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23 Cards in this Set

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ABC Analysis
Method for dividing hands-on inventory into 3 classifications based on annual dollar volume. AQBC analysis uses the Pareto Principle which states that there are important inventory parts and not that many unimportant ones.
Class A- Items which the annual dollar volume is high. 15% inventory 70-80% total $
Class B - Items of medium annual dollar volume. 30% inventory 15-25% of total value
Class C - items of low annual dollar volume. 5% annual dollar 55% total inventory items.
Holding Costs
Costs associated with holding or "carrying" inventory over time. Include obsolescence and costs related t ostorage such as insurance. Extra staffing, and interest payments.
Ordering Costs
costs of supplies, forms, order processing, clerical support and so forth.
Setup Costs
cost to prepare a machine or process for manufacturing an order. Includes time and labor to clean and change tools or holders.
Economic Order Quantity
EOQ model. One of the oldest and most commonly known
Production Order Quantity Model
Useful when inventory continuously builds up over time, and traditional economic order quantity assumptions are valid. Applied to production orders
Lead Time
the time between recognition of the need for an order and receiving it; In purchasing systems, it is the order, wait, move, queue, setup and run times for each component. The time between placement and receipt of an order. Could be a few hours or could be months.
Reorder Point(ROP)
The inventory level (point) at which action is taken to replenish the stocked item.
Safety Stock
Extra stock to allow for uneven demand. When the demand during lead time and lead time itself is not constant.
Fixed-Quantity System
An Economic Order Quantity ordering system with the same order amount each time. Fixed amount is added to inventory every time an order for an item is placed
Perpetual Inventory System
A system that keeps track of each withdrawal or addition to inventory continuously, so records are always current. Makes sure the ROP has not been reached.
Fixed-Period System
A system in which inventory orders are made at regular time intervals
Objective Function
A mathematical expression in linear programming that maximizes or minimizes some quantity ( often profit or cost, but any goal may be used)
Restrictions that limit the degree to which a manger can pursue an objective. Example: deciding how many units of each product in a firms product line to manufacture is restricted by available labor and machinery.
Decision Variables
Choices available to the decision Maker
Feasible Region
The set of all feasible combinations of decision variables. This region must satisfy all conditions specified by the programs constraints and is thus the region where all constraints overlap
Sensitivity Analysis
An analysis that projects how much a solution may change if there are changes in the variables or input data. Also known as "postoptimality"
Producing only what is needed, when it is needed. It's a philosphy as well as an integrated management system. Objective is to eliminate all waste
Lean Production
Different than JIT because JIT is a philosophy of continuing improvement with an internal focus, while lean production begins externally with a focus on the customer. Understanding what the customer wants and ensuring customer input and feedback are starting points for lean production. Identifycustomer value by analyzing all of the activities required to product the product, and then optimizing the entire process from the view of the customer.
Pull System
A JIT concept that results in material being produced only when requested.Material is pulled throughthe system when needed. Forces cooperation and prevents over and underproduction
Push System
A system that pushes material into downstream workstations regardless of their timeliness or availability of resources to perform the work. Materials are pushed according to schedule
Move inventory through the shop only as needed, through the pull system. Japanese word for "card". Kanban card signals standard quantity of production. Derived from a two-bin inventory system.
Level Schedules
Scheduling products so that each days production meets the demand for that day. Processes frequent small batches rather than few large batches. " Jelly Bean" scheduling.