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315 Cards in this Set

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abnormal demand
Demand in any period that is outside the limits established by management policy. This demand may come from a new customer or from existing customers whose own demand is increasing or decreasing. Care must be taken in evaluating the nature of the demand: is it a volume change, is it a change in product mix, or is it related to the timing of the order?
accessory
A choice or feature added to the good or service offered to the customer for customizing the end product. An accessory enhances the capabilities of the product but is not necessary for the basic function of the product. In many companies, an accessory means that the choice does not have to be specified before shipment but can be added at a later date. In other companies, this choice must be made before shipment.
actual demand
Actual demand is composed of customer orders (and often allocations of items, ingredients, or raw materials to production or distribution). Actual demand nets against or "consumes" the forecast, depending upon the rules chosen over a time horizon. For example, actual demand will totally replace forecast inside the sold-out customer order backlog horizon (often called the demand time fence), but will net against the forecast outside this horizon based on the chosen forecast consumption rule.
adaptive smoothing
A form of exponential smoothing in which the smoothing constant is automatically adjusted as a function of forecast error measurement.
advanced planning and scheduling (APS)
Techniques that deal with analysis and planning of logistics and manufacturing over the short, intermediate, and long-term time periods. APS describes any computer program that uses advanced mathematical algorithms or logic to perform optimization or simulation on finite capacity scheduling, sourcing, capital planning, resource planning, forecasting, demand management, and others. These techniques simultaneously consider a range of constraints and business rules to provide real-time planning and scheduling, decision support, available-to-promise, and capable-to-promise capabilities. APS often generates and evaluates multiple scenarios. Management then selects one scenario to use as the "official plan." The five main components of APS systems are demand planning, production planning, production scheduling, distribution planning, and transportation planning.
advanced planning system (APS)
Syn: advanced planning and scheduling

Techniques that deal with analysis and planning of logistics and manufacturing over the short, intermediate, and long-term periods. APS describes any computer program that uses advanced mathematical algorithms or logic to perform optimization or simulation on finite capacity scheduling, sourcing, capital planning, resource planning, forecasting, demand management, and others. These techniques simultaneously consider a range of constraints and business rules to provide real-time planning and scheduling, decision support, available-to-promise, and capable-to-promise capabilities. APS often generates and evaluates multiple scenarios. management then selects one scenario to use as the "official plan." The five main components of APS systems are demand planning, production planning, production scheduling, distribution planning, and transportation planning.
after-sale service
Syn: field service

The functions of installing and maintaining a product for a customer after the sale or during the lease. Field service may also include training and implementation assistance.
aggregate forecast
An estimate of sales, often time phased, for a grouping of products or product families produced by a facility or firm. Stated in terms of units, dollars, or both, the aggregate forecast is used for sales and production planning (or for sales and operations planning) purposes.
aggregate plan
A plan that includes budgeted levels of finished goods, inventory, production backlogs, and changes in the workforce to support the production strategy. Aggregated information (e.g., product line, family) rather than product information is used, hence the name aggregate plan.
aggregate planning
A process to develop plans to support the organization's business plan. Aggregate planning usually icludes the development, analysis, and maintenance of plans for total sales, total production, targeted invetory, and targeted customer backlog for families of products. The production plan is the result of the aggregate planning process. Two approaches to aggregate planning exist - production planning and sales and operations planning.
algorithm
A prescribed set of well-defined rules or processes for solving a problem in a finite number of steps, e.g., the full statement of the arithmetic procedure for calculating the reorder point.
Allocated item
In an MRP system, an item for which a picking order has been released to the stockroom but not yet sent from the stockroom.
allocation
1) The classification of quantities of items that have been assigned to specific orders but have not yet been released from the stockroom to production. It is an "uncashed" stockroom requisition. 2) A process used to distribute material in short supply.

Syn: assignment
alpha factor
Syn: smoothing constant

In exponential smoothing, the weighting factor that is applied to the most recent demand, observation, or error. In this case, the error is defined as the difference between actual demand and the forecast for the most recent period. The weighting factor is represented by the symbol α. Theoretically, the range of α is 0.0 to 1.
arithmetic mean
Syn: mean

The arithmetic average of a group of values
assemble-to-order
A production environment where a good or service can be assembled after receipt of a customer's order. The key components (bulk, semifinished, intermediate, subassembly, fabricated, purchased, packing, and so on) used in teh assembly or finishing process are planned and usually stocked in anticipation of a customer order. Receipt of an order initiates assembly of the customized product. This strategy is useful where a large number of end products (based on the selection of options and accessories) can be assembled from common components.

Syn: finish-to-order
assembly
A group of subassemblies and/or parts that are put together and that constitute a major subdivision for the final product. An assembly may be an end item or a component of a higher level assembly.
assembly lead time
The time that normally elapses between the issuance of a work order to the assembly floor and work completion.
assembly order
A manufacturing order to an assembly department authorizing it to put components together into an assembly.
assembly parts list
As used in the manufacturing process, a list of all parts (and subassemblies) that make up a particular assembly.
ATP
Abberviation for available-to-promise
attachment
An accessory that has to be physically attached to the product.
available-to-promise (ATP)
The uncommitted portion of a company's inventory and planned production maintained in the master schedule to support customer-order promising. The ATP quantity is the uncommitted inventory balance in the first period and is normally calculated for each period in which an MPS receipt is scheduled. In the first period, ATP includes on-hand inventory less customer orders that are due and overdue. Three methods of calculation are used: discrete ATP, cumulative ATP with lookahead, and cumulative ATP without lookahead.
average forecast error
1) The arithmetic mean of the forecast errors. 2) The exponentially smoothed forecast error.
backlog
All the customer orders received but not yet shipped. Sometimes referre to as open orders or the order board.

Syn: order backlog
backorder
An unfilled customer order or commitment. A backorder is an immediate (or past due) demand against an item whose inventory is insufficient to satisfy the demand.
base index
Syn: base series

A standard succession of values of demand-over-time data used in forecasting seasonal items. This series of factors is usually based on the relative level of demand during the corresponding period of previous years. The average value of the base series over a seasonal cycle will be 1.0. A figure higher than 1.0 indicates that the demand for that period is more than the average; a figure less than 1.0 indicates less than the average. For forecasting purposes, the base series is superimposed upon the average demand and trend in demand for the item in question.
base series
A standard succession of values of demand-over-time data used in forecasting seasonal items. This series of factors is usually based on the relative level of demand during the corresponding period of previous years. The average value of the base series over a seasonal cycle will be 1.0. A figure higher than 1.0 indicates that the demand for that period is more than the average; a figure less than 1.0 indicates less than the average. For forecasting purposes, the base series is superimposed upon the average demand and trend in demand for the item in question.

Syn: base index
base stock system
A method of inventory control that includes as special cases most of the systems in practice. In this system, when an order is received for any item, it is used as a picking ticket, and duplicate copies, called replenishment orders, are sent back to all stages of production to initiate replenishment of stocks. Positive or negative orders, called base stock orders, are also used from time to time to adjust the level of the base stock of each item. In actual practice, replenishment orders are usually accumulated when they are issued and are released at regular intervals.
bias
A consistent deviation from the mean in one direction (high or low). A normal property of a good forecast is that it is not biased.
bill of capacity
Syn: bill of resources

A listing of the required capacity and key resources needed to manufacture one unit of a selected item or family. Rouch-cut capacity planning uses these bills to calculate the approximate capacity requirements of the master production schedule. Resource planning may use a form of this bill.
bill of distribution
Syn: distribution network structure

The planned channels of inventory disbursement from one or more sources to field warehouses and ultimately to the customer. There may be one or more levels in the disbursement system.
bill of labor
A structured listing of all labor requirements for the fabrication, assembly, and testing of a parent item.
bill of lading (uniform)
A carrier's contract and receipt for goods the carrier agrees to transport from one place to another and to deliver to a designated person. In case of loss, damage, or delay, the bill of lading is the basis for filing freight claims.
bill of resources
A listing of the required capacity and key resources needed to manufacture one unit of a selected item or family. Rouch-cut capacity planning uses these bills to calculate the approximate capacity requirements of the master production schedule. Resource planning may use a form of this bill.

Syn: bill of capacity
blowthrough
Syn: phantom bill of material

A bill-of-material coding and structuring technique used primarily for transient (nonstocked) subassemblies. For the transient item, lead time is set to zero and the order quantity to lot-for-lot. A phantom bill of material represents an item that is physically built, but rarely stocked, before being used in the next step or level of manufacturing. This permits MRP logic to drive requirements straight through the phantom item to its components, but the MRP system usually retains its ability to net against any occasional inventories of the item. This technique also facilitates the use of common bills of material for enginerring and manufacturing

Syn: transient bill of material.
bottom up replanning
In MRP, the process of using pegging data to solve material availability or other problems. This process is accomplished by the planner (not the computer system), who evaluates the effects of possible solutions. Potential solutions include compressing lead time, cutting order quantity, substituting material, and changing the master schedule.
Box-Jenkins model
A forecasting method based on regression and moving averaging models. The model is based not on regression of independent variables, but on past observations of the item to be forecast at varying time lags and on previous error values from forecasting.
branch warehouse
Syn: distribution center.

A warehouse with finished goods and/or service items. A company, for example, might have a manufacturing facility in Philadelphia and distribution centers in Atlanta, Dallas, Los Angeles, San Francisco, and Chicago. Distribution center is synonymous with term branch warehouse, although the former has become more commonly used recently. When a warehouse serves a group of satellite warehouse, it is usually called a regional distribution center.

Syn: field warehouse
branch warehouse demand
Syn: warehouse demand.

The need for an item to replenish stock at a branch warehouse.
break bulk
Dividing truckloads of homogeneous items into smaller, more appropriate quantities for use.
bucketed system
An MRP, DRP, or other time-phased system in which all time-phased data are accumulated into time periods or buckets. If the period of accumulation is one week, then the system is said to have weekly buckets.
bucketless system
An MRP, DRP, or other time-phased system in which all time-phased data are processed, stored, and usually displayed using dated records rather than defined time periods or buckets.
budget
A plan that includes an estimate of future costs and revenues related to expected activities. The budget servs as a pattern for and a control over future operations.
business cycle
A period of time marked by long-term fluctuations in the total level of economic activity. Measures of business cycle activity include the rate of unemployment and the level of gross domestic product.
business plan
1) A statement of long-range strategy and revenue, cost, and profit objectives usually accompanied by budgets, a projected balance sheet, and a cash flow (source and application of funds) statement. A business plan is usually stated in terms of dollars and grouped by product family. The business plan is then translated into synchronized tactical functional plans through the production planning process (or sales and operations planning process). Although frequently stated in different terms (dollars versus units), these tactical plans should agree with each other and with the business plan.

2) A document consisting of the business details (organization, strategy, and financing tactics) prepared by an entrepreneur to plan for a new business.
business unit
A division or segment of an organization generally treated as a separate profit-and-loss center.
by-product
A material of value produced as a residual of or incidental to the production process. The ratio of by-product to primary product is usually predictable. By-products may be recycled, sold as is, or used for other purposes.
capacity management
The function of establishing, measuring, monitoring, and adjusting limits or levels of capacity in order to execute all manufacturing schedules; i.e., the production plan, master production schedule, material requirements plan, and dispatch list. Capacity management is executed at four levels: resource requirements planning, rough-cut capacity planning, capacity requirement planning, and input/output control.
capacity planning using overall factors (CPOF)
A rough-cut capacity planning technique. The master schedule items and quantities are multiplied by the total time required to build each item to provide the total number of hours to produce the schedule. Historical work center percentages are then applied to the total number of hours to provide an estimate of the hours per work center to support the master schedule. This technique eliminates the need for engineered time standards

Syn: overall factors
capacity simulation
The ability to do rough-cut capacity planning using a simulated master production schedule or material plan rather than live data.
cash cow
A highly profitable product in a low-growth market
casual forecast
A type of forecasting that uses cause-and-effect associations to predict and explain relationships between the independent and dependent variables. An example of a casual model is an econometric model used to explain the demand for housing starts based on consumer base, interest rates, personal incomes, and land availability.
centralized inventory control
Inventory decision making (for all SKUs) exercised from one office or department for an entire company.
channels of distribution
Any series of firms or individuals that participates in the flow of goods and services from the raw material supplier and producer to the final user or consumer.
chase production method
A production planning method that maintains a stable inventory level while varying production to meet demand. Companies may combine chase and level production schedule methods.

Syn: chase strategy
chase strategy
Syn: chase production method

A production planning method that maintains a stable inventory level while varying production to meet demand. Companies may combine chase and level production schedule methods.
closed-loop feedback system
A planning and control system that monitors system progress toward the plan and has an internal control and replanning capability
closed-loop MRP
A system built around material requirements planning that includes the additional planning processes of production planning (sales and operations planning), master production scheduling, and capacity requirements planning. Once this planning phase is complete and the plans have been accepted as realistic and attainable, the execution processes come into play. These processes include the manufacturing control processes of input-output (capacity) measurement, detailed scheduling and dispatching, as well as anticipated delay reports from both the plant and suppliers, supplier scheduling, and so on. The term closed loop implies not only that each of these processes is included in the overall system, but also that feedback is provided by the execution processes so that the planning can be kept valid at all times.
co-product
A product that is usually manufactured together or sequentially because of product or process similarities.
collaborative planning
Syn: collaborative planning, forecasting, and replenishment (CPFR).

1) A collaboration process whereby supply chain trading partners can jointly plan key supply chain activities from production and delivery of raw materials to production and delivery of final products to end customers. Collaboration encompasses business planning, sales forecasting, and all operations required to replenish raw materials and finished goods.

2) A process philosophy for facilitating collaborative communications. CPFR is considered a standard, endorsed by the Voluntary Interindustry Commerce Standards.
common parts bill
Syn: common parts bill of material

A type of planning bill that groups common components for a product or family of products into one bill of material, structured to a pseudoparent item number.
consigned stocks
Inventories, generally of finished goods, that are in the possession of customers, dealers, agents, and so on, but remain the property of the manufacturer by agreement with those in possession.

Syn: consignment inventory
constraint
Any element or factor that prevents a system from achieving a higher level of performance with respect to its goal. Contraints can be physical, such as a machine center or lack of material, but they can also be managerial, such as a apolicy or procedure.
consuming the forecast
The process of reducing the forecast by customer orders or other types of actual demands as they are received. The adjustments yield the value of the remaining forecast for each period.

Syn: forecast consumption
continuous flow (production)
Syn: continuous production

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

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

Syn: continuous process
correlation
The relationship between two sets of data such that when one changes, the other is likely to make a corresponding change. If the changes are in the same direction, there is a positive correlation. When changes tend to occur in opposite directions, there is negative correlation. When there is little correspondence or random changes, there is no correlation.
CPFR
Abbreviatioin for collaborative planning, forecasting, and replenishment.
CPOF
Abbreviation for capacity planning using overall factors.
cumulative available-to-promise
A calculation based on the available-to-promise (ATP) figure in the master schedule. Two methods of computing the cumulative available-to-promise are used, with and without lookahead calculation. the cumulative with lookahead ATP equals the ATP from the previous period plus the MPS of the period minus the backlog of the period minus the sum of the differences between the backlogs and MPSs of all future periods until, but not to include, the period where point production exceeds the backlogs. The cumulative without lookahead procedure equals the ATP in the previous period plus the MPS, minus the backlog in the period being considered.
cumulative lead time
The longest planned length of time to accomplish the activity in question. For any item planned though MRP, it is found by reviewing the lead time for each bill of material path below the item; whichever path adds up to the greatest number defines cumulative lead time.

Syn: aggregate lead time, combined lead time, composite lead time, critical path lead time, stacked lead time.
curve fitting
An approach to forecasting based on a straight line, ploynomial, or other curve that describes some historical time series data.
customer
1) A person or organization who receives a good, service, or information.

2) In project management, every project has a customer who may be internal or external to the organization and who is responsible for the final project acceptance.
customer order
An order from a customer for a particular product or a number of products. It is often referred to an an actual demand to distinguish it from a forecasted demand.
customer order promising
Syn: order promising

The process of making a delivery commitment, i.e., answering the question, When can you ship? For make-to-order products, this usually involves a check of uncommitted material and availability of capacity, often as represented by the master schedule available-to-promise.

Syn: order dating
customer order servicing system
An automated system for order entry, where orders are keyed into a local terminal and a bill-of-material translator converts the catalog ordering numbers into required manufacturing part numbers and due dates for the MRP system. Advanced systems contain customer information, sales history, forecasting information, and product option compatibility checks to facilitate order processing, "cleaning up" orders before placing a demand on the manufacturing system.

Syn: configuration system, sales order configuration
customer partner
A customer organization with which a company has formed a customer-supplier partnership.
customer partnership
Syn: customer-supplier partnership.

A long-term relationship between a buyer and a supplier characterized by teamwork and mutual confidence. The supplier is considered an extension of the buyer's organization. The partnership is based on several commitments. The buyer provides log-term contracts and uses fewer suppliers. The supplier implements quality assurance processes so that incoming inspection can be minimized. The supplier also helps the buyer reduce costs and improve product and process designs.
customer satisfaction
The results of delivering a good or service that meets customer requirements.
customer service
1) The ability of a company to address the needs, inquiries, and requests from customers.

2) A measure of the delivery of a product to the customer at the time the customer specified.
customer service ratio
1) A measure of delivery performance of finished goods, usually expressed as a percentage. In a make-to-stock company, this percentage usually represents the number of items or dollars (on one or more customer orders) that were shipped on schedule for a specific time period, compared with the total that were supposed to be shipped in that time period.

Syn: customer service level, fill rate, order-fill ratio, percent of fill.

Ant: stockout percentage

2) In a make-to-order company, it is usually some comparison of the number of jobs or dollars shipped in a given time period (e.g., a week) compared with the number of jobs or dollars that were supposed to be shipped in that time period.
customer-supplier partnership
A long-term relationship between a buyer and a supplier characterized by teamwork and mutual confidence. The supplier is considered an extension of the buyer's organization. The partnership is based on several commitments. The buyer provides long-term contracts and uses fewer suppliers. The supplier implements quality assurance processes so that incoming inspection can be minimized. The supplier also helps the buyer reduce costs and improve product and process designs.

Syn: customer partnership
decomposition
A method of forecasting where time series data are separated into up to three components: trend, seasonal, and cyclical; where trend includes the general horizontal upward or downward movement over time; seasonal includes a recurring demand pattern such as day of the week, weekly, monthly, or quarterly; and cyclical includes any repeating, nonseasonal pattern. A fourth component is random, that is, data with no pattern. The new forecast is made by projecting the patterns individually determined and then combining them.
delivery cycle
Syn: delivery lead time

The time from the receipt of a customer order to the delivery of the product
delivery lead time
The time from the receipt of a customer order to the delivery of the product

Syn: delivery cycle
delivery policy
The company's goal for the time to ship the product after the receipt of a customer's order. The policy is sometimes stated as "our quoted delivery time."
delivery schedule
The required or agreed time or rate of delivery of goods or services purchased for a future period.
Delphi method
A qualitative forecasting technique where the opinions of experts are combined in a series of iterations. The results of each iteration are used to develop the next, so that convergence of the experts' opinions is obtained.
demand
A need for a particular product or component. The demand could come from any number of sources, e.g., customer order or forecast, an interplant requirement, or a request from a branch warehouse for a service part or for manufacturing another product. At the finished goods level, demand data are usually different from sales data because demand does not necessarily result in sales (i.e., if there is no stock, there will be no sale). There are generally up to four components of demand: cyclical component, random component, seasonal component, and trend component.
demand filter
A standard that is set to monitor sales data for individual items in forecasting models. It is usually set to be tripped when the demand for a period differs from the forecast by more than some number of mean absolute deviations.
demand forecasting
Forecasting the demand for a particular good, component, or service.
demand lead time
The amount of time potential customers are willing to wait for the delivery of a good or a service.

Syn: customer tolerance time.
demand management
1) The function of recognizing all demands for goods and services to support the market place. It involves prioritizing demand when supply is lacking. Proper demand management facilitates the planning and use of resources for profitable business results.

2) In marketing, the process of planning, executing, controlling, and monitoring the design, pricing, promotion, and distribution of products and services to bring about transactions that meet organizational and individual needs.

Syn: marketing management
demand time fence
(DTF)
1) That point in time inside of which the forecast is no longer included in total demand and projected abailable inventory calculations; inside this point, only customer orders are considered. Beyond this point, total demand is a combination of actual orders and forecasts, depending on the forecast consumption technique chosen.

2) In some contexts, the demand time fence may correspond to that point in the future inside which changes to the master schedule must be approved by an authority higher than the master scheduler. Note, however, that customer orders may still be promised inside the demand time fence without higher authority approval if there are quantities available-to-promise (ATP). Beyond the demand time fence, the master scheduler may change the MPS within the limits of established resheduling rules, without the approval of higher authority.
demand uncertainty
The uncertainty or variability in demand as measured by the standard deviation, mean absolute deviation (MAD), or variance of forecast errors.
demand-based order quantity
An order system using forecast or derived demand for one or more future periods (rather than a fixed quantity as in economic order quantity).
demographics
The characteristics of a specific population, such as a set of potential customers.
demonstrated capacity
Proven capacity calculated from actual performance data, usually expressed as the average number of items produced multiplied by the standard hours per item.
dependent demand
Demand that is directly related to or derived from the bill of material structure for other items or end products. Such demands are therefore calculated and need not and should not be forecast. A given inventory item may have both dependent and independent demand at any given time. For example, a part may simultaneously be the component of an assembly and sold as a service part.
design-to-order
Syn: engineer-to-order

Products whose customer specifications require unique engineering design, significant customization, or new purchased materials. Each customer order results in a unique set of part numbers, bills of material, and routings.
deviation
The difference, usually the absolute difference, between a number and the mean of a set of numbers, or between a forecast value and the actual value.
discontinuous demand
A demand pattern that is characterized by large demands interrupted by periods with no demand, as opposed to a continuous or steady (e.g., daily) demand.

Syn: lumpy demand
distribution
1) The activities associated with the movement of material, usually finished goods or service parts, from the manufacturer to the customer. These activities encompass the functions of transportation, warehousing, inventory control, material handling, order administration, site and location analysis, industrial packaging, data processing, and the communications network necessary for effective management. It includes all activities related to physical distribution, as well as the return of goods to the manufacturer. In many cases, this movement is made through one or more levels of field warehouses.

Syn: physical distribution.

2) The systematic division of a whole into discrete parts having distinctive characteristics
distribution center
A warehouse with finished goods and/or service items. Acompany, for example, might have a manufacturing facility in Philadelphia and distribution centers in Atlanta, Dallas, Los Angeles, San Francisco, and Chicago. Distribution center is synonymous with the term branch warehouse, although the former has become more commonly used recently. When a warehouse serves a group of satellite warehouses, it is usually called a regional distribution center.

Syn: branch warehouse, field warehouse
distribution channel
The distribution route, from raw materials through consumption, along which products travel.

Syn: marketing channel
distribution network structure
The planned channels of inventory disbursement from one or more sources to field warehouses and ultimately to the customer. There may be one or more levels in the disbursement system.

Syn: bill of distribution
distribution of forecast errors
Tabulation of the forecast errors according to the frequency of occurrence of each error value. The errors in forecasting are, in many cases, normally distributed even when the observed data do not come from a normal distribution.
distribution planning
The planning activities associated with transportation, warehousing, inventory levels, materials handling, order administration, site and location planning, industrial packaging, data processing, and communications networks to support distribution.
distribution requirements planning
(DRP)
1) The function of determining the need to replenish inventory at branch warehouses. A time-phased order point approach is used where the planned orders at the branch warehouse level are "exploded" via MRP logic to become gross requirements on the supplying source. In the case of multilevel distribution networks, this explosion process can continue down through the various levels of regional warehouses (master warehouse, factory warehouse, etc.) and become input to the master production schedule. Demand on the supplying sources is recognized as dependent, and standard MRP logic applies.

2) More generally, replenishment inventory calculations, which may be based on other planning approaches such as period order quantities or "replace exactly what was used," rather being limited to the time-phased order point approach.
distribution resource planning
(DRP II)
The extension of distribution requirements planning into the planning of the key resources contained in a distribution system: warehouse space, workforce, money, trucks, freight cars, etc.
double order point system
A distribution inventory management system that has two order points. The smallest equals the original order point, which covers demand during replenishment lead time. The second order point is the sum of the first order point plus normal usage during manufacturing lead time. It enables warehouses to forewarn manufacturing of future replenishment orders.
double smoothing
Syn: second-order smoothing

A method of exponential smoothing for trend situations that employs two previously computed averages, the singly and doubly smoothed values, to extrapolate into the future.

Syn: double smoothing
DRP
Abbreviation for distribution requirements planning.
DRP II
Abbreviation for distribution resource planning.
DTF
Abbreviation for demand time fence.
econometric model
A set of equations intended to be used simultaneously to capture the way in which dependent and independent variables are interrelated.
efficiency
A measurement (usually expressed as a percentage) of the actual output to the standard output expected. Efficiency measures how well something is performing relative to existing standards; in contrast, productivity measures output relative to a specific input, e.g., tons/labor hour. Efficiency is the ratio of (1) actual units produced to the standard rate of production expected in a time period or (2) standard hours produced to actual hours worked (taking longer means less efficiency) or (3) actual dollar volume of output to a standard dollar volume in a time period. Illustrations of these calculations follow. (1) There is a standard of 100 pieces per hour and 780 units are produced in one eight-hour shift; the efficiency is 780/800 converted to a percentage, or 97.5%. (2) The work is measured in hours and took 8.21 hours to produce 8 standard hours; the efficiency is 8/8.21 converted to a percentage or 97.5 percent. (3) The work is measured in dollars and produces $780 with a standard of $800; the efficiency is $780/$800 converted to a percentage, or 97.5 percent.
engineer-to-order
products whose customer specifications require unique engineering design, significant customization, or new purchased materials. each customer order results in a unique set of part numbers, bills of material, and routings.

Syn: design-to-order
exponential smoothing forecast
A type of weighted moving average forecasting technique in which past observations are geometically discounted according to their age. the heaviest weight is assigned to the most recent data. the smoothing is termed exponential because data points are weighted in accordance with an exponential function of their age. The technique makes use of a smoothing constant to apply to the difference between the most recent forecast and the critical sales data, thus avoiding the necessity of carrying historical sales data. The approach can be used for data that exhibit no trend or seasonal patterns. higher order exponential smoothing models can be used for data with either (or both) trend and seasonality.
extrapolation
Estimation of the future value of some data series based on past observations. Statisical forecasting is a common example.

Syn: projection
extrinsic forecast
A forecast based on a correlated leading indicator, such as estimating furniture sales based on housing starts. Extrinsic forecasts tend to be more useful for large aggregations, such as total company sales, than for individual product sales.

Ant: intrinsic forecast method
family
A group of end items whose similarity of design and manufacture facilitates their being planned in aggregate, whose sales performance is monitored together, and, occasionally, whose cost is aggregated at this level.
FAS
1) Abbreviation for final assembly schedule. 2) Abbreviation for free alongside ship.
feature
A distinctive characteristic of a good or service. The characteristic is provided by an option, accessory, or attachment. For example, in ordering a new car, the customer must specify an engine type and size (option), but need not necessarily select an air conditioner (attachment).
fill rate
Syn: customer service reatio

1) A measure of delivery performance of finished goods, usually expressed as a percentage. In a make-to-stock company, this percentage usually represents the number of items or dollars (on one or more customer orders) that were shipped on schedule for a specific time period, compared with the total that were supposed to be shipped in that time period.
Syn: customer service level, order-fill ratio, percent of fill
Ant: stockout percentage
2) In a make-to-order company, it is usually some comparison of the number of jobs or dollars shipped in a given time period (e.g., a week) compared with the number of jobs or dollars that were supposed to be shipped in that time period.
final assembly schedule (FAS)
A schedule of end items to finish the product for specific customers' orders in a make-to-order or assemble-to-order environment. It is also referred to as the finishing schedule because it may involve operations other than just the final assembly; also, it may not involve assembly, but simply final mixing, cutting, packaging, etc. The FAS is prepared after receipt of a customer order as constrained by the availability of material and capacity, and it schedules the operations required to complete the product from the level where it is stocked (or master scheduled) to the end-item level.
finish-to-order
Syn: assemble-to-order

A production environment where a good or service can be assembled after receipt of a customer's order. The key components (bulk, semifinished, intermediate, subassembly, fabricated, purchased, packing, and so on) used in the assembly or finishing process are planned and usually stocked in anticipation of a customer order. Receipt of an order initiates assembly of the customized product. This strategy is useful where a large number of end products (based on the selection of options and accessories) can be assembled from common components.
finishing lead time
1) The time that is necessary to finish manufacturing a good after recxeipt of a customer order. 2) The time allowed for completing the good based on the final assembly schedule.
finite forward scheduling
An equipment scheduling technique that builds a schedule by proceeding sequentially from the initial period to the final period while observing capacity limits. A Gantt chart may be used with this technique.
finite loading
Assigning no more work to a work center than the work center can be expected to execute in a given time period. The specific term usually refers to a computer techqniue that involves calculating shop priority revisions in order to level load operation by operation.
finite scheduling
A scheduling methodology where work is loaded into work centers such that no work center capacity requirement exceeds the capacity available for that work center.
firm planned order (FPO)
A planned order that can be frozen in quantity and time. The computer is not allowed to change it automatically; this is the responsibility of the planner in charge of the item that is being planned. This technique can aid planners working with MRP systems to respond to material and capacity problems by firming up selected planned orders. In addition, firm planned orders are the normal method of stating the master production schedule.
focus forecasting
A system that allows the user to simulate the effectiveness of numerous forecasting techniques, enabling selection of the most effective one.
forecast
An estimate of future demand. A forecast can be constructed using quantitative methods, qualitative methods, or a combination of methods, and it can be based on extrinsic (external) or intrinsic (internal) factors. Various forecasting techniques attempt to predict one or more of the four components of demand: cyclical, random, seasonal, and trend.
forecast accuracy
A measurement of forecast usefulness, often defined as the average difference between the forecast value to the actual value

Syn: sales forecast
forecast consumption
Syn: consuming the forecast

The process of reducing the forecast by customer orders or other types of actual demands as they are recieved. The adjustments yield the value of the remaining forecast for each period.
forecast error
The difference between actual demand and forecast demand, stated as an absolute value or as a percentage
forecast horizon
The period of time into the future for which a forecast is prepared
forecast interval
The time unit for which forecasts are prepared, such as week, month, or quarter

Syn: forecast period
forecast management
The process of making, checking, correcting, and using forecasts. It also includes determination of the forecast horizon
forecast period
Syn: forecast interval

The time unit for which forecasts are prepared, such as week, month, or quarter.
forecasting
The business function that attempts to predict sales and use of products so they can be purchased or manufactured in appropriate quantities in advance
FPO
Abbreviation for firm planned order
frequency distribution
A table that indicates the frequency with which data fall into each of any number of subdivisions of the variable. The subdivisions are usually called classes
hedge
1) An action taken in an attempt to shield the company from an uncertain event such as a strike, price increase, or currency reevaluation.

2) In master scheduling, a scheduled quantity to protect against uncertainty in demand or supply. The hedge is similar to safety stock, except that a hedge has the dimension of timing as well as amount. A volume hedge or market hedge is carried at the master schedule or production plan level. The master scheduler plans excess quantities over and above the demand quantities in given periods beyond some time fence such that, if the hedge is not needed, it can be rolled forward before major resources must be committed to produce the hedge and put it in inventory. A product mix hedge is an approach where several interrelated optional items are overplanned. Sometimes, using a planning bill, the sum of the percent mix can exceed 100% by a defined amount, thus triggering additional hedge planning.

3) In purchasing, any purchase or sale transaction having as its purpose the elimination of the negative aspects of price fluctuations
hybrid strategy
Syn: hybrid production method

A production planning method that combines the aspects of both the chase and level production planning methods.
independant demand
The demand for an item that is unrelated to the demand for other items. Demand for finished goods, parts required for destructive testing, and service parts requirements are examples of independent demand.
infiinte loading
Calculation of the capacity required at work centers in the time periods required regardless of the capacity available to perform this work.

Syn: infinite scheduling
internittent production
A form of manufacturing in which the jobs pass through the functional departments in lots, and each lot may have a different routing.
interplant demand
One plant's need for a part or product that is produced by another plant or division within the same organization. Although it is not a customer order, it is usually handled by the master production scheduling system in a similar manner.
intrinsic forecast method
A forecast based on internal factors, such as an average of past sales

Ant: extrinsic forecast
JIT
Acronym for Just-in-Time
job shop
1) An organization in which similar equipment is organized by function. Each job follows a distinct routing through the shop.

2) A type of manufacturing process used to produce items to each customer's specifications. Production operations are designed to handle a wide range of product designs and are performed at fixed plant locations using general-purpose equipment

Syn: jobbing
Just-in-Time (JIT)
A philosophy of manufacturing based on planned elimination of all waste and on continuous improvement of productivity. It encompasses the successful execution of all manufacturing activities required to produce a final product, from design engineering to delivery, and includes all stages of conversion from raw material onward. The primary elements of Just-in-Time are to have only the required inventory when needed; to improve quality to zero defects; to reduce lead times by reducing setup times, queue lengths, and lot sizes; to incrementally revise the operations themselves; and to accomplish these activities at minimum cost. In the broad sense, it applies to all forms of manufacturing - job shop, process, and repetitive - and to many service industries as well

Syn: short-cycle manufacturing, stockless production, zero inventories.
least-squares method
A method of curev fitting that selects a line of best fit through a plot of data to minimize the sum of squares of the deviations of the given points from the line.
level of service
A measure (usually expressed as a percentage) of satisfying demand through inventory or by the current production schedule in time to satisfy the customers' requested delivery dates and quantities. In a make-to-stock environment, level of service is sometimes calculated as the percentage of orders picked complete from stock upon receipt of the customer order, the percentage of line items picked complete, or the percentage of total dollar demand picked complete. In make-to-order and design-to-order environments, level of service is the percentage of times the customer-requested or acknowledged date was met by shipping complete product quantities.

Syn: measure of service, service level
level production method
A production planning method that maintains a stable production rate while varying inventory levels to meet demand

Syn: level strategy, production leveling
level production schedule
Syn: level schedule

1) In traditional management, a production schedule or master production schedule that generates material and labor requirements that are as evenly spread over time as possible. Finished goods inventories buffer the production system against seasonal demand.

2) In JIT, a level schedule (usually constructed monthly) in which each day's customer demand is scheduled to be built on the day it will be shipped. A level schedule is the output of the load-leveling process

Syn: JIT master schedule
level schedule
1) In traditional management, a production schedule or master production schedule that generates material and labor requirements that are as evenly spread over time as possible. Finished goods inventories buffer the production system against seasonal demand.

2) In JIT, a level schedule (usually constructued monthly) in which each day's customer demand is scheduled to be built on the day it will be shipped. A level schedule is the output of the load-leveling process.

Syn: JIT master schedule, level production schedule
life cycle analysis
A quantitative forecasting technique based on applying past patterns of demand data covering introduction, growth, maturity, saturation, and decline of similar products to a new product family.
MAD
Acronym for mean absolute deviation
make-to-order
A production environment where a good or service can be made after receipt of a customer's order. The final product is usually a combination of standard items and items custom-designed to meet the special needs of the customer. Where options or accessories are stocked before customer orders arrive, the term assemble-to-order is frequently used.
make-to-stock
A production environment where products can be and usually are finished before receipt of a customer order. Customer orders are typically filled from existing stocks, and production orders are used to replenish those stocks.
manufacturing environment
The framework in whcih manufacturing strategy is developed and implemented. Elements of the manufacturing environment include external environmental forces, corporate strategy, business unit strategy, other functional strategies (marketing, engineering, finance, etc.), product selection, product/process design, product/process technology, and management competencies. Often refers to whether a company, plant, product, or service is make-to-stock, make-to-order, or assemble-to-order.

Syn: production environment
manufacturing process
The series of operations performed upon material to convert it from the raw material or a semifinished state to a state of further completion. Manufacturing processes can be arranged in a process layout, product layout, cellular layout, or fixed-position layout. Manufacturing processes can be planned to support make-to-stock, make-to-order, assemble-to-order, etc., based on the strategic use and placement of inventories.
manufacturing strategy
A collective pattern of decisions that acts upon the formulation and deployment of manufacturing resources. To be most effective, the manufacturing strategy should act in support of the overall strategic direction of the business and provide for competitive advantages (edges).
manufacturing volume strategy
An element of manufacturing strategy that includes a series of assumptions and predictions about long-term market, technology, and competitive behavior in the following areas: (1) the predicted growth and variability of demand, (2) the costs of building and operating different sized plants, (3) the rate and direction of technological improvement, (4) the likely behavior of competitors, and (5) the anticipated impact of international competitors, markets, and sources of supply. It is the sequence of specific volume decisions over time that determines an organization's long-term manufacturing volume strategy.
marketing research
The systematic gathering, recording, and analyzing of data about problems relating to the marketing of goods and services. Such research may be undertaken by impartial agencies or by business firms or their agents. Marketing research includes several types: (1) Market analysis (product potential is a type) is the study of the size, location, nature, and characteristics of markets, (2) Sales analysis (or research) is the systematic study and comparison of sales (or consumption) data, (3) Consumer research (motivation research is a type) is concerned with the discovery and analysis of consumer attitudes, reactions, and preferences.
mass customization
The creaton of a high-volume product with large variety so that a customer may specify his or her exact model out of a large volume of possible end items while manufacturing cost is low because of the large volume. An example is a personal computer order in which the customer may specify processor speed, memory size, hard disk size and speed, removable storage device characteristics, and many other options when PCs are assembled on one line and at low cost.
master planning
A group of business processes that includes the following activities: demand management (which includes forecasting and order servicing); production and resource planning; and master scheduling (which includes the master schedule and the rough-cut capacity plan).
master production schedule (MPS)
the master production schedule is a line on the master schedule grid that reflects the anticipated build schedule for those items assigned to the master scheduler. the master scheduler maintains this schedule, and in turn, it becomes a set of planning numbers that drives material requirements planning. It represents what the company plans to produce expressed in specific configurations, quantities, and dates. the master production schedule is not a sales item forecast that represents a statement of demand. The master production schedule must take into account the forecast, the production plan, and other important considerations such as backlog, availability of material, availability of capacity, and management policies and goals.

Syn: master schedule
master schedule
the master schedule is a format that includes time periods (dates), the forecast, customer orders, projected available balance, available-to-promise, and the master production schedule. The master schedule takes into account the forecast; the production plan; and other important considerations such as backlog, availability of materials, availability of capacity, and management policies and goals.

Syn: master production schedule
master schedule item
A part number selected to be planned by the master scheduler. the item is deemed critical in its impact on lower level components or resources such as skilled labor, key machines, or dollars. therefore, the master scheduler, not the computer, maintains the plan for these items. A master schedule item may be an end item, a component, a pseudo number, or a planning bill of material.
master scheduler
Often the job of the person charged with the responsibility of managing, establishing, reviewing, and maintaining a master schedule for select items.Ideally, the person should have substantial product, plant, process, and market knowledge because the consequences of this individual's actions often have a great impact on customer service, material, and capacity planning.
master scheduling
the process where the master schedul is generated and reviewed and adjustments made to the master production schedule to ensure consistency with th production plan. the master production schedule (the line on the grid) is the primary input to the material requirements plan. the sum of the master production schedules for the items within the product family must equal the production plan for that family.
mean
the arithmetic average of a group of values

Syn: arithmetic mean
mean absolute deviation (MAD)
the average of the absolute values of the deviations of observed values from some expected value. MAD can be calculated based on observations and the arithmetic mean of those observations. An alternative is to calculate absolute deviations of actual sales data minus forecast data. these data can be averaged in the usual arithmetic way or with exponential smoothing.
median
The middle value in a set of measured values when the items are arranged in order of magnitude. If there is no single middle value, the median is the mean of the two middle values.
mix forecast
Forecast of the proportion of products that will be sold within a given product family, or the proportion of options offered within a product line. Product and option mix as well as aggregate product families must be forecasted. Even though the appropriate level of units is forecasted for a given product line, an inaccurate mix forecast can create material shortages and inventory problems.
mixed-model master schedule
The process of setting and maintaining the master production schedule to support mixed-model production.
mixed-model production
Making several different parts or products in varying lot sizes so that a factory produces close to the same mix of products that will be sold that day. The mixed-model schedule governs the making and the delivery of component parts, including those provided by outside suppliers. the goal is to build every model every day, according to daily demand.
mixed-model scheduling
The process of developing one or more schedules to enable miced-model production. the goal is to achieve a day's production each day.
mode
The most common or frequent value in a group of values.
modular bill of material
A type of planning bill that is arranged in product modules or options. It is often used in companies where the product has many optional features, e.g., assemble-to-order companies such as automobile manufacturers.
moving average
An arithmetic average of a certain number (n) of the most recent observations. As each new observation is added, the oldest observation is dropped. the value of n (the number of periods to use for the average) reflects responsiveness versus stability in the same way that the choice of smoothing constant does in exponential smoothing. there are two types of moving average, simple and weighted.
moving average forecast
A forecasting technique that uses a simple moving average or a weighted moving average projected forward as a forecast.
MPS
Abbreviation for master production schedule.
multilevel master schedule
A master scheduling technique that allows any level in an end item's bill of material to be master scheduled. To accomplish this, MPS items must receive requirements from independent and dependent demand sources.
n
Same size (the number of units in a sample)
noise
The unpredictable or random difference between the observed data and the "true process."
normal distribution
A particluar statistical distribution where most of the observations fall fairly close to one mean, and a deviation from the mean is as likely to be plus as it is to be minus. When graphed, the normal distribution takes the form of a bell-shaped curve.
on-time schedule performance
A measure (percentage) of meeting the customer's originally negotiated delivery request date. Performance can be expressed as a percentage based on the number of orders, line items, or dollar value shipped on time.
operations planning
The planning of activities that transform inputs into finished goods and services.
option
A choice that must be made by the customer or company when customizing the end product. In many companies, the term option means a mandatory choice from alimited selection.
option overplanning
Typically, scheduling extra quantities of a master schedule option greater than the expected sales for that option to protect against unanticipated demand. This schedule quantity may only be planned in the period where new customer orders are currently being accepted, typically just after the demand time fence. This technique is usually used on the second level of a two-level master scheduling approach to create a situation where more of the individual options are available than of the overall family. The historical average of demand for an item is quantified in a planning bill of material. Option overplanning is accomplished by increasing this percentage to allow for demans greater than forecast.
order entry
The process of accepting and translating what a customer wants into terms used by the manufacturer or distributor. The commitment should be based on the available-to-promise line (ATP) in the master shculed. This can be as simple as creating shipping documents for finished goods in a make-to-stock envirnoment, or it might be a more complicated series of activities, including design efforts for make-to-order products.
order processing
The activity required to administratively process a customer's order and make it ready for shipment or production.
order promising
The process of making a delivery commitment, i.e., answering the question, When can you ship? For make-to-order products, this usually involves a check of uncommitted material and availability of capacity, often as represented by the master schedule available-to-promise.

Syn: customer order promising, order dating.
order service
The function that encompasses receiving, entering, and promising orders from customers, distribution centers, and interplant operations. Order service is also typically responsible for responding to customer inquiries and interacting with the master scheduler on availability of products. In some companies, distribution and interplant requirements are handled seperately.
outlier
A data point that differs significantly from other data for a similar phenomenon. For example, if the average sales for a product were 10 units per month, and one month the product had sales of 500 units, this sales point might be considered an outlier.
outsourcing
The process of having suppliers provide goods and services that were perviously provided internally. Outsourcing involves substitution - the replacement of internal capacity and production by that of the supplier
overall factors
Syn: capacity planning using overall factors (CPOF)

A rough-cut capacity planning technique. the master schedule items and quantities are multiplied by the total time required to build each item to provide the total number of hours to produce the schedule. Historical work center percentages are then applied to the total number of hours to provide an estimate of the hours per work center to support the master schedule. this technique eliminates the need for engineered time standards.
overstated master production schedule
A schedule that includes either past due quantities or quantities that are greater than the ability to produce, given current capacity and material availability. An overstated MPS should be made feasible before MRP is run.
package to order
A production environment in which a good or service can be packaged after receipt of a customer order. the item is common across many different customers; packaging determines the end product.
panel consensus
A judgemental forecasting technique by which a committee, sales force, or group of experts arrives at a sales estimate.
part family
A collection of parts grouped for some managerial purpose.
past due order
A line item on an open customer order that has an original scheduled ship date that is earlier than the current date.

Syn: delinquent order, late order, order backlog
pegging
In MRP and MPS, the capability to identify for a given item the sources of its gross requirements and/or allocations. Pegging can be thought of as active where-used information.
performance measure
In a performance measurement system, the actual value measured for the criterion.

Syn: performance measurement
performance measurement system
A system for collecting, measuring, and comparing a measur to a standard for a specific criterion for an operation, item, good, service, business, etc. A performance measurement system consists of a criterion, a standard, and a measure

Syn: metrics
planning bill
Syn: planning bill of material

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

Syn: planning bill
planning fence
Syn: planning time fence

A point in time denoted in the planning horizon of the master scheduling process that marks a boundary inside of which changes to the schedule may adversely affect component schedules, capacity plans, customer deliveries, and cost. Outside the planning time fence, customer orders may be booked and changes to the master schedule can be made within the constraints of the production plan. Changes inside the planning time fence must be made manually by the master scheduler.
planning horizon
The amount of time a plan extends into the future. For a master schedule, this is normally set to cover a minimum of cumulative lead time plus time for lot sizing low-level components and for capacity changes of primary work centers or of key suppliers. For longer term plans the planning horizon must be long enough to permit any needed additions to capacity.
planning time fence
A point in time denoted in the planning horizon of the master scheduling process that marks a boundary inside of which changes to the schedule may adversely affect component schedules, capacity plans, customer deliveries, and cost. Outside the planning time fence, customer orders may be booked and changes to the master schedule can be made within the constraints of the production plan. Changes inside the planning time fence must be made manually by the master scheduler.

Syn: planning fence
point of sale (POS)
The relief of inventory and computation of sales data at the time and place of sale, generally through the use of bar coding or magnetic media and equipment.
population
The entire set of items from which a sample is drawn.
POS
Abbreviation for point of sale.
probabilistic demand models
Statistical procedures that represent the uncertainty of demand by a set of possible outcomes (i.e., a probability distribution) and that suggest inventory management strategies under probabilistic demands.
probability
Mathematically, a number between 0 and 1 that estimates the fraction of experiments (if the same experiment were being repeated many times) in which a particular result would occur. This number can be either subjective or based upon the empirical results of experimentation. It can also be derived for a process to give the probable outcome of experimentation.
probability distribution
A table of numbers or a mathematical experssion that indicates the frequency with which each of all possible results of an experiment should occur.
process flow production
A production approach with minimal interruptions in the actual processing in any one production run or between production runs of similar products. Queue time is virtually eliminated by integrating the movement of the product into the actual operation of the resource performing the work.
process manufacturing
Production that adds value by mixing, separating, forming, and/or performing chemical reactions. It may be done in either batch or continuous mode.
product configuration catalog
A listing of all upper level configurations contained in an end-item product family. Its application is most useful when there are multiple end-item configurations in the same product family. It is used to provide a transition linkage between the end-item level and a two-level master production schedule. It also provides a correlation between the various units of upper level product definition.
product configurator
A system, generally rule-based, to be used in design-to-order, engineer-to-order, or make-to-order environments, where numerous product variations exist. Product configurators perform intelligent modeling of the part or product attributes and often create solid models, drawings, bills of material, and cost estimates that can be intergrated into CAD/CAM and MRP II systems as well as sales order entry systems.
product family
A group of products with similar characteristics, often used in production planning (or sales and operations planning).
product group
Syn: product line

A group of products whose similarity in manufacturing procedures, marketing characteristics, or specifications enables them to be aggregated for planning, marketing, or, occasionally. costing.
product group forecast
A forecast for a number of similar products
product life cycle
1) The stages a new product goes through from beginning to end. i.e., the stages that a product passes through from introduction through growth, maturity, and decline. 2) The time from initial research and development to the time at which sales and support of the product to customers are withdrawn. 3) The period of time during which a product can be produced and marketed profitably.
product line
A group of products whose similarity in manufacturing procedures, marketing characteristics, or specifications enables them to be aggregated for planning, marketing, or, occasionally, costing.

Syn: product group.
product load profile
A listing of the required capaity and key resources needed to manufacture on eunit of a selected item or family. The resource requirements are further defined by a lead-time offset to predict the impact of the product on the load of the key resources by specific time period. The product load profile can be used for rough-cut capacity planning to calculate the approximate capacity requirements of the master production schedule.
product mix
The proportion of individual products that make up the total production or sales volume. Changes in the product mix can mean drastic changes in the manufacturing requirements for certain types of labor and material.
product positioning
The marketing effort involved in placing a product in a market to serve a particular niche or function.

Syn: service positioning
product/service hierarchry
In sales and operations planning, a general approach to dividing products or services into families, brands, and subfamilies or various planning levels. This ensures that a correct top-down or bottom-up approach is taken to grouping (or aggregating) demand at each subsequent level. Forecasts are more accurate the higher up the product hierarchy they are developed; consequently, forecasts should usually be driven down from the top.
production environment
Syn: manufacturing environment.

The framework in which manufacturing strategy is developed and implmented. Elements of the manufacturing environment include external environmental forces, corporate strategy, business unit strategy, other functional strategies (marketing, engineering, finance, etc.), product selection, product/process design, product/process technology, and management competencies. Often refers to whether a company, plant, product, or service is make-to-stock, make-to-order, or assemble-to-order.
production forecast
A projected level of customer demand for a feature (option, accessory, etc.) of a make-to-order or an assemble-to-order product. used in two-level master scheduling, it is calculated by netting customer backlog against an overall family or product line master production schedule and then factoring this product's available-to-promise by the option percentage in a planning bill of material.
production level
Syn: production rate

the rate of production usually expressed in units, cases, or some other broad measure, expressed by a period of time, e.g., per hour, shift, day, or week.
production plan
The agreed-upon plan that comes from the production planning (sales and operations planning) process, specifically the overall level of manufacturing output planned to be produced, usually stated as a monthly rate for each product family (group of products, items, options, features, and so on). Various units of measurement can be used to express the plan: units, tonnage, standard hours, number of wrkers, and so on. The production plan is management's authorization for the master scheduler to convert it into a more detailed plan, that is, the master production schedule.
production planning
A process to develop tactical plans based on setting the overall level of manufacturing output (production plan) and other activities to best satisfy the current planned levels of sales (sales plan or forecasts), while meeting general business objectives of profitability, productivity, competitive customer times, and so on, as expressed in the overall business plan. the sales and production capabilities are compared, and a business strategy that includes a sales plan, a production plan, budgets, pro forma financial statements, and supporting plans for materials and workforce requirements, and son on, is developed. One of its primary purposes is to establish production rates that will achieve management's objective of satisfying customer demand by maintaining, raising, or lowering inventories or backlogs, while usually attempting to keep the workforce relatively stable. Because this plan affects many company functions, it is normally prepared with informatiion from marketing and coordinated with the functions of manufacturing, sales, engineering, finance, materials, and son on.
production rate
The rate of production usually expressed in units, cases, or some other broad measure, expressed by a period of time, e.g., per hour, shift, day, or week.

Syn: production level
production schedule
A plan that authorizes the factory to manufacture a certain quantity of a specific item. It is usually initiated by the production planning department.
project
An endeavor with a specific objective to be met within the proscribed time and sollar limitations and that has been assigned for definition or execution.
project management
The use of skills and knowledge in coordinating the organizing, planning, scheduling, directing, controlling, monitoring, and evaluating of prescribed activities to ensure that the stated objectives of a project, manufactured good, or service are achieved.
project manufacturing
A type of manufacturing process used for large, often unique, items or structures that require a custom design capability (engineer-to-order). This type of process is highly flexible and can cope with a broad range of product designs and design changes. Product manufacturing usually uses a fixed-position type layout.
projected available balance
An inventory balance projected into the future. It is the running sum of on-hand inventory minus requirements plus scheduled receipts and planned orders.

Syn: projected available inventory
projection
Syn: extrapolation

Estimation of the future value of some data series based on past observations. Statistical forecasting is a common example
pyramid forecasting
A forecasting technique that enables management to review and adjust forecasts made at an aggregate level and to keep lower level forecasts in balance. The procedure begins with the roll up (aggregation) of item forecasts into forecasts by product group. The management team establishes a (new) forecast for the product group. The value is then forced down (disaggregation) to individual item forecasts so that they are consistent with the aggregate plan. The approach combines the stability of aggregate forecasts and the application of management judgement with the need to forecast many end items within the constraints of an aggregate forecast or sales plan.
qualitative forecasting techniques
An approach to forecasting that is based on intuitive or judgmental evaluation. It is used generally when data are scarce, not available, or no longer relevant. Common types of qualitative techniques include: personal insight, sales force estimates, panel consensus, market research, visionary forecasting, and the Delphi method. Examples include developing long-range projections and new product introduction.
random sample
A selection of observations taken from all the observations of a phenomenon in such a way that each chosen observation has the same possibility of selection.
random variation
A fluctuation in data that is caused by uncertain or random occurrences.
rationing
The allocation of product among consumers. When price is used to allocate product, it is allocated to those willing to pay the most.
RCCP
Abbreviation for rough-cut capacity planning.
regression analysis
A statistical technique for determining the best mathematical expression describing the functional relationship between one response and one or more independent variables.
remanufacturing
1) An industrial process in which worn-out products are restored to like-new condition. In contrast, a repaired product normally retains its identity, and only those parts that have failed or are badly worn are replaced or serviced. 2) The manufacturing environment where worn-out products are restored to like-new condition.
repetitive manufacturing
The repeated production of the same discrete products or families of products. Repetitive methodology minizes setups, inventory, and manufacturing lead times by using production lines, assembly lines, or cells. Work orders are no longer necessary; production scheduling and control are based on production rates. Products may be standard or assembled from modules. Repetitive is not a function of speed or volume.

Syn: repetitive process, repetitive production.
resource planning
Capacity planning conducted at the business plan level. The process of establishing, measuring, and adjusting limits or levels of long-range capacity. Resource planning is normally based on the production plan but may be driven by higher level plans beyond the time horizon for the production plan, e.g., the business plan. It addresses those resources that take long periods of time to acquire. Resource planning decisions always require top management approval.

Syn: long-range resource planning, resource requirements planning
resource profile
The standard hours of load placed on a resource by time period. Production lead-time data are taken into account to provide time-phased projections of the capacity requirements for individual production facilities.
resource requirements planning
Syn: resource planning

Capacity planning conducted at the business plan level. The process of establishing, measuring, and adjusting limits or levels of long-range capacity. Resource planning is normally based on the production plan but may be driven by higher level plans beyond the time horizon for the production plan, e.g., the business plan. It addresses those resources that take long periods of time to acquire. Resource planning decisions always require top management approval.

Syn: long-range resource planning
rouch-cut capacity planning (RCCP)
The process of converting the master production schedule into requirements for key resources, often including labor, machinery, warehouse space, suppliers' capabilities, and, in some cases, money. Comparison to available or demonstrated capacity is usually done for each key resource. This comparison assists the master scheduler in establishing a feasible master production schedule. Three approaches to performing RCCP are the bill of labor (resources, capacity) approach, the capacity planning using overall factors approach, and the resource profile approach.
safety capacity
The planned amount by which the available capcity exceeds current productive capacity. This capacity provides protection from planned activities, such as resource contention, and preventive maintenance and unplanned activities, such as resource breakdown, poor quality, rework, or lateness. Safety capacity plus productive capacity plus excess capacity is equal to 100% of capacity.
safety factor
1) The ratio of average strength to the worst stress expected. It is essential that the variation, in addition to the average value, be considered in design. 2) The numerical value used in the service function (based on the standard deviation or mean absolute deviation of the forecast) to provide a given level of customer service. For example, if the item MAD is 100 and a .95 customer service level (safety factor of 2.06) is desired, then a safety stock of 206 units should be carried. This safety stock must be adjusted if the forecast interval and item lead times differ.

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

An estimate of future demand. A forecast can be contructed using quantitative methods, qualitative methods, or a combination of methods, and it can be based on extrinsic (external) or intrinsic (internal) factors. Various forecasting techniques attempt to predict one or more of the four components of demand: cyclical, random, seasonal, and trend.
sales order configuration
Syn: customer order servicing system

An automated system for order entry, where orders are keyed into a local terminal and a bill-of-material translator converts the catalog ordering numbers into required manufacturing part numbers and due dates for the MRP system. Adavnced systems contain customer information, sales history, forecasting information, and product option compatibility checks to facilitate order processing, "cleaning up" orders before placing a demand on the manufacturing system.

Syn: configuration system
sales plan
A time-phased statement of expected customer orders anticipated to be received (incoming sales, not outgoing shipments) for each major product family or item. It represents sales and marketing management's commitment to take all reasonable steps necessary to achieve this level of actual customer orders. The sales plan is a necessary input to the production planning process (or sales and operations planning process). It is expressed in units identical to those used for the production plan (as well as in sales dollars).
sales planning
The process of determining the overall sales plan to best support customer needs and operations capabilities while meeting general business objectives of profitability, productivity, competitive customer lead times, and so on, as expressed in the overall business plan.
sales promotion
1) Sales activities that supplement both personal selling and marketing, coordinate the two, and help to make them effective, e.g., displays. 2) More loosely, the combination of personal selling, advertising, and all supplementary selling activities. 3) Promotion activities - other than advertising, publicity, and personal selling - that stimulate interest, trial, or purchase by final customers or others in the marketing channel.
sample
A portion of a universe of data chosen to estimate some characteristics about the whole universe. The universe data could consist of sizes of customer orders, number of units of inventory, number of lines on a purchase order, etc.
sampling distribution
The distribution of values of a statistic calculated from samples of a given size.
scatter chart
A graphical technique to analyze the relationship between two variables. Two sets of data are plotted on a graph, with the y axis used for the variable to be predicted and the x axis used for the variable to make the prediction. The graph will show possible relationships (although two variables might appear to be related, they make that evaluation). The scatter chart is one of the seven tools of quality

Syn: cross plot, scatter diagram
seasonal index
A number used to adjust data to seasonal demand.

Syn: seasonal adjustment.
seasonality
A repetitive pattern of demand from year to year (or other repeating time interval) with some periods considerably higher than others.
second-order smoothing
A method of exponential smoothing for trend situations that employs two previously computed averages, the singly and doubly smoothed values, to extrapolate into the future

Syn: double smoothing
service function
A mathematical relationship of the safety factor to service level, i.e., the fraction of demand that is routinely met from stock.
service industry
1) In its narrowest sense, an organization that provides an intangible product, e.g., medical or legal advice. 2) In its broadest sense, all organizations except farming, mining, and manufacturing. This definition of service industry includes retail trade; wholesale trade; transportation and utilities; finance, insurance, and real estate; construction; professional, personal, and social services; and local, state, and federal governments.
service level
Syn: level of service

A measure (usually expressed as a percentage) of satisfying demand through inventory or by the current production schedule in time to satisfy the customer's requested delivery dates and quantities. In a make-to-stock environment, level of service is sometimes calculated as the percentage of orders picked complete from stock upon receipt of the customer order, the percentage of line items picked complete, or the percentage of total dollar demand picked complete. In make-to-order and design-to-order environments, level of service is the percentage of times the customer-requested or acknowledged date was met by shipping complete product quantities.

Syn: measure of service
service parts
Those modules, components, and elements that are planned to be used without modification to replace an original part.

Syn: repair parts, spare parts.
service parts demand
The need or requirement for a component to be sold by itself, as opposed to being used in production to make a higher level product.

Syn: repair parts demand, spare parts demand
sigma
A Greek letter (S) commonly used to designate the standard deviation of a population.
significant variances
Those differences between planned and actual performance that exceed established thresholds and that require further review, analysis, and action
simulation
1) The technique of using representative or artificial data to reproduce in a model various conditions that are likely to ccur in the actual performance of a system. It is frequently used to test the behavior of a system under different operating policies. 2) Within MRP II, using the operational data to perform what-if evaluations of alternative plans to answer the question, Can we do it? If yes, the simulation can then be run in the financial mode to help answer the question, Do we really want to?
single exponential smoothing
single exponential smoothing - Syn: first-order smoothing

first-order smoothing - A single exponential smoothing; a weighted moving average approach that is applied to forecasting problems where the data do not exhibit significant trend or seasonal patterns.

Syn: single exponential smoothing, single smoothing.
single smoothing
single smoothing - Syn: first-order smoothing.

fiirst-order smoothing - A single exponential smoothing; a weighted moving average approach that is applied to forecasting problems where the data do not exhibit significant trend or seasonal patterns.

Syn: single exponential smoothing, single smoothing
skew
The degree of nonsymmetry shown by a frequency or probability distribution.
smoothing
The process of averaging data by a mathematical process or by curve fitting, such as the least-squares method or exponential smoothing.
smoothing constant
In exponential smoothing, the weighting factor that is applied to the most recent demand, observation, or error. In this case, the error is defined as the difference between actual demand and the forecast for the most recent period. The weighting factor is represented by the symbol α (alpha). Theoretically, the range of α is 0.0 to 1.

Syn: alpha factor
smoothing factor
Syn: smoothing constant

In exponential smoothing, the weighting factor that is applied to the most recent demand, observation, or error. In this case, the error is defined as the difference between actual demand and the forecast for the most recent period. The weighting factor is represented by the symbol α (alpha). Theoretically, the range of α is 0.0 to 1.

Syn: alpha factor
standard deviation
A measurement of dispersion of data or of a variable. The standard deviation is computed by finding the differences between the average and actual observations, squaring each difference, adding the squared differences, dividing by n - 1 (for a sample), and taking the square root of the result.
stockless production
Syn: Just-in-Time.

A philosophy of manufacturing based on planned elimination of all waste and on continuous improvement of productivity. It encompasses the successful execution of all manufacturing activities required to produce a final product, from design engineering to delivery, and includes all stages of conversion from raw material onward. The primary elements of Just-in-Time are to have only the required inventory when needed; to improve quality to zero defects; to reduce lead times by reducing setup times, queue lengths, and lot sizes; to incrementally revise the operations themselves; and to accomplish these activities at minimum cost. In the broad sense, it applies to all forms of manufacturing - job shop, process, and repetitive - and to many service industries as well.

Syn: short-cycle manufacturing, zero inventories
stockout percentage
A measure of the effectiveness with which a company responds to actual demand or requirements. The stockout percentage can be a measurement of total orders containing a stockout to total orders, or of line items incurring stockouts to total line items ordered during a period.
strategic plan
The plan for how to marshal and determine actions to support the mission, goals, and objectives of an organization. Generally includes an organization's explicit mission, goals, and objectives and the specific actions needed to achieve those goals and objectives.

Syn: strategy
strategic planning
The process of developing a strategic plan
substitution
The use of a nonprimary product or component, normally when the primary item is not available.
super bill of material
A type of planning bill, located at the top level in the structure, that ties together various modular bills (and possibly a common parts bill) to define an entire product or product family. The quantity per relationship of the super bill to its modules represents the forecasted percentage of demand of each module. The master-scheduled quantities of the super bill explode to create requirements for the modules that also are master scheduled.
supply
1) The quantity of goods available for use.

2) The actual or planned replenishment of a product or component. The replenishment quantities are created in response to a demand for the product or component or in anticipation of such a demand.
surge capacity
The ability to meet sudden, unexpected increases in demand by expanding production with existing personnel and equipment.
synchronized production
A manufacturing management philosophy that includes a consistent set of principles, procedures, and techniques where every action is evaluated in terms of the global goal of the system. Both kanban, which is a part of the JIT philosophy, and drum-buffer-rope, which is a part of the theory of constraints philosophy, represent synchronized production control approaches

Syn: synchronous manufacturing
tactical plan(s)
The set of functional plans (e.g., production plan, sales plan, marketing plan) synchronizing activities acorss functions that specify production levels, capacity levels, staffing levels, funding levels, and so on, for achieving the intermediate goals and objectives to support the organization's strategic plan.
tactical planning
The process of developing a set of tactical plans (e.g., production plan, sales plan, marketing plan, and so on). Two approaches to tactical planning exist for linking tactical plans to strategic plans - production planning and sales and operations planning.
third-order smoothing
Syn: triple smoothing

A method of exponential smoothing that accounts for accelerating or decelerating trends, such as would be experienced in a fad cycle
time fence
A policy or guideline established to note where various restrictions or changes in operating procedures take place. For example, changes to the master production schedule can be acomplished easily beyond the cumulative lead time, while changes inside the cumulative lead time become increasingly more difficult to a point where changes should be resisted. Time fences can be used to define these points.
time series
A set of data that is distributed over time, such as demand data in monthly time periods. Various patterns of demand must be considered in time series analysis: seasonal, trend, cyclical, and random.
time series analysis
Analysis of any variable classified by time in which the values of the variables are functions of the time periods. time series analysis is used in forecasting. A time series consists of seasonal, cyclical, trend, and random components.
time-phased order point (TPOP)
MRP-like time planning logic for independent demand items, where gross requirements come from a forecast, not via explosion. this technique can be used to plan distribution center inventories as well as to plan for service (repair) parts, because MRP logic can readily handle items with dependent demand, independent demand, or a combination of both. Time-phased order point is an approach that uses time periods, thus allowing for lumpy withdrawals instead of average demand. When used in distribution environments, the planned order releases are input to the master schedule dependent demands.
TPOP
Acronym for time-phased order point.
traceability
1) the attribute allowing the ongoing location of a shipment to be determined. 2) The registering and tracking of parts, processes, and materials used in production, by lot or serial number.
tracking signal
the ratio of the cumulative algebraic sum of the deviations between the forecasts and the actual values to the mean absolute deviation. used to signal when the validity of the forecasting model might be in doubt.
trend forecasting models
Methods for forecasting sales data when a definite upward or downward pattern exists. Models include double exponential smoothing, regression, and triple smoothing.
two-level master schedule
A master scheduling approach in which a planning bill of materials is used to master schedule an end product or family, along with selected key features (options and accessories).
universe
the population, or a large set of data, from which samples are drawn. usually assumed to be infinitely large or at least very large relative to the sample.
vendor-managed inventory (VMI)
A means of optimizing supply chain performance in which the supplier has access to the customer's inventory data and is responsible for maintaining the inventory level required by the customer. this activity is accomplished by a process in which resupply is done by the vendor through regularly scheduled reviews of the on-site inventory. The on-site inventory is counted, damaged or outdated goods are removed, and the inventory is restocked to predefined levels. The vendor obtains a receipt for the restocked inventory and accordingly invoices the customer.
VMI
Abbreviation for vendor-managed inventory
warehouse demand
the need for an item to replenish stock at a branch warehouse.

Syn: branch warehouse demand
weighted moving average
An averaging technique in which the data to be averaged are not uniformly weighted but are given values according to their importance.