OM pr

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Chapter 6 terms

Assemble-to-order

A production environment where pre-assembled components, subassemblies, and modules are put together in response to a specific customer order.

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Assembly line

A process structure designed to make discrete parts. Parts are moved through a set of specially designed workstations at a controlled rate.

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Assembly-line balancing

The problem of assigning all the tasks to a series of workstations so that each workstation has no more than can be done in the workstation cycle time and so that idle time across all workstations is minimized.

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Continuous process

An often automated process that converts raw materials into a finished product in one contiguous process.

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Customer order decoupling point

The place where inventory is positioned to allow processes or entities in the supply chain to operate independently.

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Days-of-supply

The number of days of inventory of an item. If an item were not replenished, this would be the numbers of days until the firm would run out of the item (on average). Also, the inverse of inventory turn expressed in days.

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Engineer-to-order

Here the firm works with the customer to design the product, which is then made from purchased materials, parts, and components.

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Flow time

The time it takes a unit to flow through a process from beginning to end.

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Inventory turn

The cost of goods sold divided by the total average value of inventory.

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Lead time

The time needed to respond to a customer order.

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Lean manufacturing

The attempt to achieve high customer service with minimum levels of inventory investment.

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Little’s law

A mathematical expression that relates inventory, throughput, and flow time.

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Make-to-order

A production environment where the product is built directly from raw materials and components in response to a specific customer order.

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Make-to-stock

A production environment where the customer is served “on-demand” from finished goods inventory.

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Manufacturing cell

An area where simple items that are similar in processing requirements are produced.

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Precedence relationship

The order in which tasks must be performed in the assembly process.

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Product–process matrix

Shows the relationships between different production units and how they are used depending on product volume and the degree of product standardization.

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Project layout

The product, because of its sheer bulk or weight, remains fixed in a location. Equipment is moved to the product rather than vice versa.

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Throughput

The long-term average rate that items flow through a process.

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Total average value of inventory

The total average investment in raw material, work-in-process, and finished goods inventory. This is valued at the cost to the firm.

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Workcenter

Often referred to as a job shop, a process structure suited for low-volume production of a great variety of nonstandard products. Workcenters sometimes are referred to as departments and are focused on a particular type of operation.

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Workstation cycle time

The time between successive units coming off the end of an assembly line.

Chapter 10 terms

Assignable variation Deviation in the output of a process that can be clearly identified and managed.

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Attributes Quality characteristics that are classified as either conforming or not conforming to specification.

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Capability index (Cpk) The ratio of the range of values produced by a process divided by the range of values allowed by the design specification.

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Common variation Deviation in the output of a process that is random and inherent in the process itself.

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Conformance quality The degree to which the product or service design specifications are met.

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Cost of quality Expenditures related to achieving product or service quality, such as the costs of prevention, appraisal, internal failure, and external failure.

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Design quality The inherent value of the product in the marketplace.

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DMAIC An acronym for the Define, Measure, Analyze, Improve, and Control improvement methodology followed by companies engaging in Six Sigma programs.

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DPMO (defects per million opportunities) A metric used to describe the variability of a process.

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Dimensions of quality Criteria by which quality is measured.

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Malcolm Baldrige National Quality Award An award established by the U.S. Department of Commerce given annually to organizations that excel in quality.

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Quality at the source The person who does the work is responsible for ensuring that specifications are met.

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Six Sigma A statistical term to describe the quality goal of no more than four defects out of every million units. Also refers to a quality improvement philosophy and program.

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Statistical process control (SPC) Techniques for testing a random sample of output from a process to determine whether the process is producing items within a prescribed range.

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Total quality management (TQM) Managing the entire organization so that it excels on all dimensions of products and services that are important to the customer.

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Upper and lower specification limits The range of values in a measure associated with a process that are allowable given the intended use of the product or service.

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Variables Quality characteristics that are measured in actual weight, volume, inches, centimeters, or other measure.

Chapter 11

ABC inventory classification Divides inventory into dollar volume categories that map into strategies appropriate for the category.

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Cycle counting A physical inventory-taking technique in which inventory is counted on a frequent basis rather than once or twice a year.

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Dependent demand The need for any one item is a direct result of the need for some other item, usually an item of which it is a part.

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Fixed–order quantity model (or Q-model) An inventory control model where the amount requisitioned is fixed and the actual ordering is triggered by inventory dropping to a specified level of inventory.

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Fixed–time period model (or P-model) An inventory control model that specifies inventory is ordered at the end of a predetermined time period. The interval of time between orders is fixed and the order quantity varies.

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Independent demand The demands for various items are unrelated to each other.

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Inventory position The amount on-hand plus on-order minus backordered quantities. In the case where inventory has been allocated for special purposes, the inventory position is reduced by these allocated amounts.

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Inventory The stock of any item or resource used in an organization.

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Safety stock The amount of inventory carried in addition to the expected demand.

Chapter 12

Backflush Calculating how many of each part were used in production and using these calculations to adjust actual on-hand inventory balances. This eliminates the need to actually track each part used in production.

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Customer value In the context of lean, something for which the customer is willing to pay.

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Freeze window The period of time during which the schedule is fixed and no further changes are possible.

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Group technology A philosophy in which similar parts are grouped into families, and the processes required to make the parts are arranged in a specialized workcell.

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Kaizen Japanese philosophy that focuses on continuous improvement.

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Kanban and the kanban pull system An inventory or production control system that uses a signaling device to regulate flows.

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Lean production Integrated activities designed to achieve high-volume, high-quality production using minimal inventories of raw materials, work-in-process, and finished goods.

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Level schedule A schedule that pulls material into final assembly at a constant rate.

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Preventive maintenance Periodic inspection and repair designed to keep equipment reliable.

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Quality at the source Philosophy of making factory workers personally responsible for the quality of their output. Workers are expected to make the part correctly the first time and to stop the process immediately if there is a problem.

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Uniform plant loading Smoothing the production flow to dampen schedule variation.

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Value stream mapping A graphical way to analyze where value is or is not being added as material flows through a process.

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Value stream These are the value-adding and non-value--adding activities required to design, order, and provide a product from concept to launch, order to delivery, and raw materials to customers.

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Waste reduction The optimization of value-adding activities and elimination of non-value-adding activities that are part of the value stream.

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Waste Anything that does not add value from the customer’s perspective.

Chapter 13

Average aggregate inventory value The total value of all items held in inventory for the firm, valued at cost.

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Bullwhip effect The variability in demand is magnified as we move from the customer to the producer in the supply chain.

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Cost of goods sold The annual cost for a company to produce the goods or services provided to customers.

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Functional products Staples that people buy in a wide range of retail outlets, such as grocery stores and gas stations.

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Innovative products Products such as fashionable clothes and personal computers that typically have a life cycle of just a few months.

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Inventory turnover and weeks of supply Measures of supply chain efficiency that are mathematically the inverse of one another.

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Logistics Management functions that support 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 purchasing, shipping, and distribution of the finished product.

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Outsourcing Moving some of a firm’s internal activities and decision responsibility to outside providers.

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Strategic sourcing The development and management of supplier relationships to acquire goods and services in a way that aids in achieving the immediate needs of a business.

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Total cost of ownership (TCO) Estimate of the cost of an item that includes all the costs related to the procurement and use of the item including disposing of the item after its useful life.

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Vendor managed inventory When a customer allows the supplier to manage an item or group of items.

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Weeks of supply A measure of how many weeks’ worth of inventory is in the system at a particular point in time.