Ch# Term Definition Sound File

1 assemble-to-order
manufacturing
strategy
An approach to
producing customized
products from
relatively fe
assemblies and
components after
customer orders are
received!
1 assemble-to-order
services
A strategy ith
processes that
produce a set of
standardized
services" folloed by
other processes that
assemble a pac#age of
standardized
offerings for a
specific customer$s
needs!
1 competitive
priorities
The relative
eighting of the
dimensions of
customer value that
operations management
must possess to
outperform its
competitors!
1 consistent
%uality
The fre%uency ith
hich the product or
service meets design
specifications!
1 core competencies The uni%ue resources
and processes that an
organization$s
management can
leverage hen
formulating and
implementing
strategy!
1 customer benefit
bundle
A pac#age of a core
good or service along
ith a set of
peripheral products
or services!
1 customer value The combination of
%uality" time" and
fle&ibility relative
to price for the
customer benefit
bundle of goods and
services! 'rice
translates into cost
for operations
management!
1 customization The ability to
satisfy the uni%ue
needs of each
customer by changing
product or service
designs and systems!
1 customized-
services strategy
A strategy that
provides
individualized
services!
1 development speed (easurement of ho
%uic#ly a ne product
or service is
introduced" covering
the elapsed time from
idea generation
through design to
production!
1 e&ternal
customers
)nd users or
intermediaries" such
as manufacturers"
holesalers" or
retailers" ho buy a
firm$s products and
services!
1 fast delivery
time
The elapsed time
beteen receiving a
customer$s order and
filling it" sometimes
termed lead time!
1 high-performance
design
The level of
functionality or
particular attributes
that is specified for
operations to ma#e a
product or perform a
service!
1 internal
customers
*ne or more employees
ho use outputs from
earlier" upstream
processes to perform
processes in the ne&t
office" shop" or
department!
1 ma#e-to-order
manufacturing
strategy
A strategy used by
manufacturers that
ma#e products to
customer
specifications in lo
volumes!
1 ma#e-to-stoc#
manufacturing
strategy
A manufacturing
strategy that
involves holding
items in stoc# for
immediate delivery"
thereby minimizing
customer delivery
times!
1 mass
customization
An assemble-to-order
strategy hereby a
firm$s fle&ible
processes generate
customized products
or services in high
volumes at reasonably
lo costs!
1 mass production The approach used by
firms that employ a
ma#e-to-stoc#
strategy!
1 nested process A process ithin a
process!
1 on-time delivery (easurement of the
fre%uency ith hich
delivery-time
promises are met!
1 operations
management
The systematic
design" direction"
and control of
processes that
transform inputs into
services and products
for internal" as ell
as e&ternal"
customers!
1 operations
strategy
The pattern of
decisions and
investments in
products" services"
and processes used to
implement an
organization$s
corporate strategy
and to create
customer value!
1 order %ualifier A demonstrated level
of performance of an
order inner that is
re%uired for a firm
to do business in a
particular mar#et
segment!
1 order inner A criterion customers
use to differentiate
the services or
products of one firm
from those of
another!
1 process Any activity or group
of activities that
ta#es one or more
inputs" transforms
and adds value to
them" and provides
one or more outputs
for its customers!
1 productivity The value of outputs
+goods and services,
produced divided by
the values of input
resources!
1 standardized-
services strategy
A strategy that
provides lo-variety"
homogeneous services
at high volumes!
1 time-based
competition
Defining the steps
and time needed to
deliver a product or
service" and then
critically analyzing
each step to
determine hether
time can be reduced
ithout hurting
%uality!
1 volume
fle&ibility
The ability to
%uic#ly accelerate or
decelerate the rate
of production or
service to handle
large fluctuations in
demand!
- automation A system" process" or
piece of e%uipment
that is self-acting
and self-regulating!
- batch process A process ith the
fle&ibility needed to
produce a ide
variety of services
and products in small
to moderate
%uantities! .esources
such as or#ers and
e%uipment are usually
grouped by tas#!
- capital-intensity The mi& of e%uipment
and human s#ill in a
process!
- cell A group of to or
more dissimilar
or#stations located
close to each other
that process a
limited number of
parts or models ith
similar process
re%uirements!
- continuous flo The e&treme end of
process high-volume"
standardized
production ith rigid
line flos!
- customer
interaction
The e&tent to hich
the customer is
present" is actively
engaged" and receives
personalized" face-
to-face attention
during the process!
- customer
involvement
The ays in hich
customers become part
of the process and
the e&tent of their
participation!
- economies of
scope
)conomies that
reflect the ability
to produce multiple
products more cheaply
in combination than
separately!
- fi&ed automation A manufacturing
process that produces
one type of part or
product in a fi&ed
se%uence of simple
operations!
- fle&ible +or
programmable,
automation
A manufacturing
process that can be
changed easily to
handle various
products!
- fle&ible
or#force
A or#force hose
members are capable
of doing many tas#s"
either at their on
or#stations or as
they move from one
or#station to
another!
- flo diagram A diagram that traces
the flo of
information"
customers" employees"
e%uipment" or
materials through a
process!
- focused factories The result of a
firm$s splitting
large plants that
produced all the
company$s products
into several
specialized smaller
plants!
- line process A process ith linear
movement of
materials"
information" or
customers from one
operation to the ne&t
according to a fi&ed
se%uence! /olumes are
relatively high"
alloing resources to
be organized around
standardized services
and products!
- plants ithin
plants +'0's,
Different operations
ithin a facility
ith individual
competitive
priorities"
processes" and
or#forces under the
same roof!
- process chart An organized ay of
documenting all the
activities performed
on a customer or
product by a person"
a group of people"
e%uipment" or a
or#station!
- process
improvement
The systematic study
of the activities and
flos of each process
to improve its
performance!
- process
management
The selection of the
inputs" operations"
or# flos" and
methods that
transform inputs into
outputs!
- process structure A process decision
that determines
hether resources are
organized around
products or
processes!
- pro1ect process A process
characterized by a
high degree of 1ob
customization" the
large scope of each
pro1ect" and the
release of
substantial resources
once a pro1ect is
completed!
- re-engineering The fundamental
rethin#ing and
radical redesign of
processes to improve
performance
dramatically in terms
of cost" %uality"
service" and speed!
- resource
fle&ibility
The ease ith hich
employees and
e%uipment can handle
a ide variety of
products" output
levels" duties" and
functions!
- robust process
design
A process that is
less sensitive to or
accommodates
variation in inputs
or operating
conditions hile
maintaining customer
value!
- service encounter The time during hich
a customer is in
contact ith a
service process"
starting from hen
the customer and
process first meet"
and finishing hen
the customer
completes the
process!
- simulation The act of
reproducing the
behaviour of a
process using a model
that describes each
step of the process!
2 activity The smallest unit of
or# effort consuming
both time and
resources that the
pro1ect manager can
schedule and control!
2 activity slac# The ma&imum length of
time that an activity
can be delayed
ithout delaying the
entire pro1ect!
2 activity-on-node
+A*3, netor#
An approach used to
create a netor#
diagram" in hich
nodes represent
activities and arcs
represent the
precedence
relationships among
them!
2 close out An activity that
includes riting
final reports"
completing remaining
deliverables" and
compiling the team$s
recommendations for
improving the pro1ect
process!
2 crash cost The additional cost
associated ith
reducing an activity
time!
2 critical path
method +C'(,
A netor# planning
method initially
developed as a means
of scheduling
maintenance shutdons
at chemical
processing plants!
2 critical path The se%uence of
activities beteen a
pro1ect$s start and
finish that ta#es the
longest time to
complete!
2 earliest finish
time +)F,
An activity$s
earliest start time
plus its estimated
duration"t" or )F 4
)S 5 t!
2 earliest start
time +)S,
The earliest finish
time of the preceding
activity!
2 free slac# The amount of time
that an activity$s
earliest finish time
can be delayed
ithout delaying the
earliest start time
of any activity
immediately folloing
it!
2 6antt chart A pro1ect schedule"
usually created by
the pro1ect manager
using computer
softare" that
superimposes pro1ect
activities" ith
their precedence
relationships and
estimated duration
times" on a time
line!
2 latest finish
time +7F,
The latest start time
of the activity that
immediately follos!
2 latest start time
+7S,
The latest finish
time of an activity
minus its estimated
duration" t" or 7S 4
7F 8 t!
2 minimum-cost
schedule
A schedule determined
by crashing
activities along the
critical path +or
paths, such that the
costs of crashing do
not e&ceed the
savings from penalty
and indirect costs!
3on-critical
activities also may
be e&tended!
2 most li#ely time The probable time
re%uired to perform
an activity!
2 netor# diagram A diagram that
depicts the
relationships beteen
activities" hich
consists of nodes
+circles, and arcs
+arros,!
2 optimistic time The shortest time in
hich an activity can
be completed" if all
goes e&ceptionally
ell!
2 path The se%uence of
activities beteen a
pro1ect$s start and
finish!
2 pessimistic time The longest estimated
time re%uired to
perform an activity!
2 precedence
relationship
A relationship that
determines a se%uence
for underta#ing
activities9 it
specifies that one
activity cannot start
until a preceding
activity has been
completed!
2 program
evaluation and
A netor# planning
method created for
revie techni%ue
+').T,
the :!S! 3avy$s
'olaris missile
pro1ect!
2 pro1ect An interrelated set
of activities ith a
definite starting and
ending point" hich
results in a uni%ue
outcome for a
specific allocation
of resources!
2 ris#-management
plan
A plan that
identifies the #ey
ris#s to a pro1ect$s
success and
prescribes ays to
circumvent them!
2 scope creep (any small
incremental changes
to pro1ect
ob1ectives" hich in
total significantly
e&pand the scope!
2 total slac# Slac# shared by other
activities9
calculated as 7S - )S
or 7F - )F!
2 or# brea#don
structure +0;S,
A statement of all
or# that has to be
completed!
< base case The act of doing
nothing and losing
orders from any
demand that e&ceeds
current capacity!
< bloc#ed operation An operation that
cannot pass or#
along to the ne&t
operation donstream
and must stop!
< bottlenec# An operation that has
the loest effective
capacity of any
operation in the
process and" thus"
limits the output
rate of the process!
Alternatively" a
bottlenec# is any
operation ith
capacity utilization
greater than 1==
percent!
< capacity The ma&imum rate of
output for a process!
< capacity cushion The amount of reserve
capacity a firm
maintains to handle
variability in the
process or demand! >t
measures the amount
by hich the average
utilization falls
belo 1== percent!
< capacity gap Any difference
+positive or
negative, beteen
pro1ected demand and
current capacity!
< capacity
re%uirement
The process capacity
needed for some
future time period to
meet the demand of
customers" given the
firm$s desired
capacity cushion!
< capacity
utilization
The degree to hich
capacity is currently
being used to
generate products or
services!
< cash flo The difference
beteen the flos of
funds into and out of
an organization over
a period of time"
including revenues"
costs" and changes in
assets and
liabilities!
< decision tree A schematic model of
alternatives
available to the
decision ma#er" along
ith their possible
conse%uences!
< diseconomies of
scale
0hen the average cost
per unit increases as
the facility$s size
increases!
< economies of
scale
A concept that states
that the average unit
cost of a good or
service can be
reduced by increasing
its output rate!
< effective
capacity
The ma&imum output
that a process or
firm can reasonably
sustain under normal
conditions!
< pea# capacity The ma&imum output
that a process or
facility can achieve
under ideal
conditions!
< planning horizon The set of
consecutive time
periods considered
for planning
purposes!
< predictable
variation
Changes determined by
specific" usually
larger-scale causes"
often driven by
natural cycles such
as time of day! (any
management decisions"
such as preventive
maintenance" also
create predictable
variation!
< random variation :ncertainty that
results from chance
related to small
changes or
differences in
e%uipment operations"
people$s behaviour"
or environmental
conditions!
< setup time The time re%uired to
change an operation
from ma#ing one type
of product or service
to ma#ing another!
< setup time The time re%uired to
change or read1ust a
process or an
operation from one
service or product to
another!
< starved operation An operation that
runs out of or# to
process!
< theory of
constraints +T*C,
An approach to
management that
focuses on hatever
impedes progress
toard the goal of
ma&imizing the flo
of total value-added
funds or sales less
discounts and
variable costs! Also
referred to as the
drum-buffer-rope
method!
< throughput time Total time for an
item to move through
a process from the
first operation to
the last" including
operations time"
movement time beteen
operations" and ait
time!
< pre-emptive
discipline
A rule that allos a
customer of higher
priority to interrupt
the service of
another customer!
< priority rule A rule that selects
the ne&t customer to
be served at the
service facility!
< %ueuing
configuration
The number of lines
and the arrangement
of the facilities!
< customer
population
An input that
generates potential
customer demand!
< interarrival
times
The time beteen
customer arrivals!
< *perations time The time re%uired to
complete all
activities or tas#s
at a or#station!
Also called service
time or processing
time!
< phase A single step in the
process!
< aiting line or
%ueue
*ne or more customers
or items aiting for
service! (aterials"
e%uipment" or
products can also
form a %ueue as they
ait for further
operations!
? &-chart A chart used to
monitor changes in
the sample mean!
? acceptance
sampling
The application of
statistical
techni%ues to
determine hether a
%uantity of material
should be accepted or
re1ected based on the
inspection or test of
a sample!
? appraisal costs Costs incurred in
assessing the level
of %uality attained
by the operating
system!
? assignable causes
of variation
Any variation-causing
factors that can be
identified and
eliminated!
? attributes 'roduct or service
characteristics that
can be %uic#ly
counted for
acceptable %uality!
? bar chart A series of bars
representing the
fre%uency of
occurrence of data
characteristics
measured on a yes-or-
no basis!
? benchmar#ing A continuous"
systematic procedure
that measures a
firm$s products"
services" and
processes against
those of industry
leaders!
? ;lac# ;elt An employee ho has
reached the highest
level of training in
a Si& Sigma program
and spends all of his
or her time teaching
and leading teams
involved in Si& Sigma
pro1ects!
? c-chart A chart used for
controlling the
number of defects
hen more than one
defect can be present
in a product or
service!
? cause-and-effect
diagram
A diagram that
relates a #ey %uality
problem to its
potential causes!
? chec#list A form used to record
the fre%uency of
occurrence of certain
product or service
characteristics
related to %uality!
? common causes of
variation
The purely random
sources of variation
inherent in a process
and generally
considered
unavoidable!
? continuous
improvement
The philosophy of
continually see#ing
ays to improve
operations" based on
a @apanese concept
called kaizen!
? control chart A time-ordered
diagram used to
determine hether
observed variations
are abnormal!
? employee
empoerment
An approach to
teamor# that moves
responsibility for
decisions farther
don the
organizational
chart--to the level
of the employee
actually doing the
1ob!
? e&ternal failure
costs
Costs that arise hen
a defect is
discovered after the
customer has received
the product or
service!
? graphs .epresentations of
data in a variety of
pictorial forms" such
as line graphs and
pie charts!
? 6reen ;elt An employee ho has
achieved the first
level of training in
a Si& Sigma program
and spends part of
his or her time
teaching and helping
teams ith their
pro1ects!
? histogram A summarization of
data measured on a
continuous scale"
shoing the fre%uency
distribution of some
%uality
characteristic +in
statistical terms"
the central tendency
and dispersion of the
data,!
? internal failure
costs
Costs resulting from
defects that are
discovered during the
production of a
product or service!
? >S* 1<=== A family of standards
governing
environmental
management of
products and
processes" including
material use"
recycling" and
disposal of aste!
? >S* A=== A family of standards
governing the
development and
documentation of a
%uality program!
? (aster ;lac# ;elt Full-time teachers
and mentors to
several ;lac# ;elts!
? nominal value A target for design
specifications!
? p-chart A chart used for
controlling the
proportion of
defective products or
services generated by
the process!
? 'areto chart A bar chart on hich
factors are plotted
in decreasing order
of fre%uency along
the horizontal a&is!
? plan-do-chec#-act
cycle
A cycle" also called
the Deming 0heel"
used by firms
actively engaged in
continuous
improvement to train
their or# teams in
problem solving!
? prevention costs Costs associated ith
preventing defects
before they happen!
? process
capability
The ability of the
process to meet the
design specifications
for a product or
service!
? process
capability inde&"
C
pk
An inde& that
measures the
potential for a
process to generate
defective outputs
relative to either
upper or loer
specifications!
? process
capability ratio"
C
p
The tolerance idth
divided by si&
standard deviations
+process
variability,!
? %uality The degree of
e&cellence based on
meeting or e&ceeding
the e&pectations of
the customer"
including both high-
performance design
and conformance!
? %uality circles Another name for
problem-solving teams
B-small groups of
supervisors and
employees ho meet to
identify" analyze"
and solve production
and %uality problems!
? %uality
engineering
An approach that
involves combining
engineering and
statistical methods
to reduce costs and
improve %uality by
optimizing product
design and process
characteristics!
? %uality function
deployment +CFD,
A means of
translating customer
re%uirements into the
appropriate technical
re%uirements for each
stage of product or
service development
and production!
? %uality loss
function
The rationale that a
product or service
that barely conforms
to the specifications
is more li#e a
defective product or
service than a
perfect one!
? .-chart A chart used to
monitor changes in
process variability!
? reliablity The probability that
a product ill be
functional hen used!
? sample size A %uantity of
randomly selected
observations of
process outputs!
? sampling plan A plan that specifies
a sample size" the
time beteen
successive samples"
and decision rules
that determine hen
action should be
ta#en!
? scatter diagram A plot of to
variables shoing
hether they are
related!
? self-managing
team
A small group of
employees ho or#
together to produce a
ma1or portion" or
sometimes all" of a
product or service!
? Si& Sigma A comprehensive and
fle&ible system for
achieving"
sustaining" and
ma&imizing business
success by minimizing
defects and
variability in
processes!
? special-purpose
teams
6roups that address
issues of paramount
concern to
management" labour"
or both!
? statistical
process control
+S'C,
The application of
statistical
techni%ues to
determine hether the
output of a process
conforms to the
product or service
design!
? teams Small groups of
people ho have a
common purpose" set
their on performance
goals and approaches"
and hold themselves
accountable for
success!
? tolerance An alloance above or
belo the nominal
value!
? total %uality
management +TC(,
A philosophy that
stresses three
principlesD customer
satisfaction"
employee involvement"
and continuous
improvements in
%uality!
? type > error An error that occurs
hen the employee
concludes that the
process is out of
control based on a
sample result that
falls outside the
control limits" hen
in fact it as due to
pure randomness!
? type >> error An error that occurs
hen the employee
concludes that the
process is in control
and only randomness
is present" hen
actually the process
is out of statistical
control!
? variables 'roduct or service
characteristics" such
as eight" length"
volume" or time" that
can be measured!
? arranty A ritten guarantee
that the producer
ill replace or
repair defective
parts or perform the
service to the
customer$s
satisfaction!
E A;C analysis The method of
dividing items into
three classes
according to their
dollar usage so that
managers can focus on
items that have the
highest dollar value!
E anticipation
inventory
>nventory used to
absorb uneven" but
predictable" rates of
demand or supply!
E bac#order A customer order that
cannot be filled hen
promised or demanded
but is filled later!
E base-stoc# system An inventory control
system that issues a
replenishment order"
Q" each time a
ithdraal is made"
for the same amount
as the ithdraal!
E continuous revie
+Q, system or
reorder point
+.*', system
A system designed to
trac# the remaining
inventory of an item
every time a
ithdraal is made to
determine hether it
is time to replenish!
E cycle counting An inventory control
method hereby
storeroom personnel
physically count a
small percentage of
the total number of
items each day"
correcting errors
that they find!
E cycle inventory The portion of total
inventory that varies
directly ith lot
size!
E cycle-service
level
The desired
probability of not
running out of stoc#
in any one ordering
cycle" hich begins
at the time an order
is placed and ends
hen it arrives in
stoc#!
E decoupling
inventory
>nventory held to
accommodate different
rates or patterns of
production beteen
to operations!
E economic order
%uantity +)*C,
The lot size that
minimizes total
annual inventory
holding and ordering
costs!
E independent
demand items
>tems for hich
demand is influenced
by mar#et conditions
and is not related to
the inventory
decisions for any
other item held in
stoc#!
E inventory A stoc# of items"
including materials"
orders" information"
and people" that flo
through or are used
in a process to
satisfy customer
demand!
E inventory holding
cost
The variable cost of
#eeping items on
hand" including
interest" storage and
handling" ta&es"
insurance" and
shrin#age!
E inventory
position +>',
The net %uantity of
an item available to
satisfy future
demand!
E item fill rate 'ercentage of demand
for an item that is
met from on-hand
inventory" relative
to the total demand
for that item!
E lot sizing The determination of
ho fre%uently and in
hat %uantity to
order inventory!
E optional
replenishment
system
A system used to
revie the inventory
position at fi&ed
time intervals and"
if the position has
dropped to +or belo,
a predetermined
level" to place a
variable-sized order
to cover e&pected
needs!
E ordering cost The cost of preparing
a purchase order for
a supplier or a
production order for
the shop!
E periodic revie
+P, system
A system in hich an
item$s inventory
position is revieed
periodically rather
than continuously!
E perpetual
inventory system
A system of inventory
control in hich the
inventory records are
alays current!
E pipeline
inventory
>nventory moving from
point to point in the
materials flo
system!
E protection
interval
The time interval for
hich inventory must
be planned hen each
ne order is placed!
E %uantity discount A drop in the price
per unit hen the
order is sufficiently
large!
E reorder point +R, The predetermined
minimum level that an
inventory position
must reach before a
fi&ed %uantity Q of
the item is ordered!
E repeatability The degree to hich
the same or# can be
done again!
E safety stoc#
inventory
>nventory held to
protect against
uncertainties and
random variation in
demand" lead time"
processing time"
%uality" and supply!
E scheduled
receipts +S.,
*rders that have been
placed but not yet
received! Also termed
open orders!
E setup cost The cost involved in
changing over an
operation to produce
a different
component" item" or
service!
E single-bin system A system of inventory
control in hich a
ma&imum level is
mar#ed on the storage
shelf or bin on a
measuring rod" and
the inventory is
brought up to the
mar# periodically!
E special An item made to
order9 if purchased"
it is bought to
order!
E standard An item made to stoc#
and normally
available hen
needed!
E stoc#out An item that is
typically stoc#ed is
not available to
satisfy a demand the
moment it occurs"
resulting in the loss
of the sale!
E time beteen
orders +T;*,
The average elapsed
time beteen
receiving +or
placing,
replenishment orders!
E to-bin system A visual system
version of the Q
system" in hich an
item$s inventory is
stored at to
different locations!
E visual system A system that allos
employees to place
orders hen inventory
visibly reaches a
certain mar#er!
F balance delay The amount by hich
efficiency falls
short of 1== percent!
F bloc# plan A plan that allocates
space and indicates
placement of each
department!
F centre of gravity A good starting point
in evaluating
locations is ith the
load-distance model9
the centre of
gravity$s x-
coordinate is found
by multiplying each
point$s x-coordinate
by its load +l,"
summing these
products" and then
dividing by the sum
of the loads!
F closeness matri& A matri& that gives
the number of trips
+or some other
measure of materials
movement, beteen
each pair of
departments per day!
F critical mass A situation hereby
several competing
firms clustered in
one location attract
more customers than
the total number ho
ould shop at the
same stores at
scattered locations!
F cycle time The ma&imum time
alloed for or# on a
unit at each station!
F economic activity
centre
Anything that
consumes space9 for
e&ample" a person or
a group of people" a
teller indo" a
machine" a
or#station" a
department" an aisle"
or a storage room!
F )uclidean
distance
The straight-line
distance" or shortest
possible path"
beteen to points!
F facility location The process of
determining a
geographic site for a
firm$s operations!
F fi&ed-position
layout
An arrangement in
hich the product is
fi&ed in place9
or#ers" along ith
their tools and
e%uipment" come to
the product to or#
on it!
F fle&ible-flo
layout
A layout that groups
or#stations or
departments according
to function!
F geographical
information
system +6>S,
A system of computer
softare" hardare"
and data that the
firm$s personnel can
use to manipulate"
analyze" and present
information relevant
to a location
decision!
F globalization ;usinesses$
deployment of
facilities and
operations around the
orld!
F group technology
+6T,
An option for
achieving product
layouts ith lo-
volume processes9
creates cells not
limited to 1ust one
or#er and has a
uni%ue ay of
selecting or# to be
done by the cell!
F heuristics Solution guidelines"
or rules of thumb"
that find feasible--
but not necessarily
the bestB-solutions
to problems!
F hybrid layout A layout in hich
some portions of the
facility are arranged
in a fle&ible-flo
layout and others are
arranged in a line-
flo layout!
F immediate
predecessors
0or# elements that
must be done before
the ne&t element can
begin!
F layout
fle&ibility
The property of a
facility to be
desirable after
significant changes
occur" or to be
easily and
ine&pensively adapted
in response to
changes!
F layout planning 'lanning that
involves decisions
about the physical
arrangement of
economic activity
centres ithin a
facility!
F line balancing The assignment of
or# to stations in a
line so as to achieve
the desired output
rate ith the
smallest number of
or#stations!
F line-flo layout A layout in hich
or#stations or
departments are
arranged in a linear
path!
F load-distance
method
A mathematical model
used to evaluate
locations on the
basis of pro&imity
factors!
F mi&ed-model line A product line that
produces several
items belonging to
the same family!
F one-or#er"
multiple-machines
+*0((, cell
A one-person cell in
hich a or#er
operates several
different machines
simultaneously to
achieve a line flo!
F optimization A procedure used to
determine the GbestH
solution9 generally
utilizes simplified
and less realistic
vies of a problem!
F pacing The movement of
product from one
station to the ne&t
after the cycle time
has elapsed!
F precedence
diagram
A diagram that allos
you to visualize
immediate
predecessors better9
or# elements are
denoted by circles"
ith the time
re%uired to perform
the or# shon belo
each circle!
F %uality of life A factor that
includes a diverse
mi& of lifestyle
concerns such as good
schools" climate"
housing" recreational
facilities" and
cultural events!
F rectilinear
distance
The distance beteen
to points ith a
series of A=I turns"
as along city bloc#s!
F simulation A modelling techni%ue
that reproduces the
behaviour of a
system!
F theoretical
minimum +T(,
A benchmar# or goal
for the smallest
number of stations
possible" here the
total time re%uired
to assemble each unit
+the sum of all or#-
element standard
times, is divided by
the cycle time!
F or# elements The smallest units of
or# that can be
performed
independently!
J aggregation The act of clustering
several similar
products or services
so that companies can
obtain more accurate
forecasts!
J causal method A %uantitative method
that uses historical
data on related
variables" such as
promotional
campaigns" economic
conditions" and
competitors$ actions"
to predict demand!
J collaborative
planning"
forecasting" and
replenishment
+C'F.,
An approach to
forecasting that
allos a manufacturer
and its customers to
or# together to ma#e
and refine a forecast
over the >nternet!
J combination
forecasts
Forecasts produced by
averaging independent
forecasts based on
different methods or
different data" or
both!
J cumulative sum of
forecast errors
+CF),
A measurement of the
total forecast error
that assesses the
bias in a forecast!
J Delphi method A process of gaining
consensus from a
group of e&perts
hile maintaining
their anonymity!
J dependent
variable
The measure or
%uantity that is
being forecast!
J e&ecutive opinion A forecasting method
in hich the
opinions" e&perience"
and technical
#noledge of one or
more managers are
summarized to arrive
at a single forecast!
J e&ponential
smoothing method
A eighted moving
average method that
calculates the
average of a time
series by giving
recent demands more
eight than earlier
demands!
J forecast A prediction of
future events used
for planning
purposes!
J focus forecasting A method of
forecasting that
selects the best
forecast from a set
of forecasts
generated by simple
techni%ues!
J forecast error The difference found
by subtracting the
forecast from actual
demand for a given
period!
J holdout set Actual demands from
the more recent time
periods in the time
series" hich are set
aside to test
different models
developed from the
earlier time periods!
J independent
variables
/ariables assumed to
be related to the
dependent variable
and therefore predict
or GcauseH the
results observed in
the past!
J 1udgment method A %ualitative method
that translates the
opinions of managers"
e&pert opinions"
consumer surveys" and
sales-force estimates
into %uantitative
estimates!
J linear regression A causal method in
hich one variable
+the dependent
variable, is related
to one or more
independent variables
by a linear e%uation!
J mar#et research A systematic approach
to gathering mar#et
information to
determine customer
interest in a product
or service" including
surveys of potential
customers!
J mean absolute
deviation +(AD,
A measurement of the
dispersion of
forecast errors!
J mean absolute
percent error
+(A'),
A measurement that
relates the forecast
error to the level of
demand!
J mean s%uared
error +(S),
A measurement of the
dispersion of
forecast errors!
J multiplicative
seasonal method
A method hereby
seasonal factors are
multiplied by an
estimate of average
demand to arrive at a
seasonal forecast!
J naive forecast A time-series method
hereby the forecast
for the ne&t period
e%uals the demand for
the current period!
J sales force
estimates
The forecasts that
are compiled from
estimates of future
demands made
periodically by
members of a
company$s sales
force!
J simple moving
average method
A time-series method
used to estimate the
average of a demand
time series by
averaging the demand
for the n most recent
time periods!
J standard
deviation
A measurement of the
dispersion of
forecast errors!
J technological
forecasting
An application of
e&ecutive opinion to
account for the
difficulties of
#eeping abreast of
the latest advances
in technology!
J time series The repeated
observations of
demand for a product
or service in their
order of occurrence!
J time-series
analysis
A statistical
approach that relies
heavily on historical
demand data to
pro1ect the future
size of demand and
recognizes trends and
seasonal patterns!
J trac#ing signal A measure that
indicates hether a
method of forecasting
is accurately
predicting actual
changes in demand!
J trend-ad1usted
e&ponential
smoothing method
The method for
incorporating a trend
in an e&ponentially
smoothed forecast!
J eighted moving
average method
A time-series method
in hich each
historical demand in
the average can have
its on eight9 the
sum of the eights is
e%ual to 1!
A auction An e&tension of the
e&change in hich
firms place
competitive bids to
buy something!
A average aggregate
inventory value
The total value of
all items held in
inventory by a firm!
A bac#ard
integration
A firm$s movement
upstream toard the
sources of ra
materials and parts!
A bullhip effect The phenomenon in
supply chains hereby
ordering patterns
sho increasing
variance as you move
upstream in the
chain!
A catalogue hubs 'osting of a
centralized
electronic catalogue
online that enables
employees to place
orders for pre-
approved items!
A channel assembly The process of using
members of the
distribution channel
to put together
components as if they
ere assembly
stations in the
factory!
A competitive
orientation
A supplier relation
that vies
negotiations beteen
buyer and seller as a
zero-sum gameD
hatever one side
loses" the other side
gains9 short-term
advantages are prized
over long-term
commitments!
A continuous
replenishment
A /(> method in hich
the supplier monitors
inventory levels at
the customer and
replenishes the stoc#
as needed to avoid
shortages!
A cooperative
orientation
A supplier relation
in hich the buyer
and seller are
partners" each
helping the other to
achieve mutually
beneficial
ob1ectives!
A cross-doc#ing The pac#ing of
products on incoming
shipments so that
they can be easily
sorted at
intermediate
arehouses and
immediately
transferred for
outgoing shipment
based on their final
destinations!
A distribution The management of the
flo of finished
goods from
manufacturers to
customers and from
arehouses to
retailers" involving
the storage and
transportation of
products!
A early supplier
involvement
A program that
includes suppliers in
the design phase of a
product or service!
A electronic data
interchange +)D>,
A technology that
enables the
transmission of
routine business
documents having a
standard format from
computer to computer
over telephone or
direct leased lines!
A e&change An electronic
mar#etplace here
buying firms and
selling firms come
together to do
business!
A finished goods
+F6,
>tems that have
completed the
manufacturing or
service process!
A forard
integration
A firm$s movement
donstream by
ac%uiring channels of
distribution"
finished goods
manufacturing" or
supplemental service!
A forard placement 7ocating stoc# closer
to customers at a
arehouse"
distribution centre"
holesaler" or
retailer!
A green purchasing :sing environmental
criteria in
purchasing decisions
to favour suppliers
+and inputs, ith
strong environmental
management systems"
performance" or
certification!
A inventory A stoc# of items"
including materials"
orders" information"
and people" that flo
through or are used
in a process to
satisfy customer
demand!
A inventory pooling A reduction in
inventory and safety
stoc# because of the
merging of variable
demands from
customers!
A inventory
turnover
A measure of the rate
at hich inventory is
consumed" obtained by
dividing annual sales
at cost by the
average aggregate
inventory value
maintained during the
year!
A ma#e-or-buy
decisions
Decisions that either
involve more
integration +a make
decision, or more
outsourcing +a buy
decision,!
A materials
management
Supply chain
decisions about the
purchase of materials
and services"
including placement
and size of
inventories!
A offshoring A supply chain
strategy that
involves moving
processes to another
country!
A order-fulfillment
process
The activities
re%uired to deliver a
product or service to
a customer!
A order-placement
process
The activities
re%uired to register
the need for a
product or service
and to confirm the
acceptance of the
order!
A outsourcing Allotting payment to
suppliers and
distributors to
provide needed
services and
materials and to
perform those
processes that the
organization does not
perform itself!
A postponement A tactic used by
assemble-to-order and
mass-customization
firms that refers to
delaying the
customizing of a
product or service
until the last
possible moment!
A presourcing A level of supplier
involvement in hich
suppliers are
selected early in a
product$s concept
development stage and
are given
significant" if not
total" responsibility
for the design of
certain components or
systems!
A production The management of the
transformation
process devoted to
producing the good or
service!
A purchasing The management of the
buying and
ac%uisition process"
hich includes
sourcing inputs"
deciding hich
suppliers to use" and
negotiating
contracts!
A radio fre%uency
identification
+.F>D,
A method for
identifying items
through the use of
radio signals from a
tag attached to an
item!
A ra materials
+.(,
(aterials and items
used as inputs for
the production of
goods and services!
A sole sourcing The aarding of a
contract for an item
or service to only
one supplier!
A supply chain
management
The synchronization
of a firm$s processes
and those of its
suppliers to match
the flo of
materials" services"
and information ith
customer demand!
A value analysis A systematic effort
to reduce the cost or
improve the
performance of
products or services"
either purchased or
produced!
A vendor-managed
inventories +/(>,
An e&treme
application of the
forard placement
tactic that involves
locating the
inventories at the
customer!
A ee#s of supply An inventory measure
obtained by dividing
the average aggregate
inventory value by
sales per ee# at
cost!
A or#-in-process
+0>',
>tems partay through
a process that are
needed for a final
product or service!
1= five S +?S, A methodology
consisting of five
or#place practices--
sort" set in order"
shine" standardize"
and sustain--that are
conducive to visual
controls and lean
production!
1= @>T systems The organization of
resources"
information flos"
and decision rules
that enable an
organization to
realize the benefits
of a @>T philosophy!
1= 1ust-in-time
+@>T, philosophy
The belief that aste
can be eliminated by
cutting unnecessary
inventory and
removing non-value-
added activities in
operations!
1= #anban A ord meaning GcardH
or Gvisible recordH
in @apanese9 refers
to cards used to
control the flo of
production through a
factory!
1= lean systems *perations systems
that ma&imize the
value added by each
of a firm$s
activities by paring
unnecessary
operations and
delays!
1= lot A %uantity of items
that are processed
together!
1= mi&ed-model
assembly
A type of assembly
that produces a mi&
of models in smaller
lots!
1= po#a-yo#e (ista#e-proofing
methods aimed at
designing fail-safe
systems that minimize
human and e%uipment
error!
1= pull method A method in hich
customer demand
activates production
of the item!
1= push method A method in hich the
production of the
item begins in
advance of customer
needs!
1= setup The group of
activities needed to
change or read1ust a
process beteen
different lots!
1= single-digit
setup
The goal of having a
setup time shorter
than 1= minutes!
1= value stream
mapping +/S(,
A %ualitative lean
tool for eliminating
aste that involves a
current state
draing" a future
state draing" and an
implementation plan!
11 concurrent
engineering
A concept that brings
product engineers"
process engineers"
mar#eters" buyers"
information
specialists" %uality
specialists" and
suppliers together to
or# 1ointly to
design a service or
product and the
re%uired processes
that ill meet
customer
e&pectations!
11 disruptive
technology
A technology that has
performance
attributes that are
not valued yet by
e&isting customers"
or that performs much
orse on some
performance
attributes but ill
%uic#ly surpass
e&isting technologies
on such attributes
hen it is refined!
11 enterprise
process
A companyide process
that cuts across
functional areas"
business units"
geographic regions"
and product lines!
11 enterprise
resource planning
+).',
A large" integrated
information system
that supports many
enterprise processes
and data storage
needs!
11 information
technology
Technology used to
ac%uire" process" and
transmit information
ith hich to ma#e
more effective
decisions!
11 interoperability The ability of one
piece of softare to
interact ith others!
11 process
technology
The methods by hich
an organization does
things!
11 support netor# A netor# made up of
the physical"
informational" and
organizational
relationships that
ma#e a technology
complete and allo it
to function as
intended!
11 technology The #no-ho"
physical e%uipment
and components" and
procedures used to
produce products and
services!
1- aggregate plan A statement of a
company$s production
rates" or#force
levels" and inventory
holdings based on
estimates of customer
re%uirements and
capacity limitations!
1- bac#log An accumulation of
customer orders that
have been promised
for delivery at some
future date!
1- bac#order An order that the
customer e&pected to
be filled immediately
but reluctantly as#s
that it be delivered
as soon as possible!
1- capacity
alternatives
Actions that can be
ta#en to cope ith
demand re%uirements!
1- chase strategy A strategy that
matches demand during
the planning horizon
by varying either the
or#force level or
the output rate!
1- complementary
products
'roducts or services
having similar
resource re%uirements
but different demand
cycles!
1- demand
alternatives
Actions that attempt
to modify or shift
customer demand and"
conse%uently"
resource
re%uirements!
1- fi&ed schedule A schedule that calls
for each employee to
or# the same days
and hours each ee#!
1- level strategy A strategy that
maintains a constant
or#force level or
constant output rate
during the planning
horizon!
1- mi&ed strategy A strategy that
considers and
implements a fuller
range of capacity
alternatives and goes
beyond a GpureH chase
or level strategy!
1- operations
scheduling
Developing a
timetable that
assigns 1obs to
machines or or#ers
to 1obs!
1- overtime The time that
employees or# that
is longer than the
regular or#day or
or#ee#" for hich
they receive premium
pay for the e&tra
hours!
1- planning horizon The length of time
covered by an
aggregate plan!
1- production plan A manufacturing
firm$s aggregate
plan" hich generally
focuses on production
rates and inventory
holdings!
1- revenue
management
The ad1ustment of
price to ma&imize the
revenue obtained for
available capacity
that is lost if not
used!
1- rotating schedule A schedule that
rotates employees
through a series of
or#days or hours!
1- schedule A timetable that
allocates and assigns
resources such as
e%uipment and people
to accomplish
specific tas#s!
1- staffing plan A service firm$s
aggregate plan" hich
centres on staffing
and other labour-
related factors!
1- stoc#out An order that is lost
and causes the
customer to go
elsehere!
1- undertime The situation that
occurs hen employees
do not or#
productively for the
regular-time or#day
or or#ee#!
1- or#force
scheduling
Developing a
timetable that
determines hen
employees or#!
12 action notice A computer-generated
memo used by
inventory planners to
ma#e decisions about
releasing ne orders
and ad1usting the due
dates of scheduled
receipts!
12 bill of materials
+;*(,
A record of all the
components of an
item" the parent-
component
relationships" and
usage %uantities
derived from
engineering and
process designs!
12 bill of resources
+;*.,
A record of all the
re%uired materials"
e%uipment time"
staff" and other
resources needed to
provide a service"
the parent-component
relationships" and
the usage %uantities!
12 capacity
re%uirements
planning +C.',
A techni%ue used for
pro1ecting time-
phased capacity
re%uirements for
or#stations9 its
purpose is to match
the material
re%uirements plan
ith the plant$s
production capacity!
12 component An item that may go
through one or more
operations to be
transformed into or
become part of one or
more parents!
12 dependent demand The %uantity re%uired
is a function of the
demand for other
items produced or
held in inventory!
12 end item The final product
sold to a customer!
12 finite capacity
scheduling +FCS,
An algorithm designed
to schedule a group
of orders
appropriately across
an entire shop!
12 fi&ed order
%uantity +F*C,
A rule that maintains
the same order
%uantity each time an
order is issued!
12 gross
re%uirements
The total demand
derived from all
parent production
plans!
12 intermediate item An item that has at
least one parent and
at least one
component!
12 inventory record A record that shos
an item$s lot-size
policy" lead time"
and various time-
phased data!
12 lot-for-lot +7<7, A rule under hich
the lot size ordered
covers the gross
re%uirements of a
single ee#!
12 manufacturing
resource planning
+(.' >>,
A system that ties
the basic (.' system
to the company$s
financial system!
12 master production
schedule +('S,
A part of the
material re%uirements
plan that details ho
many end items ill
be produced ithin
specified periods of
time!
12 material
re%uirements
planning +(.',
A computerized
information system
developed
specifically to aid
in managing dependent
demand inventory and
scheduling
replenishment orders!
12 (.' e&plosion A process that
converts the
re%uirements of
various final
products into a
material re%uirements
plan that specifies
the replenishment
schedules of all the
subassemblies"
components" and ra
materials needed by
the final products!
12 parent Any item manufactured
from one or more
components!
12 part commonality The degree to hich a
component has more
than one immediate
parent!
12 periodic order
%uantity +'*C,
A rule that allos a
different order
%uantity for each
order issued but
tends to issue the
order at
predetermined time
intervals!
12 planned order
release
An indication of hen
an order for a
specified %uantity of
an item is to be
issued!
12 planned receipts *rders that are not
yet released to the
shop or the supplier!
12 pro1ected on-hand An estimate of the
inventory amount of inventory
available each ee#
after gross
re%uirements have
been satisfied!
12 purchased item An item that has one
or more parents but
no components because
it comes from a
supplier!
12 subassembly An intermediate item
that is assembled +as
opposed to being
transformed by other
means, from more than
one component!
12 usage %uantity The number of units
of a component needed
to ma#e one unit of
its immediate parent!
1< brea#-even
analysis
The use of the brea#-
even point9 can be
used to compare
production methods by
finding the volume at
hich to different
processes have e%ual
costs!
1< brea#-even point The volume at hich
total revenues e%ual
total costs!
1< decision theory A general approach to
decision ma#ing hen
the outcomes
associated ith
alternatives are
often in doubt!
1< decision tree A schematic model of
alternatives
available to the
decision ma#er" along
ith their possible
conse%uences!
1< fi&ed cost The portion of the
total cost that
remains constant
regardless of changes
in levels of output!
1< payoff table A table that shos
the amount for each
alternative if each
possible event
occurs!
1< preference matri& A table that allos
the manager to rate
an alternative
according to several
performance criteria!
1< sensitivity
analysis
A techni%ue for
systematically
changing parameters
in a model to
determine the effects
of such changes!
1< value of perfect
information
The amount by hich
the e&pected payoff
ill improve if the
manager #nos hich
event ill occur!
1< variable cost The portion of the
total cost that
varies directly ith
volume of output!
1? annuity A series of payments
on a fi&ed amount for
a specified number of
years!
1? capital cost
alloance +CCA,
The only acceptable
depreciation method
for Canadian ta&
purposes" in hich
assets are divided
into classes ith
different percentages
for depreciation that
roughly reflect their
useful lives!
1? cash flo The cash that ill
flo into and out of
the organization
because of the
pro1ect" including
revenues" costs" and
changes in assets and
liabilities!
1? compounding
interest
The process by hich
interest on an
investment
accumulates" and then
earns interest itself
for the remainder of
the investment
period!
1? discount rate The interest rate
used in discounting
the future value to
its present value!
1? discounting The process of
finding the present
value of an
investment" hen the
future value and the
interest rate are
#non!
1? future value of
an investment
The value of an
investment at the end
of the period over
hich interest is
compounded!
1? hurdle rate The interest rate
that is the loest
desired return on an
investment9 the
hurdle over hich the
investment must pass!
1? internal rate of
return +>..,
The discount rate
that ma#es the 3'/ of
a pro1ect zero!
1? modified
accelerated cost
recovery system
+(AC.S,
The only acceptable
depreciation method
for ta& purposes that
shortens the lives of
investments" giving
firms larger early
ta& deductions!
1? net present value
+3'/, method
The method that
evaluates an
investment by
calculating the
present values of all
after-ta& total cash
flos and then
subtracting the
initial investment
amount for their
total!
1? paybac# method A method for
evaluating pro1ects
that determines ho
much time ill elapse
before the total of
after-ta& flos ill
e%ual" or pay bac#"
the initial
investment!
1? present value of
an investment
The amount that must
be invested no to
accumulate to a
certain amount in the
future at a specific
interest rate!
1? salvage value The cash flo from
the sale or disposal
of plant and
e%uipment at the end
of a pro1ect$s life!
1? straight-line
method
The simplest method
of calculating annual
depreciation9 found
by subtracting the
estimated salvage
value from the amount
of investment
re%uired at the
beginning of the
pro1ect" and then
dividing by the
asset$s e&pected
economic life!
1? time value of
money
The concept that a
dollar in hand can be
invested to earn a
return" so that more
than one dollar ill
be available in the
future!
1E alloance time The time added to the
normal time to ad1ust
for certain factors!
1E elemental
standard data
A type of data used
by analysts to derive
standards for various
1obs hen a high
degree of similarity
e&ists in the or#
elements of certain
1obs!
1E methods time
measurement +(T(,
A commonly used
predetermined data
system!
1E normal time +3T, A measurement found
by multiplying the
select time" the
fre%uency of the or#
element per cycle"
and the rating factor
+.F,!
1E normal time for
the cycle +3TC,
A measurement found
by summing the normal
time for each
element!
1E performance
rating factor
+.F,
An assessment that
describes ho much
above or belo
average the or#er$s
performance on each
or# element is!
1E select time The average observed
time based only on
representative times!
1E standard time
+ST,
A measurement found
by incorporating the
normal time added for
alloances!
1E time study The method most often
used for setting time
standards for a 1ob9
it consists of four
stepsD selecting or#
elements" timing the
elements" determining
sample size" and
setting the standard!
1E or# measurement The process of
creating labour
standards on the
basis of the 1udgment
of s#illed observers!
1E or# sampling The process of
estimating the
proportions of the
time spent by people
and machines on
activities" based on
a large number of
observations!
1E or# standard The time re%uired for
a trained or#er to
perform a tas#
folloing a
prescribed method
ith normal effort
and s#ill!
1F learning curve A line that displays
the relationship
beteen the total
direct labour per
unit and the
cumulative %uality of
a product or service
produced!
1F organizational
learning
The process of
gaining e&perience
ith products and
processes" achieving
greater efficiency
through automation
and other capital
investments" and
ma#ing other
improvements in
administrative
methods or personnel!
1J automated guided
vehicle +A6/,
A small" driverless"
battery-driven truc#
that moves materials
beteen operations"
folloing
instructions from
either an on-board or
a central computer!
1J automated storage
and retrieval
system +ASK.S,
A computer-controlled
method of storing and
retrieving materials
and tools using
rac#s" bins" and
stac#ers!
1J computer-aided
design +CAD,
An electronic system
for designing ne
parts or products or
altering e&isting
ones" replacing
drafting
traditionally done by
hand!
1J computer-aided
manufacturing
+CA(,
The component of C>(
that deals directly
ith manufacturing
operations!
1J computer-
integrated
manufacturing
+C>(,
The total integration
of product design and
engineering" process
planning" and
manufacturing by
means of comple&
computer systems!
1J computerized
numerically
controlled +C3C,
machines
Stand-alone pieces of
e%uipment" each
controlled by its on
microcomputer!
1J fle&ible
manufacturing
cell +F(C,
A scaled-don version
of F(S that consists
of one or a very
small group of 3C
machines that may or
may not be lin#ed to
a materials handling
mechanism!
1J fle&ible
manufacturing
system +F(S,
A configuration of
computer-controlled"
semi-independent
or#stations here
materials are
automatically handled
and machine-loaded!
1J industrial robots /ersatile" computer-
controlled machines
programmed to perform
various tas#s!
1J materials
handling
The processes of
moving" pac#aging"
and storing a
product!
1J numerically
controlled +3C,
machines
7arge machine tools
programmed to produce
small-to-medium-sized
batches of intricate
parts!
1A acceptable
%uality level
+AC7,
The %uality level
desired by the
consumer!
1A acceptance
sampling
An inspection
procedure used to
determine hether to
accept or re1ect a
specific %uantity of
materials!
1A average outgoing
%uality +A*C,
The e&pressed
proportion of defects
that the plan ill
allo to pass!
1A average outgoing
%uality limit
+A*C7,
The ma&imum value of
the average outgoing
%uality over all
possible values of
the proportion
defective!
1A consumer$s ris# The probability of
accepting a lot ith
7T'D %uality +a type
>> error,!
1A double-sampling
plan
A plan in hich
management specifies
to sample sizes and
to acceptance
numbers9 if the
%uality of the lot is
very good or very
bad" the consumer can
ma#e a decision to
accept or re1ect the
lot on the basis of
the first sample"
hich is smaller than
in the single-
sampling plan!
1A lot tolerance
proportion
defective +7T'D,
The orst level of
%uality that the
consumer can
tolerate!
1A operating
characteristic
+*C, curve
A graph that
describes ho ell a
sampling plan
discriminates beteen
good and bad lots!
1A producer$s ris# The ris# that the
sampling plan ill
fail to verify an
acceptable lot$s
%uality and" thus"
re1ect it +a type >
error,!
1A rectified
inspection
The assumption that
all defective items
in the lot ill be
replaced ith good
items if the lot is
re1ected and that any
defective items in
the sample ill be
replaced if the lot
is accepted!
1A se%uential-
sampling plan
A plan in hich the
consumer randomly
selects items from
the lot and inspects
them one by one!
1A single-sampling
plan
A decision to accept
or re1ect a lot from
the results of one
random sample from
the lot!
-= decision
variables
/ariables that are
controlled by the
decision ma#er and
ill change from one
run to the ne&t as
different events are
simulated!
-= (onte Carlo
simulation
A simulation process
that uses random
numbers to generate
simulation events!
-= random number A number that has the
same probability of
being selected as any
other number!
-= simulation The act of
reproducing the
behaviour of a system
using a model that
describes the
processes of the
system!
-= steady state The state that occurs
hen the simulation
is repeated over
enough time that the
average results for
performance measures
remain constant!
-= time compression The feature of
simulation models
that allos them to
obtain operating
characteristic
estimates in much
less time than is
re%uired to gather
the same operating
data from a real
system!
-= uncontrollable
variables
.andom events that
the decision ma#er
cannot control!
-1 economic
production lot
size +)7S,
The optimal lot size
in a situation in
hich replenishment
is not instantaneous!
-1 %uantity
discounts
'rice incentives to
purchase large
%uantities!
-- binding
constraint
A constraint that
helps form the
optimal corner point9
it limits the ability
to improve the
ob1ective function!
-- certainty :sed to describe that
a fact is #non
ithout doubt!
-- coefficient
sensitivity
The measurement of
ho much the
ob1ective function
coefficient of a
decision variable
must improve
+increase for
ma&imization or
decrease for
minimization, before
the optimal solution
changes and the
decision variable
becomes some positive
number!
-- constraints The limitations that
restrict the
permissible choices
for the decision
variables!
-- corner point A point that lies at
the intersection of
to +or possibly
more, constraint
lines on the boundary
of the feasible
region!
-- decision
variables
The variables that
represent choices the
decision ma#er can
control!
-- degeneracy A condition that
occurs hen the
number of nonzero
variables in the
optimal solution is
less than the number
of constraints!
-- feasible region A region that
represents all
permissible
combinations of the
decision variables in
a linear programming
model!
-- graphic method of
linear
programming
A type of graphic
analysis involving
the folloing five
stepsD plotting the
constraints9
identifying the
feasible region9
plotting an ob1ective
function line9
finding a visual
solution9 and finding
the algebraic
solution!
-- linear
programming
A techni%ue that is
useful for allocating
scarce resources
among competing
demands!
-- linearity A characteristic of
linear programming
models that implies
proportionality and
additivity--there can
be no products or
poers of decision
variables!
-- nonnegativity An assumption that
the decision
variables must be
either positive or
zero!
-- ob1ective
function
An e&pression in
linear programming
models that states
mathematically hat
is being ma&imized
+e!g!" profit or
present value, or
minimized +e!g!" cost
or scrap,!
-- parameter A value that the
decision ma#er cannot
control and that does
not change hen the
solution is
implemented!
-- product-mi&
problem
A one-period type of
aggregate planning
problem" the solution
of hich yields
optimal output
%uantities +or
product mi&, of a
group of products or
services" sub1ect to
resource capacity and
mar#et demand
constraints!
-- range of
feasibility
The interval over
hich the right-hand-
side parameter can
vary hile its shado
price remains valid!
-- range of
optimality
The loer and upper
limit over hich the
optimal values of the
decision variables
remain unchanged!
-- shado price The marginal
improvement in Z
+increase for
ma&imization and
decrease for
minimization, caused
by rela&ing the
constraint by one
unit!
-- simple& method An iterative
algebraic procedure
for solving linear
programming problems!
-- slac# The amount by hich
the left-hand side
falls short of the
right-hand side!
-- surplus The amount by hich
the left-hand side
e&ceeds the right-
hand side!
-2 advanced planning
and scheduling
+A'S, systems
Systems that see# to
optimize resources
across the supply
chain and align daily
operations ith
strategic goals!
-2 critical ratio
+C.,
A ratio calculated by
dividing the time
remaining until a
1ob$s due date by the
total shop time
remaining for the
1ob" including the
setup" processing"
move" and e&pected
aiting times of all
remaining operations"
including the
operation being
scheduled!
-2 dispatching
procedures
A method of
generating schedules
in 1ob shops that
allos the schedule
for a or#station to
evolve over a period
of time!
-2 earliest due date
+)DD,
A priority se%uencing
rule that specifies
that the 1ob that has
the earliest due date
is the ne&t 1ob to be
processed!
-2 @ohnson$s rule A procedure that
minimizes ma#espan in
scheduling a group of
1obs on to
or#stations!
-2 labour-limited
environment
An environment in
hich the resource
constraint is the
amount of labour
available" not the
number of machines or
or#stations!
-2 ma#espan The total amount of
time re%uired to
complete a group of
1obs!
-2 multiple-
dimension rules
.ules that apply to
more than one aspect
of a 1ob!
-2 past due The amount of time by
hich a 1ob missed
its due date or the
percentage of total
1obs processed over
some period of time
that missed their due
dates! Same meaning
as Ltardiness!L
-2 priority
se%uencing rules
The rules that
specify the 1ob
processing se%uence
hen several 1obs are
aiting in line at a
or#station!
-2 shortest
processing time
+S'T,
A priority se%uencing
rule that states that
the 1ob re%uiring the
shortest processing
time is the ne&t 1ob
to be processed!
-2 single-dimension
rules
.ules that base the
priority of a 1ob on
a single aspect of
the 1ob" such as
arrival time at the
or#station" the due
date" or the
processing time!
-2 slac# per
remaining
operations +SK.*,
A priority se%uencing
rule that determines
priority by dividing
the slac# by the
number of operations
that remain"
including the one
being scheduled!
-2 throughput time Total time for a 1ob
or item to move
through a process
from the first
operation to the
last" including
operations time"
moving time beteen
operations" aiting
time +including
resources such as
people" information"
machines" or setup
time," and other
delays! Same meaning
as L1ob flo time!L
-2 total inventory The sum of scheduled
receipts and all on-
hand inventories!
-2 or#-in-process
+0>', inventory
@obs or items part-
ay through a
process!
-< available-to-
promise +AT',
inventory
The %uantity of end
items that mar#eting
can promise to
deliver on specified
dates!
-< demand time fence The number of periods
+beginning ith the
current period,
during hich fe" if
any" changes can be
made to the ('S!
-< planning time A time fence that
fence typically covers a
longer period than
the demand time
fence!