SCM 411 Aggregate Planning, Inventory Management, MRP, Scheduling, and Linear Programming

A set of 50 vocabulary flashcards covering Aggregate Planning, Inventory Management, MRP, Scheduling, and Linear Programming based on the SCM 411 lecture notes.

Aggregate planning

Intermediate range capacity planning that typically covers a time horizon of 2 up to 18 months.

Aggregate planning goal

Achieve a production plan that will effectively utilize the organizations resources to satisfy demand.

Pricing (Demand Option)

Used to shift demand from peak to off peak periods where price elasticity is important.

Back orders (Aggregate Planning)

Orders are taken in one period and deliveries promised for a later period.

New demand

The creation of demand to absorb excess capacity generated due to peak time demands.

Level capacity strategy

Maintaining a steady rate of regular-time output while meeting variations in demand by a combination of options.

Chase demand strategy

Matching capacity to demand; the planned output for a period is set at the expected demand for that period.

Perpetual inventory system

System that keeps track of removals from inventory continuously, thus monitoring current levels of each item.

Two-bin system

Inventory system using two containers; a reorder is placed when the first is empty.

Universal bar code

A bar code printed on a label that has information about the item to which it is attached.

Periodic inventory system

A system involving a physical count of items made at periodic intervals.

Class A items

Inventory items that represent $5-15\%$ of units and $70-80\%$ of value.

Class B items

Inventory items that represent $30\%$ of units and $15\%$ of value.

Class C items

Inventory items that represent $50-60\%$ of units and $5-10\%$ of value.

Economic Production Quantity (EPQ) objective

To determine a production lot size that minimizes total annual inventory costs when production occurs periodically.

Reorder point (ROP)

The inventory level at which a new order should be placed, calculated as $\text{ROP} = d \times \text{LT}$.

Materials Requirement Planning (MRP)

A computer-based information system that translates finished product requirements into time-phased requirements for subassemblies, parts, and raw materials.

Master schedule

States which end items are to be produced, when they are needed, and in what quantities.

Bill of materials (BOM)

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

Time buckets

Information on the status of each item by time period within inventory records.

Planned orders

A schedule indicating the amount and time of future orders.

Order releases

Authorizing the execution of planned orders.

Performance-control reports

Evaluation of system operations, including deviations from plans and cost information.

Exception reports

Data on any major discrepancies encountered within the MRP system.

Lot-for-lot ordering

The order or run size is set equal to the demand for that period.

Lot size ordering

The lot size is predetermined due to packaging, shipping, or production considerations.

Scheduled receipts

Quantities that will be received in some future periods as their corresponding orders have been released in the past.

Projected on hand

The inventory projected to be physically present in the facility in a future period.

Net requirement

A quantity of an item that must be purchased or manufactured to fully deliver independent demand requirements.

Planned order receipt

Quantities that must be planned to be received in a particular time period in order to meet the net requirements.

Planned order releases

Quantities that must be planned to be released in a period in order to receive them in a future time period.

Pegging

The process of identifying the parent items that have generated a given set of material requirements for an item.

Backflushing

Exploding an end item’s BOM to determine the quantity of the components that were used to make the item.

Scheduling

Establishing the timing of the use of equipment, facilities, and human activities in an organization.

Load chart

A Gantt chart that shows the loading and idle times for a group of machines or a list of departments.

Schedule chart

A Gantt chart that shows the orders or jobs in progress and whether they are on schedule.

Infinite loading

Jobs are assigned to workstations without regard to the capacity of the work center.

Finite loading

Jobs are assigned to work centers taking into account the work center capacity and job processing times.

Sequencing

Determining the order in which jobs at a work center will be processed.

Johnson’s rule

A sequencing technique for scheduling jobs at two work centers to minimize total idle time.

Theory of constraints

Production planning approach that balances flow throughout a system and centers improvement around restrictive constraints.

Cyclical scheduling

Assigning employees to work shifts or time slots and days off on a repeating basis.

Objective function

A mathematical statement of profit or cost for a given solution in an LP problem.

Decision variables

Amounts of either inputs or outputs represented in a linear programming model.

Constraints

Limitations that restrict the available alternatives in linear programming.

Feasible solution space

The set of all feasible combinations of decision variables as defined by the constraints.

Binding constraint

A constraint that forms the optimal corner point of the feasible solution space and effectively limits the objective function value.

Redundant constraint

A constraint that does not form a unique boundary of the feasible solution space.

Shadow price

The amount by which the objective function value would change if a constraint's RHS is increased by one unit.

Maximum inventory ($I_{max}$)

Calculated in the EPQ model as $Q \times (1 - u/p)$, where $u$ is usage rate and $p$ is production rate.