Operations Management: Layout, Inventory & MRP Vocabulary

A comprehensive set of vocabulary flashcards covering key terms and concepts from the lecture on facility layout strategies, inventory management, and material requirements planning.

Facility Layout

The physical arrangement of work areas, equipment, people, and support services within and around a building to maximize efficiency and customer satisfaction.

Layout Strategy

A long-term plan for developing layouts that support a firm’s competitive requirements for cost, quality, flexibility, and speed.

Office Layout

A layout that positions workers, equipment, and spaces to promote safe, comfortable, and efficient movement of information.

Retail Layout

A layout that allocates shelf and floor space to influence customer behavior and maximize profitability per square foot.

Warehouse Layout

A layout that balances low-cost storage with low-cost material handling to maximize the cube (volume) of a facility.

Fixed-Position Layout

A layout used for large, bulky projects in which the product remains stationary and workers, materials, and equipment come to the site.

Process-Oriented Layout

A layout that groups similar machines or processes together to handle low-volume, high-variety production (job shop).

Work Cell Layout

An arrangement of machines and people focused on making a single product or a small family of related products.

Product-Oriented Layout

A repetitive or continuous layout that arranges resources around the sequence of operations for one high-volume, standardized product.

Material Handling Equipment

Devices used to move, store, control, and protect materials, goods, and products throughout manufacturing, warehousing, and distribution.

ASRS (Automated Storage and Retrieval System)

Computer-controlled equipment that automatically places and retrieves loads from defined storage locations, sharply increasing warehouse productivity.

Cross-Docking

A logistics practice in which incoming materials are unloaded, sorted, and directly reloaded onto outbound trucks with little or no storage.

Random Stocking

A warehouse practice that uses information systems to assign incoming items to any available space while tracking their exact location.

Slotting Allowance

A fee manufacturers pay retailers to secure shelf space for their products.

Servicescape

The physical environment in a service facility, including ambient conditions, spatial layout, and signs/symbols that influence customer perception.

Ambient Conditions

Background characteristics of a service environment such as lighting, sound, smell, and temperature.

Spatial Layout and Functionality

The way equipment, furnishings, and aisles are arranged to facilitate customer circulation and service delivery.

Signs, Symbols, and Artifacts

Visual cues in a servicescape that convey meaning and support a facility’s image or mission.

Work-in-Process (WIP) Inventory

Units that have begun transformation but are not yet finished goods.

Takt Time

The maximum time per unit allowed to meet customer demand, calculated as available production time divided by required units.

Cycle Time (Assembly Line)

The maximum time allowed at each workstation to complete its tasks before the unit moves to the next station.

Line Balancing

Assigning tasks to workstations so that each station’s total task time is as equal as possible while meeting required output.

Precedence Diagram

A graphical representation showing the sequence in which assembly tasks must be performed.

Work Balance Chart

A visual tool showing the distribution of task times among operators or machines to identify bottlenecks.

Focused Work Center

A large work cell dedicated to producing a high-demand family of similar products within a facility.

Focused Factory

A physically separate facility organized around a narrowly defined product line or process to achieve superior performance.

Economic Order Quantity (EOQ)

The order size that minimizes the sum of annual holding costs and ordering (setup) costs.

Holding (Carrying) Cost

The expense of storing inventory, including capital, warehousing, insurance, depreciation, and obsolescence.

Ordering Cost

The cost of placing and receiving an order, including paperwork, communication, and inspection expenses.

Setup Cost

The cost to prepare a machine or process for manufacturing a batch of items.

Reorder Point (ROP)

The inventory level at which a new order should be placed to avoid stockouts during lead time.

Safety Stock

Extra inventory held to protect against uncertainties in demand or lead time.

Fixed-Order-Quantity System

An inventory system in which the same quantity is ordered each time the reorder point is reached.

Fixed-Period (P) System

An inventory system in which orders are placed at set time intervals and quantities vary to raise inventory to a target level.

Lead Time

The time between placing an order and receiving it.

ABC Analysis

An inventory classification technique that divides items into A (high-value), B (moderate-value), and C (low-value) categories based on annual dollar usage.

Class A Items

The small percentage of inventory items that account for the largest share of annual dollar volume; require tight control.

Class B Items

Moderate-importance inventory items that receive routine control and monitoring.

Class C Items

Low-value inventory items that represent a large number of SKUs but a small share of annual dollar volume; controlled loosely.

Cycle Counting

A method of auditing inventory accuracy by counting selected items on a periodic schedule rather than doing a full physical count.

Independent Demand

Demand for an item that is unrelated to the demand for other items; typically customer orders for finished goods.

Dependent Demand

Demand for component items that is directly tied to the production of another item.

Bill of Materials (BOM)

A hierarchical listing of all raw materials, parts, and subassemblies needed to produce one unit of a finished product.

Product Structure Tree

A visual depiction of the BOM that shows parent-component relationships by level.

Master Production Schedule (MPS)

A time-phased plan that specifies how many finished products are to be produced and when.

Material Requirements Planning (MRP)

A computer-based system that converts the MPS into time-phased requirements for components and raw materials.

Gross Requirements

Total expected demand for an item in each time period before considering on-hand inventory or scheduled receipts.

Scheduled Receipts

Open purchase or production orders that are due to arrive in a specific period.

Projected On-Hand

The expected inventory available at the start of each period after accounting for receipts and issues.

Net Requirements

The actual amount of an item needed in a period after subtracting projected on-hand and scheduled receipts from gross requirements.

Planned-Order Receipt

The quantity of an item that MRP plans to receive in a specific period to cover net requirements.

Planned-Order Release

The quantity of an item that should be ordered in a specific period, offset by lead time, to meet planned receipts.

Cumulative Lead Time

The total of all lead times required to make a finished product from raw materials.

Lot-For-Lot (L4L)

An MRP lot-sizing rule that orders exactly what is needed for production in each period, resulting in zero ending inventory.

Fixed Order Quantity (FOQ)

An MRP lot-sizing rule that always orders a predetermined, constant quantity.

Periodic Order Quantity (POQ)

An MRP lot-sizing rule that orders enough to cover demand for a set number of periods.

MRP II (Manufacturing Resource Planning)

An expanded MRP system that integrates additional functions—such as finance, marketing, and human resources—into production planning.

ERP (Enterprise Resource Planning)

An integrated information system that standardizes and shares data across the entire organization, linking functions such as finance, HR, sales, and manufacturing.

Servicescape – Signs & Symbols

Design elements that communicate a facility’s purpose or brand and guide customer behavior.

Ergonomics

The study of the interface between workers and their work environment, aimed at designing tasks and equipment for safety, comfort, and efficiency.

Job Enlargement

A job design strategy that increases the variety of tasks an employee performs to reduce boredom.

Job Enrichment

A job design strategy that adds planning, decision-making, and control responsibilities to increase employee motivation.

Self-Directed Team

A group of empowered employees that manages itself and is responsible for a complete process or product.

Poka-Yoke

Any mistake-proofing device or procedure designed to prevent defects or make them obvious at a glance.

Andon

A visual signal (often a light) that alerts workers and supervisors to quality or process problems in real time.

Kanban

A visual card or signal used in just-in-time systems to trigger the movement or production of material.

Visual Management

The use of low-cost visual devices—charts, color codes, indicators—to communicate information quickly and accurately on the shop floor.