MGT 636: Key Terms

CHAPTER 1: Introduction to Operations and Supply Chain Management

  • Balanced scorecard:  A performance assessment that includes metrics related to customers, processes, and learning and growing, as well as financials.
  • Competitiveness:  The degree to which a nation can produce goods and services that meet the test of international markets.
  • Core competencies: The essential capabilities that create a firm’s sustainable competitive advantage.
  • Craft production: The process of handcrafting products or services for individual customers.
  • Division of labor: Dividing a job into a series of small tasks each performed by a different worker.
  • Flexibility: In operations, the ability to adjust to changes in product mix, production volume, or product and process design.
  • Hoshins: The action plans generated from the policy deployment process.
  • Interchangeable parts: The standardization of parts initially as replacement parts; enabled mass production.
  • Key performance indicators:  A set of measures that help managers evaluate performance in critical areas.
  • Lean production: An adaptation of mass production that prizes quality and flexibility.
  • Mass customization: The mass production of customized products.
  • Mass production: The high-volume production of a standardized product for a mass market.
  • Operations:  A function or system that transforms inputs into outputs of greater value.
  • Operations management: The design and operation of productive systems.
  • Order qualifiers: The characteristics of a product or service that qualify it to be considered for purchase.
  • Order winner:  The characteristic of a product or service that wins orders in the marketplace.
  • Policy deployment:  A planning system for converting strategy to measurable objectives throughout all levels of an organization.
  • Positioning: Determining how a firm will compete in the marketplace.
  • Primary task:  The task that is most central to the operation of a firm; it defines the business that a firm is in and is often expressed in a mission statement.
  • Productivity:  The ratio of output to input.
  • Quality revolution:  An emphasis on quality and the strategic role of operations.
  • Scientific management: The systematic analysis of work methods proposed by Frederick Taylor in the early 1900s.
  • Speed:  Fast moves, fast adaptations, tight linkages.
  • Strategy:  A common vision that unites an organization, provides consistency in decisions, and keeps the organization moving in the right direction.
  • Supply chain management: Managing the flow of information, products, and services across a network of customers, enterprises, and supply chain partners.
  • Value chain: A series of activities from supplier to customer that add value to a product or service.

CHAPTER 1 (Supplement): Operational Decision-Making Tools: Decision Analysis

  • Coefficient of optimism:  A measure of a decision maker’s optimism, from 0 (completely pessimistic) to 1 (completely optimistic), used in the Hurwicz decision criterion.
  • Decision analysis: A set of quantitative decision-making techniques to aid the decision maker in dealing with decision situations in which uncertainty exists.
  • Equal likelihood (La Place) criterion: A decision criterion in which each state of nature is weighted equally.
  • Expected value: A weighted average of decision outcomes in which each future state of nature is assigned a probability of occurrence.
  • Expected value of perfect information (EVP): The maximum value that a decision maker would be willing to pay for perfect information about future states of nature.
  • Hurwicz criterion: A decision criterion in which the decision payoffs are weighted by a coefficient of optimism.
  • Maximax criterion: A decision criterion that results in the maximum of the maximum payoffs.
  • Maximin criterion: A decision criterion that results in the maximum of the minimum payoffs.
  • Minimax regret: Criterion a decision criterion that results in the minimum of the maximum regrets for each alternative.
  • Payoff: The outcome of a decision.
  • Payoff table:  A means of organizing and illustrating the payoffs from different decisions given various states of nature.
  • Sequential decision tree: A graphical method for analyzing decision situations that require a sequence of decisions over time.

CHAPTER 2: Quality Management

  • Appraisal costs: Costs of measuring, testing, and analyzing materials, parts, products, and the productive process to make sure they conform to design specifications.
  • Benchmark: A level of quality achievement established by one company that other companies seek to achieve (i.e., a goal).
  • Black Belt: In a Six Sigma program, the leader of a quality improvement project; a full-time position.
  • Breakthrough strategy: In Six Sigma, a five-step process for improvement projects: define, measure, analyze, improve, and control.
  • Cause-and-effect diagram or fishbone diagram: A graphical description of the elements of a specific quality problem.
  • Cause-and-effect matrix: A grid used to prioritize causes of quality problems.
  • Champion: A member of top management who is responsible for project success in a Six Sigma program.
  • Cost index: The ratio of quality cost to manufacturing cost.
  • Design for Six Sigma (DFSS): A systematic methodology to design products and processes that meet customer expectations and can be produced at Six Sigma quality levels.
  • External failure costs: Costs of poor quality incurred after the product gets to the customer; that is, customer service, lost sales, and so on.
  • fitness for use: A measure of how well a product or service does what the consumer thinks it is supposed to do and wants it to do.
  • Green Belt: In a Six Sigma program, a project team member, a part-time position.
  • Index numbers: Ratios that measure quality costs relative to some base accounting values such as sales or product units.
  • Internal failure costs: Costs of poor-quality products discovered during the production process—that is, scrap, rework, and the like.
  • Kaizen: Involving everyone in the workplace, in a process of gradual, organized, and continuous improvement.
  • Labor index: The ratio of quality cost to direct labor hours.
  • Lean Six Sigma: Integrating Six Sigma’s and lean systems.
  • Master Black Belt: In a Six Sigma program, a teacher and mentor for Black Belts; a full-time position.
  • Pareto analysis: A method for identifying the causes of poor quality, which usually shows that most quality problems result from only a few causes.
  • Participative problem solving: Involving employees directly in the quality-management process to identify and solve problems.
  • Partnering: A relationship between a company and its supplier based on mutual quality standards.
  • Prevention costs: Costs incurred during product design and manufacturing that prevent nonconformance to specifications.
  • Process flowchart: A diagram of the steps in a job, operation, or process.
  • Production index: The ratio of quality cost to final product units.
  • Productivity: A measure of effectiveness in converting resources into products, generally computed as output divided by input.
  • Quality circles: A small, voluntary group (team) of workers and supervisors formed to address quality problems in their area.
  • Quality impact on productivity: Fewer defects increase output and quality improvement reduces inputs.
  • Quality management system (QMS): A system to achieve customer satisfaction that complements other company systems.
  • Quality of conformance: The degree to which the product or service meets the specifications required by design during the production process.
  • Quality of design: The degree to which quality characteristics are designed into a product or service.
  • Quality–productivity ratio (QPR): A productivity index that includes productivity and quality costs.
  • Sales index: The ratio of quality cost to sales.
  • Six Sigma: A measure of how much a given product or process deviates from perfection, or zero defects; the basis of a quality-improvement program. Six Sigma process includes four basic steps—align, mobilize, accelerate and govern.
  • Total quality management (TQM): The management of quality throughout the organization at all management levels and across all areas.
  • Yield: A measure of productivity; the sum of good-quality and reworked units.

CHAPTER 3: Statistical Process Control

  • Attribute: A product characteristic that can be evaluated with a discrete response such as yes or no, good or bad.
  • C-chart: A control chart based on the number of defects in a sample.
  • Control chart: A graph that visually shows if a sample is within statistical limits for defective items.
  • Control limits: The upper and lower bands of a control chart.
  • Mean (-) chart: A control chart based on the means of the samples taken.
  • P-chart: A control chart based on the proportion defective of the samples taken.
  • Pattern test: A statistical test to determine if the observations within the limits of a control chart display a nonrandom pattern.
  • Process capability: The capability of a process to accommodate design specifications of a product.
  • Range: The difference between the smallest and largest values in a sample.
  • Range (R-) chart: A control chart based on the range (from the highest to the lowest values) of the samples taken.
  • Run: A sequence of sample values that display the same tendency in a control chart.
  • Sample: A portion of the items produced used for inspection.
  • Statistical process control (SPC): A statistical procedure for monitoring the quality of the production process using control charts.
  • Tolerances: Product design specifications required by the customer.
  • Variable measure: A product characteristic that can be measured, such as weight or length.

CHAPTER 3 (Supplement): Operational Decision-Making Tools: Acceptance Sampling

  • Acceptable quality level (AQL): The fraction of defective items deemed acceptable in a lot.
  • Acceptance sampling: A statistical procedure for taking a random sample in order to determine whether or not a lot should be accepted or rejected.
  • Average outgoing quality (AOQ): The expected number of defective items that will pass on to the customer with a sampling plan.
  • Consumer’s risk (): the profitability of accepting a lot in which the fraction of defective items exceeds the most (LTPD) the consumer is willing to accept.
  • Lot tolerance percent defective (LTPD): The maximum percentage defective items in a lot that the consumer will knowingly accept.
  • Operating characteristic (OC): Curve a graph that measures the probability of accepting a lot for different proportions of defective items.
  • Producer’s risk (): The probability of rejecting a lot that has an acceptable quality level (AQL).
  • Sampling plan: A plan that provides guidelines for accepting a lot.

CHAPTER 4: Product Design

  • Benchmarking: Finding the best-in-class product or process, measuring one’s performance against it, and making recommendations for improvements based on the results.
  • Carbon footprint: A measure of the greenhouse gases produced by an activity, product or company.
  • Collaborative product design (CPD): Software system for collaborative design and development among trading partners.
  • Computer-aided design (CAD): A software system that uses computer graphics to assist in the creation, modification, and analysis of a design.
  • Computer-aided design/computer-aided manufacturing (CAD/CAM): The ultimate design-to-manufacture connection.
  • Computer-aided engineering (CAE): Engineering analysis performed at a computer terminal with information from a CAD database.
  • Concurrent design: A new approach to design that involves the simultaneous design of products and processes by design teams.
  • Design for environment (DFE): Designing a product from material that can be recycled or easily repaired rather than discarded.
  • Design for manufacture (DFM): Designing a product so that it can be produced easily and economically.
  • Eco-labeling: A seal of approval for environmentally safe products.
  • Extended producer responsibility (EPR): Holding a company responsible for its product even after its useful life.
  • Failure mode and effects analysis (FMEA): A systematic approach to analyzing the causes and effects of product failures.
  • Fault tree analysis (FTA): A visual method for analyzing the interrelationships among failures.
  • Form design: The phase of product design concerned with how the product looks.
  • Functional design: The phase of a product design concerned with how the product performs.
  • Maintainability: The ease with which a product is maintained or repaired.
  • Modular design: Combining standardized building blocks, or modules, in a variety of ways to create unique finished products.
  • Perceptual map: Visual method for comparing customer perceptions of different products or services.
  • Production design: The phase of product design concerned with how the product will be produced.
  • Product lifecycle management (PLM): Software for managing the entire lifecycle of a product.
  • Quality function deployment (QFD): A structured process that translates the voice of the customer into technical design requirements.
  • Rapid prototyping: Quickly testing and revising a preliminary design model.
  • Reliability: The probability that a given part or product will perform its intended function for a specified period of time under normal conditions of use.
  • Reverse engineering: Carefully dismantling and inspecting a competitor’s product to look for design features that can be incorporated into your own product.
  • Robust design: The design of a product or a service that can withstand variations in environmental and operating conditions.
  • Simplification: Reducing the number of parts, subassemblies, or options in a product.
  • Standardization: Using commonly available parts that are interchangeable among products.
  • Sustainability: The ability to meet present needs without jeopardizing the needs of future generations.
  • Tolerances: Allowable ranges of variation.
  • Usability: Ease of use of a product or service.
  • Value analysis (VA): An analytical approach for eliminating unnecessary design features and functions.

CHAPTER 5: Service Design

  • Arrival rate: The rate at which customers arrive at a service facility during a specified period.
  • Calling population: The source of customers to a waiting line.
  • Channels: The number of parallel servers.
  • Delivery specification: Specify schedules, deliverables, and location.
  • Design specification: Describe the service in enough detail to be replicate.
  • Goods: Tangible objects that can be created and sold at a later date.
  • Infinite queue: A waiting line that grows to any length.
  • Line of influence: Signs or activities that influences a customer to seek a service.
  • Line of interaction: Point where a customer and service provider interact.
  • Line of support: Point where a service provider interacts with support personnel.
  • Line of visibility: Separates front office and back office activities.
  • Operating characteristics: Measures of waiting line performance expressed as averages.
  • Performance specification: Outline expectations and requirements.
  • Phases: The number of sequential servers a customer must go through to receive service.
  • Queue: A single waiting line that forms in front of a service facility.
  • Queue discipline: The order in which customers are served.
  • Services: Acts, deeds or performances that provide value to the customer.
  • Servicescapes: The design of the physical environment (including signs, symbols and, artifacts) in which a service takes place.
  • Service blueprinting: A specialized flow chart used for service processes.
  • Service concept: The purpose of a service; it defines the target market and the customer experience.
  • Service package: The mixture of physical items, sensual benefits, and psychological benefits provided to the customer.
  • Service time: The time required to serve a customer; the time period divided by service time yields the service rate ().
  • Utilization factor: The probability the server is busy and the customer must wait.

CHAPTER 6: Processes and Technology

  • Assembly chart: A schematic diagram of a product that shows the relationship of component parts to parent assemblies, the groupings of parts that make up a subassembly, and the overall sequence of assembly.
  • Batch production: The low-volume production of customized products.
  • Breakeven analysis: A technique that determines the volume of demand needed to be profitable; it takes into account the trade-off between fixed and variable costs.
  • Continuous production: The production of a very-high-volume commodity product with highly automated equipment.
  • Mass production: The high-volume production of a standard product for a mass market.
  • Operations sheet: A document that shows the series of operations necessary to make each item listed on the assembly chart.
  • Process: A group of related tasks with specific inputs and outputs.
  • Process flowchart: A document that uses standardized symbols to chart the productive and nonproductive flow of activities involved in a process; it may be used to document current processes or as a vehicle for process improvement.
  • Process innovation: The total redesign of a process.
  • Process planning: The conversion of designs into workable instructions for manufacture, along with associated decisions on component purchase or fabrication, and process and equipment selection.
  • Process plans: A set of documents that detail manufacturing or service delivery specifications.
  • Process strategy: An organization’s overall approach for physically producing goods and services.
  • Project: The one-of-a-kind production of a product to customer order that requires a long time to complete and a large investment of funds and resources.
  • Vertical integration: The degree to which a firm produces the parts that go into its products

CHAPTER 7: Capacity and Facilities Design

  • Balance delay: The total idle time of an assembly line.
  • Best operating level: The percent of capacity utilization at which unit costs are lowest.
  • Block diagram: A schematic layout diagram that includes the size of each work area.
  • Capacity: The maximum capability to produce.
  • Capacity cushion: A percent of capacity held in reserve for unexpected occurrences.
  • Capacity planning: A long-term strategic decision that establishes the overall level of productive resources for a firm.
  • Cellular layout: A layout that creates individual cells to process parts or customers with similar requirements.
  • Cycle time: The maximum amount of time an item is allowed to spend at each workstation if the targeted production rate is to be achieved; also, the time between successive product completions.
  • Diseconomies of scale: When higher levels of output cost more per unit to produce.
  • Economies of scale: When it costs less per unit to produce higher levels of output.
  • Facility layout: The arrangement of machines, departments, workstations, and other areas within a facility.
  • Fixed-position layout: A layout in which the product remains at a stationary site for the entire manufacturing cycle.
  • Flexible manufacturing system (FMS): Programmable equipment connected by an automated material-handling system and controlled by a central computer.
  • Line balancing: A layout technique that attempts to equalize the amount of work assigned to each workstation on an assembly line.
  • Mixed-model assembly line: An assembly line that processes more than one product model.
  • Muther’s grid: A format for displaying manager preferences for department locations.
  • Precedence requirements: Physical restrictions on the order in which operations are performed.
  • Process layout: A layout that groups similar activities together into work centers according to the process or function they perform.
  • Product layout: A layout that arranges activities in a line according to the sequence of operations that are needed to assemble a particular product.
  • Production flow analysis (PFA): A group technology technique that reorders part routing matrices to identify families of parts with similar processing requirements.
  • Relationship diagram: A schematic diagram that denotes location preference with different line thicknesses.
  • Unit load: The quantity in which material is normally moved, such as a unit at a time, a pallet, or a bin of material.
  • CHAPTER 7 (Supplement): Operational Decision-Making Tools: Facility Location Models
  • Center-of-gravity technique: A quantitative method for locating a facility at the center of movement in a geographic area based on weight and distance.
  • Infrastructure: The physical support structures in a community, including roads, water and sewage systems, and utilities.
  • Load-distance technique: A quantitative method for evaluating various facility locations using a value that is a measure of weight and distance.
  • Location factor rating: A system for weighting the importance of different factors in the location decision, scoring the individual factors, and then developing an overall location score that enables a comparison of different location sites.

CHAPTER 8: Human Resources

  • Alternative workplace: A combination of nontraditional work locations, settings and practices that supplements or replaces the traditional office.
  • Cross training: An employee learns more than one job in the organization.
  • Empowerment: The authority and responsibility of the workers to alert management about job-related problems.
  • Ergonomics: The application of human sciences like anatomy, physiology, and psychology to the design of the work environment and jobs, and objects and equipment used in work; fitting the task to the person.
  • flextime: A work schedule in which fixed times of arrival and departure are replaced by a combination of fixed and variable times.
  • Gainsharing: An incentive plan that includes employees in a common effort to achieve a company’s objectives in which they share in the gains.
  • Horizontal job enlargement: The scope of a job that includes all tasks necessary to complete a product or process.
  • Job: A defined set of tasks that comprise the work performed by employees that contributes to the production of a product or delivery of a service.
  • Job rotation: The horizontal movement between two or more jobs according to a plan or schedule.
  • Learning curve: A graph that reflects the improvement rate of workers as a job is repeated and more units are produced.
  • Managing diversity: Includes education, awareness, communication, fairness, and commitment.
  • Motion study: The study of the individual human motions used in a task.
  • Motivation: A willingness to work hard because that effort satisfies an employee need.
  • Process flowchart: A flowchart that illustrates, with symbols, the steps for a job or how several jobs fit together within the flow of the production process.
  • Profit sharing: The company sets aside a portion of profits and distributes it among employees usually at the end of the fiscal year.
  • Tasks: Individual, defined job activities that consist of one or more elements.
  • Telecommuting: Employees work electronically from whatever location they choose, either exclusively or some of the time.
  • Vertical job enlargement: The degree of self-determination and control allowed workers over their own work; also referred to as job enrichment.
  • Worker-machine chart: A chart that illustrates on a time scale the amount of time an operator and a machine are working or are idle in a job.

CHAPTER 8 (Supplement): Operational Decision-Making Tools: Work Measurement

  •  Elemental standard time: Files company files containing historical data of elemental time studies that can be used to develop a standard time.
  • Normal time: In a time study, the elemental average time multiplied by a performance rating.
  • Predetermined motion times: Normal times for basic, generic micromotions developed by an outside organization in a laboratory-type environment.
  • Standard time: The time required by an “average” worker to perform a job once under normal circumstances and conditions.
  • Work sampling: A technique for determining the proportion of time a worker or machine spends on job activities.

CHAPTER 9: Project Management

  •  Activity: Performance of an individual job or work effort that requires labor, resources, and time and is subject to management control.
  • Activity-on-arrow (AOA): A convention for constructing a CPM/ PERT network in which the branches between nodes represent project activities.
  • Activity-on-node (AON): A convention for constructing a CPM/PERT network in which the nodes represent project activities.
  • Backward pass: Starting at the end of a CPM/PERT network, a procedure for determining latest activity times.
  • Beta distribution: A probability distribution traditionally used in CPM/PERT for estimating the mean and variance of project activity times.
  • Crash cost: The cost of reducing the normal activity time.
  • Crash time: The amount of time an activity is reduced.
  • Crashing: A method for shortening the project duration by reducing the time of one or more critical activities at a cost.
  • Critical path: The longest path through a CPM/PERT network, indicating the minimum time in which a project can be completed.
  • Dummy: An activity in a network that shows a precedence relationship but represents no passage of time.
  • Earliest finish time (EF)
  • The earliest time an activity can be completed.
  • Earliest start time (ES): The earliest time an activity can begin subject to preceding activities.
  • Earned value analysis (EVA): A standard procedure for measuring a project’s progress, forecasting its completion time and cost, and measuring schedule and budget variation.
  • Event: The completion or beginning of an activity in a project.
  • Forward pass: Starting at the beginning of a CPM/PERT network, a procedure for determining earliest activity times.
  • Gantt chart: A graphical display using bars (or time lines) to show the duration of project activities and precedence relationships.
  • Latest finish time (LF): The latest time an activity can be completed and still maintain the project critical path time.
  • Latest start time (LS): The latest time an activity can begin and not delay subsequent activities.
  • Matrix organization: An organizational structure of project teams that includes members from various functional areas in the company.
  • Most likely time (m): The subjective estimate of the time that would occur most frequently if the activity were repeated many times.
  • Optimistic time (a): The shortest possible time to complete the activity if everything went right.
  • Organizational breakdown structure (OBS): A chart that shows which organizational units are responsible for work items.
  • Pessimistic time (b): The longest possible time to complete the activity given that everything went wrong.
  • Precedence relationship: The sequential relationship of project activities to each other.
  • Project: A unique, one-time operation or effort.
  • Responsibility assignment matrix (RAM): Shows who in the organization is responsible for doing the work in the project.
  • Scope statement: A document that provides an understanding, justification and expected result for the project.
  • Slack: The amount by which an activity can be delayed without delaying any of the activities that follow it or the project as a whole.
  • Statement of work: A written description of the objectives of a project.
  • Work breakdown structure (WBS): A method for subdividing a project into different hierarchical levels of components.

CHAPTER 10: Supply Chain Management Strategy and Design

  •  Bullwhip effect: Occurs when demand variability is magnified at various upstream points in the supply chain.
  • Collaborative planning, forecasting, and replenishment (CPFR): A process for two or more companies in a supply chain to synchronize their demand forecasts into a single plan to meet customer demand.
  • E-business: The replacement of physical business processes with electronic ones.
  • Electronic data interchange (EDI): A computer-to-computer exchange of business documents.
  • Enterprise resource planning (ERP): Software that connects the components of a company by sharing and organizing information and data.
  • fill rate: The fraction of orders placed by a customer with a supplier distribution center or warehouse which are filled within 24 hours.
  • Inventory: Insurance against supply chain uncertainty held between supply chain stages. Inventory turns a supply chain performance metric computed by dividing the cost of goods sold by the average aggregate value of inventory.
  • Key performance indicator (KPI): A metric used to measure supply chain performance.
  • Point-of-sale data: Computer records of sales at retail sites.
  • Procurement: Purchasing goods and services from suppliers.
  • Radio frequency identification (RFID): Radio waves used to transfer data, like an electronic product code, between an item with an embedded microchip and a reader.
  • SCOR: The supply chain operations reference model; a diagnostic tool that provides a cross-industry standard for supply chain management.
  • Supply chain: The facilities, functions, and activities involved in producing and delivering a product or service from suppliers (and their suppliers) to customers (and their customers).
  • Supply chain management (SCM): Managing the flow of information through the supply chain in order to attain the level of synchronization that will make it more responsive to customer needs while lowering costs.
  • Sustainability: Meeting present needs without compromising the ability of future generation to meet their needs.
  • Value: The creation of value for the customer is an important aspect of supply chain management.

CHAPTER 11: Global Supply Chain Procurement and Distribution

  •  Continuous replenishment: Supplying orders in a short period of time according to a predetermined schedule.
  • Core competencies: The activities that a company does best.
  • Cross-docking: Crossing of goods from one loading dock to another without being placed in storage.
  • E-marketplaces: Web sites where companies and suppliers conduct business-to-business activities.
  • E-procurement: Business-to-business commerce in which purchases are made directly through a supplier’s Web site.
  • Intermodal transportation: Combines several modes of transportation.
  • Landed cost: Total cost of producing, storing, and transporting a product to the site of consumption.
  • Logistics: The transportation and distribution of goods and services.
  • Nation: Group’s nations joined together into trading groups.
  • On-demand (direct-response) delivery: Requires the supplier to deliver goods when demanded by the customer.
  • Order fulfillment: The process of ensuring on-time delivery of a customer’s order.
  • Outsourcing: Purchasing goods and services that were originally produced in-house from an outside supplier.
  • Postponement: Moving some final manufacturing steps like final assembly or product customization into the warehouse or distribution center.
  • Procurement: Purchasing goods and services from suppliers.
  • Reverse auction: A company posts items it wants to purchase on an Internet e-marketplace for suppliers to bid on.
  • Sourcing: The selection of suppliers.
  • Supply chain: The facilities, functions, and activities involved in producing and delivering a product or service from suppliers (and their suppliers) to customers (and their customers).
  • Supply chain management (SCM): Managing the flow of information through the supply chain in order to attain the level of synchronization that will make it more responsive to customer needs while lowering costs.
  • Tariffs (duties): Taxes on imported goods.
  • Trade specialists: Specialists who help manage transportation and distribution operations in foreign countries.
  • Value added tax (VAT): An indirect tax on the increase in value of a good at any stage in the supply chain from raw material to final product.
  • Vendor-managed inventory (VMI): A system in which manufacturers instead of distributors generate orders.
  • Warehouse management system (WMS): An automated system that runs the day-to-day operations of a warehouse or distribution center and keeps track of inventory.

CHAPTER 11 (Supplement): Operational Decision-Making Tools: Transportation and Transshipment Models

  • Prohibited route: A transportation route over which items cannot be transported.
  • Transportation model: Transporting items from sources with fixed supplies to destinations with fixed demands at the minimum cost, time, etc.
  • Transshipment model: A special case of the transportation problem in which intermediate shipping points exist between the sources and final destinations.

CHAPTER 12: Forecasting

  •  Adjusted exponential smoothing: An exponential smoothing forecast adjusted for trend.
  • Average error: The cumulative error averaged over the number of time periods.
  • Coefficient of determination: The correlation coefficient squared; it measures the portion of the variation in the dependent variable that can be attributed to the independent variable.
  • Correlation: A measure of the strength of the causal relationship between the independent and dependent variables in a linear regression equation.
  • Cumulative error: A sum of the forecast errors; also known as bias.
  • Cycle: An up-and-down movement in demand over time.
  • Delphi method: A procedure for acquiring informed judgments and opinions from knowledgeable individuals to use as a subjective forecast.
  • Exponential smoothing: An averaging method that weights the most recent data more strongly than more distant data.
  • Forecast error: The difference between actual and forecasted demand.
  • Linear regression: A mathematical technique that relates a dependent variable to an independent variable in the form of a linear equation.
  • Linear trend line: A forecast using the linear regression equation to relate demand to time.
  • Long-range forecast: A forecast encompassing a period longer than two years into the future.
  • Mean absolute deviation (MAD): The per-period average of the absolute difference between actual and forecasted demand.
  • Mean absolute percent deviation (MAPD): The absolute forecast error measured as a percentage of demand.
  • Mean squared error (MSE): The average of the squared forecast errors.
  • Moving average: Average demand for a fixed sequence of periods including the most recent period.
  • Multiple regression: A mathematical relationship that relates a dependent variable to two or more independent variables.
  • Qualitative forecast methods: Nonquantitative, subjective forecasts based on judgment, opinion, experience, and expert opinion.
  • Quantitative forecast methods: Forecasts derived from a mathematical formula.
  • Random variations: Movements in demand that are not predictable and follow no pattern.
  • Regression forecasting methods: A class of mathematical techniques that relate demand to factors that cause demand behavior.
  • Seasonal factor: A numerical value that is multiplied by the normal forecast to get a seasonally adjusted forecast.
  • Seasonal pattern: An oscillating movement in demand that occurs periodically in the short run and is repetitive.
  • Short- to mid-range forecast: A forecast encompassing the immediate future, usually days or weeks, but up to two years.
  • Smoothing constant: The weighting factor given to the most recent data in exponential smoothing forecasts.
  • Time frame: How far into the future something is forecasted.
  • Time series methods: A class of statistical methods that uses historical demand data over a period of time to predict future demand.
  • Tracking signal: A measure computed by dividing the cumulative error by MAD; used for monitoring bias in a forecast.
  • Trend: A gradual, long-term up or down movement of demand.
  • Weighted moving average: A moving average with more recent demand values adjusted with weights.

CHAPTER 13: Inventory Management

  •  ABC system: A method for classifying inventory items according to their dollar value to the firm based on the principle that only a few items account for the greatest dollar value of total inventory.
  • Carrying costs: the cost of holding an item in inventory, including lost opportunity costs, storage, rent, cooling, lighting, interest on loans, and so on.
  • Continuous inventory system: A system in which the inventory level is continually monitored; when it decreases to a certain level, the reorder point, a fixed amount is ordered.
  • Dependent demand: Typically, component parts or materials used in the process to produce a final product.
  • Economic order quantity (EOQ): A fixed-order quantity that minimizes total inventory costs.
  • fixed-time-period system: Also known as a periodic system; an inventory system in which a variable amount is ordered after a predetermined, constant passage of time.
  • Independent demand: Final or finished products whose demand is not a function of, or dependent on, internal production activity.
  • Inventory: A stock of items kept by an organization to meet internal or external customer demand.
  • Order cycle: The time between the receipt of orders in an inventory system.
  • Ordering costs: The cost of replenishing the stock of inventory including requisition cost, transportation and shipping, receiving, inspection, handling, and so forth.
  • Periodic inventory system: A system in which the inventory level is checked after a specific time period and a variable amount is ordered, depending on the inventory in stock.
  • Production quantity model: Also known as the production lot-size model; an inventory system in which an order is received gradually and the inventory level is depleted at the same time it is being replenished.
  • Quantity discount: A pricing schedule in which lower prices are provided for specific (higher) order quantities.
  • Reorder point: A level of inventory in stock at which a new order is placed.
  • Safety stock: An amount added to the expected amount demanded during the lead time (the reorder point level) as a hedge against a stockout.
  • Service level: The probability that the amount of inventory on hand during the lead time is sufficient to meet expected demand.
  • Shortage costs: Temporary or permanent loss of sales that will result when customer demand cannot be met.
  • Stockout: An inventory shortage occurring when demand exceeds the inventory in stock.

CHAPTER 13 (Supplement): Operational Decision-Making Tools: Simulation

  •  Monte Carlo technique: A technique for selecting numbers randomly from a probability distribution for use in a simulation model.
  • Random numbers: Numbers in a table or generated by a computer, each of which has an equal likelihood of being selected at random.
  • Simulation: An approach to operational problem solving in which a real-world problem situation is replicated within a mathematical model.
  • Steady-state result: An average model result that approaches constancy after a sufficient passage of time or enough repetitions or trials.

CHAPTER 14: Sales and Operations Planning

  •  Aggregate planning: The process of determining the quantity and timing of production over an intermediate time frame.
  • Available-to-promise: The quantity of items that can be promised to the customer; the difference between planned production and customer orders already received.
  • Backlog: Accumulated customer orders to be completed at a later date.
  • Backordering: Ordering an item that is temporarily out-of-stock.
  • Capable-to-promise: The quantity of items that can be produced and made available at a later date.
  • Chase demand: An aggregate planning strategy that schedules production to match demand and absorbs variations in demand by adjusting the size of the workforce.
  • Collaborative planning: Sharing information and synchronizing production plans across the supply chain.
  • Disaggregation: The process of breaking down the aggregate plan into more detailed plans.
  • Level production: An aggregate planning strategy that produces units at a constant rate and uses inventory to absorb variations in demand.
  • Linear decision rule (LDR): A mathematical technique for aggregate planning.
  • Lost sales: Forfeited sales for out-of-stock items
  • Management coefficients model: A regression technique for aggregate planning.
  • Mixed strategy: Varying two or more capacity factors to determine a feasible production plan.
  • Peak demand: Staffing for high levels of customer service.
  • Pure strategy: Varying only one capacity factor in aggregate planning.
  • Sales & operations planning (S&OP): A process for coordinating supply and demand
  • Search decision rule (SDR): A pattern search technique for aggregate planning.
  • Revenue management: The process of determining the percentage of seats or rooms to be allocated to different fare classes.

CHAPTER 14 (Supplement): Operational Decision-Making Tools: Linear Programming

  • Constraints: Linear relationships of decision variables representing the restrictions placed on the decision situation by the operating environment.
  • Decision variables: Mathematical symbols that represent levels of activity of an operation.
  • Extreme points: Corner points, or protrusions, on the boundary of the feasible solution space in a linear programming model.
  • Feasible solution space: An area that satisfies all constraints in a linear programming model simultaneously.
  • Graphical solution method: A method for determining the solution of a linear programming problem using a two-dimensional graph of the model.
  • Linear programming: A technique for general decision situations in which the decision is to determine a level of operational activity in order to achieve an objective, subject to restrictions.
  • Objective function: A linear mathematical relationship that describes the objective of an operation in terms of decision variables.
  • Optimal solution: The single best solution to a problem.
  • Simplex method: A series of mathematical steps conducted within a tabular structure for solving a linear programming model.
  • Slack variable: A variable added to a linear programming    constraint to make it an equality.
  • Surplus variable: A variable subtracted from a   model constraint in a linear programming model in order to make it an equality

CHAPTER 15: Resource Planning

  • Assemble-to-order: A manufacturing environment in which major subassemblies are produced in advance of a customer’s order and are then configured to order.
  • Backward scheduling: Scheduling backward from a due date to determine when to begin a job.
  • Best-of-breed: The selection of ERP modules from different vendors.
  • Bill of material (BOM) : A list of all the materials, parts, and assemblies that make up a product, including quantities, parent– component relationships, and order of assembly.
  • Capacity: The maximum capability to produce.
  • Capacity requirements planning (CRP): A computerized system that projects the load from a given material plan onto the capacity of a system and identifies underloads and overloads.
  • Cloud computing: On-demand IT services usually delivered over the Internet.
  • Cumulative lead time: The total length of time required to manufacture a product; also, the longest path through a product structure.
  • Customer relationship management (CRM): Software that plans and executes business processes that involve customer interaction, such as sales, marketing, fulfillment, and customer service.
  • Cycle counting: A method for auditing inventory accuracy that counts inventory and reconciles errors on a cyclical schedule rather than once a year.
  • Efficiency: How well a machine or worker performs compared to a standard output level.
  • Enterprise resource planning (ERP): Software that organizes and manages a company’s business processes by sharing information across functional areas.
  • Expedite: To speed up orders so that they are completed in less than their normal lead time.
  • Explosion: The process of determining requirements for lowerlevel items by multiplying the planned orders of parent items by the quantity per assembly of component items.
  • Forward scheduling: Scheduling forward from today’s date to determine the earliest time a job can be completed.
  • Item master file: A file that contains inventory status and descriptive information on every item in inventory.
  • Load: The standard hours of work assigned to a facility.
  • Load leveling: The process of balancing underloads and overloads.
  • Load percent: The ratio of load to capacity.
  • Load profile: A chart that compares released orders and planned orders with the capacity of a facility.
  • Lot sizing: Determining the quantities in which items are usually made or purchased.
  • Master production schedule (MPS): A schedule for the production of end items (usually final products). It drives the MRP process that schedules the production of component parts.
  • Material requirements planning (MRP): A computerized inventory control and production planning system for generating purchase orders and work orders of materials, components, and assemblies.
  • Modular bill of material: A special bill of material used to plan the production of products with many optional features.
  • Netting: The process of subtracting on-hand quantities and scheduled receipts from gross requirements to produce net requirements.
  • Periodic order quantity: A lot sizing technique that orders at set time intervals.
  • Product lifecycle management (PLM): Software that manages the product development process, product lifecycles, and design collaboration with suppliers and customers.
  • Product structure file: A file that contains computerized bills of material for all products.
  • Software as a service (SaaS): Software as a service; on-demand access of software from a provider’s site.
  • SOA: Service oriented architecture; a software architecture that bundles together stand-alone services.
  • Supply chain management (SCM): Software that plans and executes business processes related to supply chains.
  • Time fence: A date specified by management beyond which no changes in the master schedule are allowed.
  • Time-phased bill of material: An assembly chart shown against a time scale.
  • Time phasing: The process of subtracting an item’s lead time from its due date to determine when an order should be released.
  • Utilization: The percentage of available working time that a worker spends working or a machine operating.
  • XML: Extensible markup language; used to help different ERP systems communicate over the Internet.

CHAPTER 16: Lean Systems

  • Andons: Call lights installed at workstations to notify management and other workers of a quality problem in production.
  • Breakdown maintenance: A maintenance activity that involves repairs needed to make a failed machine operational.
  • External setup: Setup activities that can be performed in advance while the machine is operating.
  • 5 Why’s: Repeatedly ask “why?” until a root cause is identified.
  • Internal setup: Setup activities that can be performed only when the machine is stopped.
  • Jidoka authority: Given to the workers to stop the assembly line when quality problems are encountered.
  • Just-in-time (JIT): Smoothing the flow of material to arrive just as it is needed; evolved into a system for eliminating waste.
  • Kaizen: A Japanese term for a system of continuous improvement.
  • Kanban: A card corresponding to a standard quantity of production (or size container) used in the pull system to authorize the production or withdrawal of goods.
  • Kanban square: A marked area designated to hold a certain amount of items; an empty square is the signal to produce more items.
  • Lean production: Both a philosophy and an integrated system of management that emphasizes the elimination of waste and the continuous improvement of operations.
  • Lean six sigma: A combination of lean’s principles for eliminating waste with Six Sigma’s reduction of variability.
  • Manufacturing cell: A group of dissimilar machines brought together to manufacture a family of parts with similar shapes or processing requirements.
  • Material Kanban: A rectangular-shaped Kanban used to order material in advance of a process.
  • Muda: Anything other than the minimum amount of equipment, materials, parts, space, and time that are absolutely essential to add value to the product.
  • Multifunctional workers: Workers who have been trained to perform more than one job or function.
  • Poka-yoke: Any foolproof device or mechanism that prevents defects from occurring.
  • Preventive maintenance: A system of daily maintenance, periodic inspection, and preventive repairs designed to reduce the probability of machine breakdown.
  • Production Kanban: A card authorizing the production of a container of goods.
  • Pull system: A production system in which items are manufactured only when called for by the users of those items.
  • Push system: A production system in which items are manufactured according to a schedule prepared in advance.
  • Signal Kanban: A triangular Kanban used as a reorder point to signal production at the previous workstation.
  • Supplier Kanban: A Kanban that rotates between a factory and its supplier.
  • Takt time: The cycle time of an operation paced to the rate of customer demand.
  • Total productive maintenance (TPM): An approach to machine maintenance that combines the practice of preventive maintenance with the concepts of total quality and employer involvement.
  • Undercapacity scheduling: The allocation of extra time in a schedule for nonproductive tasks such as problem solving or maintenance.
  • Uniform production levels: The result of smoothing production requirements on the final assembly line.
  • Visual control: Procedures and mechanisms for making problems visible.
  • Withdrawal Kanban: A card authorizing the withdrawal and movement of a container of goods.

CHAPTER 17: Scheduling

  •  Advanced planning and scheduling (APS): A software system that uses intelligent analytical tools and techniques to develop realistic schedules.
  • Dispatch list: A shop paper that specifies the sequence in which jobs should be processed; it is often derived from specific sequencing rules.
  • Drum-buffer-rope: A concept in theory of constraints where the drum sets the pace of production, buffer is placed in front of the bottleneck, and rope communicates changes.
  • Finite scheduling: An approach to scheduling that loads jobs in priority order and delays those jobs for which current capacity is exceeded.
  • Flow time: The time that it takes for a job to “flow” through the system; that is, its completion time.
  • Gantt chart: A bar chart that shows a job’s progress graphically or compares actual against planned performance.
  • Genetic algorithms: A method that generates possible solutions based on genetic combinations of previous solutions.
  • Infinite scheduling: An approach to scheduling that initially assumes infinite capacity and then manually “levels the load” of resources that have exceeded capacity.
  • Input/output (I/O) control: A procedure for monitoring the input to and output from a work center to regulate the flow of work through a system.
  • Johnson’s rule: An algorithm for sequencing any number of jobs through two serial operations to minimize makespan.
  • Load leveling: The process of smoothing out the work assigned across time and the available resources.
  • Loading: The process of assigning work to individual workers or machines.
  • Makespan: The time that it takes for a group of jobs to be completed—that is, the completion time of the last job in a group.
  • Manufacturing execution systems (MES): Manufacturing software that monitors operations, collects data, and controls processes on the shop floor.
  • Scheduling: The determination of when labor, equipment, and facilities are needed to produce a product or provide a service.
  • Sequencing: The process of assigning priorities to jobs so that they are processed in a particular order.
  • Shop floor control (SFC): Scheduling and monitoring day-to-day production in a job shop; also known as production control or production activity control.
  • Tardiness: The difference between a job’s due date and its completion time for jobs completed after their due date.
  • Theory of constraints: A finite scheduling approach that differentiates between bottleneck and nonbottleneck resources and between transfer batches and process batches.
  • Work package: Shop paperwork that travels with a job to specify what work needs to be done at a particular machine center and where the item should be routed next.

 

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