Mother Load

Merged set for C215

Raw materials

Purchased items or extracted materials to be transformed into components or products.

Components

Parts or subassemblies used in a final product.

Work-in-process (WIP)

Items that are currently in process throughout the manufacturing plant.

Finished goods

Completed products that are sold to customers.

Distribution inventory

Finished goods that are currently in the distribution system.

Maintenance, repairs, & operating (MRO) supplies

Includes maintenance supplies, spare parts, lubricants, cleaning agents, and daily operating supplies needed to facilitate day-to-day operations.

Anticipation inventory

Items built in anticipation of future demand, allowing a company to maintain a level production strategy.

Fluctuation inventory

Inventory that protects against unexpected demand variations and assures customer service levels.

Lot-size inventory

Inventory that results from the actual quantity purchased, allowing for lower unit costs.

Transportation inventory

Items currently in movement between locations, such as from the manufacturer to distribution facilities.

Speculative inventory

Extra inventory built up or purchased to protect against future events and allow for a continuous supply.

Inventory turnover

A measurement of inventory investment calculated as the annual cost of goods sold divided by the average inventory in dollars.

Weeks of supply

A measurement of inventory investment calculated as: $\frac{\text{Average inventory on hand}}{\text{Average weekly cost of goods sold}}$

Days of supply

A measurement of inventory investment calculated as: $\frac{\text{Average inventory on hand}}{\text{Average daily usage}}$

Item cost

The price paid per item plus any other direct costs associated with getting the item to the plant.

Holding costs

Costs including capital, storage, and risk costs associated with keeping inventory.

Ordering costs

A fixed, constant dollar amount incurred for each order placed.

Shortage costs

Costs associated with the loss of customer goodwill, back-order handling, and lost sales.

ABC inventory classification

A method for determining the level of control and frequency of review of inventory items based on a Pareto analysis of annual dollar volume.

A Items

Inventory items that typically represent $20\%$ of the items but account for $80\%$ of the inventory value.

B Items

Inventory items that typically represent an additional $30\%$ of items and account for $15\%$ of the inventory value.

C Items

Inventory items that typically represent the remaining $50\%$ of items and account for only $5\%$ of the inventory value.

Continuous review system

An inventory system that updates inventory balances after each inventory transaction.

Periodic review system

An inventory system that requires regular periodic reviews of the on-hand quantity to determine the size of the replenishment order.

Two-bin system

A system where one bin with enough stock to satisfy demand during replenishment time is kept in the storeroom while the other is on the manufacturing floor.

Lead time

The time elapsed from order placement to order receipt.

Periodic counting

A method where physical inventory is taken periodically, usually annually, involving counting, verifying, and reconciling.

Cycle counting

A method of daily counting of pre-specified items to allow for timely detection and correction of inaccurate records.

Stock-keeping unit (SKU)

An inventory item at a particular geographic location.

Lot-for-lot

An ordering approach where the amount ordered is exactly what is needed.

Fixed-order quantity

An ordering approach where a predetermined amount is ordered each time an order is placed.

Min-max system

An ordering approach where an order is placed to reach a predetermined maximum level when on-hand inventory falls below a predetermined minimum.

Economic Order Quantity (EOQ)

An optimizing method used for determining order quantity and reorder points based on known and constant demand and lead time.

Economic Production Quantity (EPQ)

A model used for determining order quantities where inventory arrives in increments rather than a single shipment.

Quantity discount model

A modification of the EOQ process used to consider cases where the unit price depends on the quantity ordered.

Single-period inventory model

A model designed for products sold at regular prices for only one period, where demand is highly variable and salvage value is less than original cost.

Safety stock (SS)

Inventory added to the reorder point calculation to protect against uncertain demand or lead time, calculated as: $SS = z\sigma_{dL}$

Order-cycle service level

The probability that demand during lead time will not exceed on-hand inventory.

Targeted inventory level (TI)

The level to which inventory is replenished in a periodic review system, calculated as: $TI = d(RP + L) + SS$

Project

Any unique endeavor with specific objectives, multiple activities, defined precedent relationships, and a specific time period for completion.

Concept Phase

The first phase of the project life cycle where the need for the project is identified.

Feasibility analysis or study

A phase in the project life-cycle used to evaluate costs, benefits, and risks associated with a project.

Planning Phase

The phase of a project life cycle where it is decided who does what, how long it should take, and what resources are needed.

Execution Phase

The phase of the project life cycle where the actual work of the project is performed.

Termination Phase

The final phase of the project life cycle where the project is ended.

Program evaluation and review technique (PERT)

A network planning technique developed for the Polaris missile project used to determine a project’s planned completion date and identify the critical path using probabilistic time estimates.

Critical path method (CPM)

A network planning technique developed for the chemical industry that uses deterministic times to determine the completion date and critical path.

Activity-on-node

A network diagramming notation that places activities in nodes and uses arrows to signify precedence relationships.

Critical path

The longest sequential path through the network diagram.

Probabilistic Time Estimates

A process that uses optimistic, most likely, and pessimistic time estimates, typically used when there is uncertainty about activity duration.

Deterministic Time Estimates

Relies on the assumption that activity duration is known with certainty, used when reliable estimates from similar past activities are available.

Slack

A measure of how long activities can be delayed without delaying the project; calculated as the activity’s late finish minus its early finish ($LF - EF$) or late start minus its early start ($LS - ES$).

Earliest start (ES)

The earliest possible time an activity can begin, which is equal to the earliest finish of the immediately preceding activity.

Earliest finish (EF)

The earliest start ($ES$) plus the total activity time.

Latest Start (LS)

The latest an activity can start without delaying the project completion.

Latest Finish (LF)

The latest an activity can be completed without delaying the project completion.

Beta probability distribution

A distribution used to represent likely outcomes for project activities, including definite endpoints and a weighted average.

Optimistic time estimate (o)

The shortest time period in which an activity can be completed.

Most likely time estimate (m)

The normal time that an activity is expected to take.

Pessimistic time estimate (p)

The longest time period in which an activity will be completed if issues arise.

Expected time (ET)

The weighted average of the three time estimates, calculated using the formula from the beta distribution.

Variance of activity

A calculation used to determine the uncertainty of activity duration, defined as: $[(\text{pessimistic} - \text{optimistic}) / 6]^2$.

Crashing

The process of reducing a project's completion time by shortening the duration of activities on the critical path.

Crash cost

The cost per unit of time to shorten an activity, calculated as: $(\text{crash cost} - \text{normal cost}) / (\text{normal time} - \text{crash time})$.

Critical Chain Approach

A management approach based on the theory of constraints that focuses on the project due date and manages safety time using buffers.

Project buffer

Safety time placed specifically at the end of the critical path to protect the project's final due date.

Feeder buffers

Time buffers placed between bottlenecks and noncritical paths to protect the critical path from delays.

Work System Design

A component of operations strategy that provides structure for company productivity and includes job design, work measurements, and worker compensation.

Job Design

The specification of work activities for an individual or group, identifying the purpose, location, and required skills for a job.

Technical Feasibility

A job design factor ensuring the job is physically and mentally doable for the worker.

Economic Feasibility

A job design factor where the cost of performing the job is less than the value it adds.

Behavioral Feasibility

The degree to which a job is intrinsically satisfying to the employee.

Labor Specialization

The degree to which an employee’s scope of expertise is narrowed via high levels of specialization or widened through lower levels of specialization.

Job Enlargement

The horizontal expansion of a job through increasing the scope of work assigned to instill pride.

Job Enrichment

The vertical expansion of a job through increased worker responsibility, such as adding work planning or inspection to a routine task.

Job Rotation

The shifting of cross-trained workers to different tasks to broaden understanding and reduce fatigue.

Problem-solving Teams

Small groups trained in problem-solving techniques used to identify, analyze, and propose solutions to workplace problems.

Special-purpose Teams

Highly focused, short-term, and often cross-functional teams with a focused agenda.

Self-directed (SD) Teams

Teams where members work through consensus to plan and control work flow, with goals defined by the team.

Self-managed (SM) Teams

Teams where members work through consensus to plan and control work flow, with goals defined by others.

Alternative Workplace

An approach that brings work to the worker rather than the worker to the workplace, facilitated by technologies like video conferencing and e-networks.

OSHA

The act passed by Congress in 1970 to mandate specific safety conditions in the work environment.

Method Analysis

A process for evaluating and improving operations by charting steps, talking with employees, and revising existing operations for continuous improvement.

Work Measurement

The process of determining how long it should take a qualified worker, using appropriate tools and processes, to complete a specific job.

Standard Time

The length of time to complete a job, including allowances for personal fatigue and unavoidable delays, used for costing and scheduling.

Time Study

A procedure to determine standard time involving the observation of work elements to calculate the mean and standard deviation of task duration.

$$n$$

The number of observations of an element needed for a time study.

$$z$$

The number of normal standard deviations needed for the desired confidence level in a study.

Performance Rating Factor (PRF)

A subjective estimate of a worker's pace relative to a normal work pace.

Frequency of Occurrence (F)

How often an element must be done during each work cycle.

Normal Time (NT)

The computation of mean observed time (MOT) multiplied by the performance rating factor (PRF) and the frequency of occurrence (F): $MOT \times PRF \times F$.

Allowance Factor (AF)

The amount of time added to normal time to account for personal time, fatigue, and unavoidable delays.

Standard Time Formula

$$\text{Normal Time} \times AF$$

Elemental Time Data

Standards established based on previously completed time studies stored in an organization’s database.

Predetermined Time Data (MTM)

Published databases of elemental time data, such as methods-time measurement, used for actions like reach, grasp, and move.

Work Sampling

A technique for estimating the proportion of time a worker or machine spends on a given activity through random observations.

Learning Curve Theory

The theory that the time required to complete a task decreases each additional time it is performed by the same employee.

Learning Curve Calculation

The formula $T \times L^n$ where $T$ is the initial time, $L$ is the rate of learning, and $n$ is the number of times the task has doubled.

Time-based Compensation

A system where pay is based on the number of hours worked.

Output-based (Incentive) Systems

A system where pay is based on the number of units completed.