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Holding cost
The cost to carry an item in inventory for a length of time, usually a year, including insurance, depreciation, and warehousing costs.
Ordering cost
The costs of ordering and receiving inventory, including time, labor, shipping, and inspection costs.
Shortage costs
Costs resulting when demand exceeds the supply of inventory.
Safety stock
Extra inventory carried to reduce the probability of a stockout due to demand and/or lead time variability.
Economic Order Quantity (EOQ)
A method used to identify a fixed order size that will minimize the sum of the annual costs of holding inventory and ordering inventory.
Lean systems
Systems that are demand driven, focus on waste reduction, and are dedicated to excellence and continuous improvement.
Overproduction
A type of waste that occurs when more products are produced than are demanded.
PULL Method
A production method where customer demand activates the production of a good or service.
PUSH Method
A production method that uses forecasts of demand and produces items before customer orders are received.
Aggregate Planning
Intermediate-range capacity planning, usually covering 2 to 12 months, to balance supply and demand.
Component (BOM)
An item that goes through one or more operations to become part of one or more parents.
Parent (BOM)
Any product that is manufactured from one or more components.
Outsourcing
Paying suppliers and distributors to perform processes and provide needed services and materials.
Vertical Integration
Purchasing the needed processes rather than outsourcing.
Next-shoring
A supply chain strategy that involves locating processes in close proximity to customer demand or product R&D.
Note 
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