Management Processes (Breakeven)

Lead time

The time needed to respond to a customer order.

Customer order decoupling point

Where inventory is positioned in the supply chain

Make-to-stock

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

Assemble-to-order

A production environment where preassembled components, subassemblies, and modules are put together in response to a specific customer order

Make-to-order

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

Engineer-to-order

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

Lean manufacturing

To achieve high customer service with minimum levels of inventory investment.

Total average value of inventory

The total investment in inventory at the firm, which includes raw material, work-in-process, and finished goods.

Inventory turn

An efficiency measure where the cost of goods sold is divided by the total average value of inventory

Days-of-supply

A measure of the number of days of supply of an item.

Little’s law

Mathematically relates inventory, throughput, and flow time.

Throughput

The average rate (e.g., units/day) that items flow through a process.

Flow time

The time it takes one unit to completely flow through a process.

Inventory

Throughput rate × Flow time

Project layout

For large or massive products produced in a specific location, labor, material, and equipment are moved to the product rather than vice versa.

Workcenter

A process with great flexibility to produce a variety of products, typically at lower volume levels.

Manufacturing cell

Dedicated area where a group of similar products are produced.

Assembly line

Area where an item is produced through a fixed sequence of workstations, designed to achieve a specific production rate.

Continuous process

A process that converts raw materials into finished product in one contiguous process.

Product–process matrix

A framework depicting when the different production process types are typically used, depending on product volume and how standardized the product is.

Workstation cycle time

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

Assembly-line balancing

The problem of assigning tasks to a series of workstations so that the required cycle time is met and idle time is minimized.

Precedence relationship

The required order in which tasks must be performed in an assembly process.

C

Production time per day / Required output per day

N_t

Sum of task times / Cycle time

Efficiency

Sum of task times / (Actual number of workstations x Workstation cycle time)