of fixed position manufacturing include shipbuilding or aircraft assembly, where the costs of frequent movement of the product are very high.

visual review system

Simple inventory control system where inventory reordering is based on actually looking at amount of inventory OH; used for low-value items (such as nuts and bolts)

Design for service (AKA design for maintainability)

Simplification of parts and processes to improve the after-sale service of a product

Design for manufacturability

Simplification of parts, products, and processes to improve quality and reduce manufacturing costs

What are the 5 S's?

Sort, simplify, scrub, standardize, sustain

Load Leveling

Spreading orders out in time or rescheduling operations so that the amount of work to be done in sequential time periods tends to be distributed evenly and is achievable. Although both material and labor are ideally level loaded, specific businesses and industries may load to one or the other exclusively (e.g., service industries).

From less planning detail (longer term) to more planning detail (shorter term) What is the planning hierarchy?

Strategic planning, business planning, demand management, sales and operations plan, master scheduling

Advanced planning and scheduling (APS)

Techniques that deal with analysis and planning of logistics and manufacturing during short, intermediate, and long-term time periods. APS 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. These techniques simultaneously consider a range of constraints and business rules to provide real-time planning and scheduling, decision support, available-to-promise, and capable-to-promise capabilities. APS often generates and evaluates multiple scenarios. Management then selects one scenario to use as the "official plan." The five main components of APS systems are (1) demand planning, (2) production planning, (3) production scheduling, (4) distribution planning, and (5) transportation planning.

Freight fowarder

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

Drum-buffer-rope (DBR)

The [TOC] method for scheduling and managing operations that have an internal constraint or capacity-constrained resource.

Process Capability

The ability of the process to produce parts that conform to (engineering) specifications. Process capability relates to the inherent variablityof a process that is in a state of statistical control Is a measure of process spread in relation to the upper and lower specification limits. It refers to the ability of the process to produce parts that conform to upper and lower engineering spec limits for the product.

Continuous improvement

The act of making incremental, regular improvements and upgrades to a process or product in the search for excellence Improves productivity Eliminates waste Involves teams

Distribution

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. It includes all activities related to physical distribution, as well as the return of goods to the manufacturer In many cases, this movement is made through one or more levels of field warehouses

critical characteristics / functional specifications

The attributes of a product that must function properly to avoid the failure of the product. Syn: functional requirements.

Mean Absolute Deviation (MAD)

The average of the absolute values of the deviations of observed values from the expected value. MAD can be calculated based on observations and the arithmetic mean of those observations. An alternative is to calculate absolute deviation of actual sales data minus forecast data. This data can be averaged in the usual arithmetic way or exponential smoothing.

Market boundary

The boundary where the laid-down cost for two companies is equal. Laid-down cost is product cost plus unit transportation cost.

Procurement

The business functions of procurement planning, purchasing, inventory control, traffic, receiving, incoming inspection, and salvage operations.

capacity available

The capability of a system or resource to produce a quantity of output in a particular time period

capacity

The capability of a system to perform its expected function A RATE NOT A QUANTITY The capability of a worker, machine, work center, plant, or organization to produce output per time period

Demurrage

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

Wait

Time spent waiting after operation ends

Employee involvement

The concept of using the experience, creative energy, and intelligence of all employees by treating them with respect, keeping them informed, and including them and their ideas in decision-making processes appropriate to their areas of expertise Focuses on quality and productivity improvements

acquisition cost

The cost of obtaining one or more units of an item

Internal failure costs

The cost of things that go wrong before the product reaches the customer. Internal failure costs usually include rework, scrap, downgrades, reinspection, retesting, and process losses. Also quite expensive because they require rework and can impact customers directly (longer lead times, backorders

Cost of poor quality

The costs associated with performing a task incorrectly and/or generating unacceptable output. These costs would include the costs of noncomformitites, inefficient processes, and lost opportunities

Prevention Costs

The costs caused by improvement activities that focus on the reduction of failure and appraisal costs. Typical costs include education, quality training, and supplier certification.

External Failure Costs

The costs related to problems found after the product reaches the customer. This usually includes such costs as warranty and returns." Expensive failures because they can impact customer perceptions and loyalty.

Cause-and-effect diagram

The diagram illustrates the main causes and subcauses leading to an effect (symptom) Sometimes called an Ishikawa diagram or a fish-bone diagram

purchase price variance

The difference in price between the amount paid to the supplier and the planned or standard cost of that item

Distribution Channel

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

Drum schedule

The drum schedule must reconcile the customer requirements with the system's constraint(s)

Gantt chart

The earliest and best-known type of planning and control chart, especially designed to show graphically the relationship between planned performance and actual performance over time. Used for: 1. Machine loading, in which one horizontal line is used to represent load against that capacity or 2. monitoring progress, in which one horizontal line represents the production schedule and another parallel line represents the actual job progress of the job against the schedule in time Syn: job progress chart, milestone chart

Receiving

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.

Distribution Requirements Planning (DRP)

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.

Production Activity Contorl (PAC)

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

Production Activity Control (PAC)

Shipping

The function that performs the tasks for the outgoing shipment of parts, components, and products. It includes packaging, marking, weighing, and loading for shipment.

materials management

The grouping of management functions supporting the complete cycle of material flow, from the purchase and internal control of production materials to the planning and control of work in process to the warehousing, shipping, and distribution of the finished product.

Consolidation

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 fowarders

Cash Flow Analysis

The inflow and outflow of cash in the business over a given period of time. It involves the preparation of a cash flow statement showing the sources and uses of cash flows into and out of the business To survive, a business must have the cash available to pay its bills

Queue

Time spent waiting before an operation begins

Cycle Counting

The objective is to improve the processes that affect inventory accuracy, and ultimately customer service, through a continuous inventory counting and evaluation program (not a periodic once-a-year inventory audit).

Periodic Inventory Audit

The objective is to provide a valuation of inventory as part of the annual financial statement to stakeholders on the financial condition of the company. Actual count figures need to be compared to inventory records and dollar valuations; adjustments should be made as necessary.

Backhauling

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. The backhaul can be with a full, partial, or empty load. An empty backhaul is called deadheading.

scheduling operations

The process of allocating operations time for each work order to appropriate periods at each work center

MRP Explosion

The process of calculating the demand for the components of a parent item by multiplying the parent item requirements by the component usage quantity specified in the bill of material

Discrete Manufacturing

The production of distinct items such as automobiles, appliances, or computers.

Job shop scheduling

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

process batch

The quantity or volume of output that is to be completed at a workstation before switching to a different type of work or changing an equipment setup.

Throughput

The rate at which the system generates "goal units." Because throughput 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, throughput will be an amount of money per time period. In that case, throughput is calculated as revenues received minus totally variable costs divided for the chosen time period. The bottleneck is the drum (schedule) that controls the throughput of the entire system Sales revenue - true variable costs

tracking signal

The ratio of cumulative algebraic sum of the deviations between the forecasts and the actual values to the mean absolute deviation. Used to signal when the validity of the forecasting model might be in doubt

Repetitive Manufacturing

The repeated production of the same discrete products or families of products. Repetitive methodology minimizes setups, inventory, and manufacturing lead times by using production lines, assembly lines, or cells. Work orders are no longer necessary; production scheduling and control are based on production rates. Products may be standard or assembled from modules. Repetitive is not a function of speed or volume. Synonym: repetitive process, repetitive production. See: project manufacturing.

Critical Chain

The resource-constrained critical path

Green reverse logistics

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

Storage

The retention of parts or products for future use or shipment

deadhead

The return of an empty transportation container to its point of origin. See backhauling.

Inventory Policies to Protect Against Uncertainty (Safety Lead Time and Safety Stock)

The root cause of stockouts is uncertainty in supply or demand. Two types of conventional methods to deal with this uncertainty are Safety Lead Time and Safety Stock

Dispatching

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

Tactical plans

The set of functional plans (e.g., production plan, sales plan, marketing plan) synchronizing activities across functions that specify production levels, capacity levels, staffing levels, funding levels, and so on, for achieving the intermediate goals and objectives to support the organization's strategic plan. See: aggregate planning, operational plan, production planning, sales and operations planning, strategic plan, tactical planning.

tactical plans

manufacturing philosophy

The set of guiding principles, driving forces, and ingrained attitudes that helps communicate goals, plans, and policies to all employees and that is reinforced through conscious and subconscious behavior within the manufacturing organization.

operational plan

The set of short-range plans and schedules detailing specific actions. Operational plans are more detailed than strategic and tactical plans and cover a shorter time horizon

internal setup time

The time associated with elements of a setup procedure performed while the process or machine is not running.

Manufacturing Lead Time

The total time required to manufacture an item, exclusive of lower level purchasing lead time. For make-to-order products, it is the length of time between the release of an order to the production process and shipment to the final customer. For make-to-stock products, it is the length of time between the release of an order to the production process and receipt into inventory. Included here are order preparation time, queue time, setup time, run time, move time, inspection time, and put-away time. Synonym: manufacturing cycle, production cycle, production lead time. See: lead time.

project management

The use of skills and knowledge in coordinating the organizing, planning, scheduling, directing, controlling, monitoring, and evaluating of prescribed activities to ensure that the stated objectives of a project, manufactured good, or service are achieved

Landed Cost

This cost includes the product cost plus the costs of logistics, such as warehousing, transportation, and handling fees.

Finished Goods Inventory

Those items on which all manufacturing operations, including final test, have been completed

Inventory

Those stocks or items used to support produciton, supporting activities, and customer service Production: Raw Materials and WIP Operations: Maintenance, repair, and operating supplies Customer Service: Finished goods, repair parts, and spares

procurement lead time

Time required to design a product, modify or design equipment, conduct mkt research, and obtain all necessary materials; begins when decision has been made to accept an order to produce new product and ends when production begins

Run

Time spent performing an operation

Move

Time spent physically moving materials between operations

Drop ship

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

Basic Seven Tools of Quality (B7)

Tools that help organizations understand their processes to improve them. The tools are: Check Sheets Pareto charts Cause-and-effect diagrams Flowcharts Histograms Control charts Scatter diagrams

operator flexibility

Training machine workers to perform tasks outside their immediate jobs and in problem-solving techniques to improve process flexibility. This is a necessary process in developing a fully cross-trained workforce.

V-Type

Type of product flow: Materials travel in divergent paths from a basic raw material that is transformed into a range of products. (Example a saw mill: From logs to dowels or decorative moldings, table legs, picture framing, and furniture) consists primarily of processes, where few raw materials can be made into several end products. (logs to dowels or table legs)

I-Type:

Type of product flow: This is the most basic. Product flow is linear through work centers that perform the same operations to produce many different products, such as frozen baked goods. Steps might include, for example, weigh, mix, bake, freeze, and package.

Distribution Center (DC)

Typically a finished goods warehouse designed for demand-driven rapid distribution to retailers (retail distribution centers), wholesalers, or direct shipments to customers (order fulfillment centers)

Periodic review system

Use when -- small issues in inventory and transactions are expenseive, order costs are small, and many items are ordered together A form of independent demand management model in which an order is placed every n time units. The order quantity is variable and essentially replaces the items consumed during the current time period. IF M is the maximumn inventory desired at any time and x is the quantity on hand at the time the order is place, then in the simplest model, the order quantity = M minus x.

downstream

Used as a relative reference within a firm or supply chain to indicate moving in the direction of the end customer

upstream

Used as a relative reference within a firm or supply chain to indicate moving in the direction of the raw material supplier.

Central storage

Using a central location for storing all inventory items in order to obtain more control of inventory and to improve inventory record accuracy

Ease of control Inventory records are easier to attain Safety stock is reduced

What are 3 main benefits of central storage?

Product specifications Product mix Workpace Methods

What are 4 common factors that affect available capacity?

Fixed reorder quantity, fixed reorder cycle, optional replenishment, hybrid

What are some inventory ordering systems?

V Type A Type T Type I Type

What are th four basic types of product flow analysis?

two-bin system Kanban Perpetual inventory record system

What are the 3 basic systems of determining when the order point is reached?

Overtime Increased inventory Subcontracting

What are the 3 most common ways to increase capacity in the short term?

Strategic (Long term goals) Tactical (Intermediate goals) Operational (Daily work routines)

What are the 3 types of KPI's?

Product, Price, Place, Promotion

What are the 4P's of the Marketing Mix?

Queue Setup Run Wait Move

What are the 5 components of manufacturing lead time?

Identify the constaint Exploit the constraint Subordinate everything else to the constraint Elevate the constraint Once the constraint is relieved, identify the new constraint

What are the 5 focusing steps to fixing constraints?

Delivery time and quality

What are the best measures of supplier performance?

S&OP-resource planning Master scheduling: RCCP MRP: CRP PAC: Input/output control and operations sequencing

What are the different planning levels and the capacity activity associated with each?

Material handling is reduced Storage costs are reduced Material is accessible at all times

What are the main benefits of point-of-use storage? NOTE: Ease of control is NOT a benefit

technical capability manufacturing capability reliability

What criteria should be considered before selecting a supplier?

Owners' equity

What is left over after liabilities are paid Net worth of the business - differnece between assests and liablities

Doing the job right

What is the best way to measure effectiveness?

Customer Needs

What is the key driver in lean manufacturing?

Supplier will be more responsive and flexible to customer needs

What is the main benefit of contract buying?

Labor

What is the one of the major operating costs of a warehouse, possibly the largest?

when not carrying it would be more costly overall.

What is the only good reason to carry inventory?

To answer customer questions of when an order will ship

What is the primary use of the available-to-promise line in MPS

Generate Requisition Issue PO Follow Up Receive goods Approve Payment

What is the purchasing cycle?

improves scheduling and reduces cost

What is the strategic advantage of capacity planning?

Bullwhip Effect

When a retailer has some minor fluctuation in demand, it might order a little more than the average demand after a stockout or not order at all when there is a surplus. If these orders are all the distributor has to go on and multiple retailers are creating a wider shift between minimum and maximum orders, then the distributor may also continue this trend of wide swings in orders. Sales promotions that are not communicated can exacerbate this effect. Communicating information on actual demand rather than orders as well as planned promotions in safety stock can prevent this occurrence or lesson its effect.

Manufacturing Planning and Control (MPC)

a closed-loop information system that includes the planning functions of production planning (S&OP), master production scheduling, material requirements planning, and capacity requirements planning

bill of lading

a detailed list of a shipment of goods in the form of a receipt given by the carrier to the person consigning the goods.

bottleneck

a facility, function, department, or resource whose capacity is less than the demand placed upon it

Key performance indicators (KPIs)

a financial or nonfinancial measure that is used to define and assess progress toward specific organizational goals and typically is tied to an organizations strategy and business stakholders

Where Used List

a listing of every parent item that calls for a given component, and the respective quantity required, from a bill of materials.

Last in, First out (LIFO) method

assumes that the newest items in inventory (last in) are sold from inventory first (first out)

First in, First out (FIFO) method

assumes that the oldest items (first in) in inventory are sold first (first out)

Process improvement

improvement-activities designed to identify and eliminate causes of poor quality, process variation, and non-value-added activities

poka-yoke

mistake-proofing methods aimed at designing fail-safe systems that minimize human error

rough-cut capacity planning

process of converting the master production schedule into requirements for key resources

Action Bucket

some type of action needs to take place. When week 3 becomes week 1-then we have an action bucket as we need to place an order.

uniform plant loading

spreading orders out in time or rescheduling operations so that the amount of work to be done is sequential time periods tends to be distributed evenly and is achievable. Although both material and labor are ideally level loaded, specific businesses and other industries may load to one or the other exclusviely

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