Operations and Supply Chain Management Review

Vocabulary practice flashcards covering operations management, inventory models, strategic sourcing, lean manufacturing, and quality concepts.

Setup Cost

The inventory expense incurred to clean, reconfigure, or prepare equipment before switching to produce a different product (e.g., cleaning a mixer between cookie dough and pumpkin bread batches).

Work-in-Progress (WIP)

Inventory that has entered the production process and undergone some processing but has not yet been baked or assembled into a completed finished good.

Bill of Materials (BOM)

A comprehensive engineering document that defines exactly how many units of each component and raw material are required to manufacture a single finished good item.

Economic Order Quantity (EOQ)

The optimal order quantity at which total annual ordering costs and total annual carrying (holding) costs are exactly equal, minimizing total inventory management cost.

Lead Time

The total latency elapsed between placing an order and receiving the goods, which typically increases when production is offshored to reduce manufacturing labor costs.

Total Cost of Ownership (TCO)

A comprehensive financial estimate designed to assess all direct and indirect lifetime costs of acquiring and operating an item, rather than relying solely on purchase price.

Routine Items

Low-complexity, low-spend items on the strategic sourcing matrix where companies maintain transactional relationships and spend the least amount of time selecting suppliers.

Leverage Items

Items on the strategic sourcing matrix that feature low product complexity but high purchasing volume, prompting buyers to focus intensely on price negotiation and volume price breaks.

Bottleneck Items

Items on the strategic sourcing matrix that exhibit high complexity and limited supplier availability or high entry barriers, representing elevated supply risk.

Critical Items

High-complexity, high-value components on the strategic sourcing matrix that warrant forming long-term strategic alliances and prioritizing supplier service over basic unit price.

Early Supplier Involvement (ESI)

The collaborative practice of integrating key suppliers into the early phases of new product development to reduce overall development time and optimize manufacturability.

Exploitable Customer

A buyer classification in the customer of choice matrix indicating an account that holds little strategic priority for the supplier and is potentially paying "too much" for a given product.

Multi-Criteria Analysis

A weighted evaluation model used in supplier selection where relative importance weights are assigned to evaluation criteria; the factor with the lowest weight is the least important to the firm.

Supplier Identification

The initial step of the supplier selection process where an organization finds all potential market suppliers and issues requests for information (RFI).

Single Sourcing

Procuring the total required volume of an item from one supplier, which typically enables larger order consolidation and more full truckload shipments.

Multi-Sourcing

Allocating procurement volume across multiple distinct suppliers to mitigate supply disruption risk stemming from regional events or natural disasters.

Bottleneck (Theory of Constraints)

The specific operational workstation or resource with the lowest effective throughput capacity, which constrains the overall output of the entire production process.

Enabler Processes

Support-oriented business activities (such as technical support or IT maintenance) that provide administrative and operational capability to core business functions.

Strategic Processes

High-level governance and planning activities focused on long-term competitive positioning, such as monitoring competitor activities in the market.

Batch Process

A manufacturing layout suitable for producing moderate varieties of goods in discrete, segmented groups, such as a bakery offering $9$ different muffin flavors daily.

Continuous Flow Process

A non-stop, highly standardized process type utilized for uniform products produced without interruption, such as power generation at an energy plant.

Effective Capacity

The realistic operating capacity attainable under normal conditions, calculated by subtracting expected productivity losses (e.g., machine breakdowns and quality scrap) from ideal design capacity.

Extra-Processing

A lean category of waste defined as performing unneeded work, modifications, or inspection steps that do not provide added value to the final customer.

Overproduction

A lean operational waste characterized by manufacturing more output than current customer demand requires or producing items earlier than needed.

Excess-Transportation

A lean category of waste that involves moving materials, tooling, or work-in-progress inventory across unnecessarily long distances between workstations.

Kanban

A lean pull-replenishment signaling device (such as an order card or threshold trigger) that prompts a fixed replenishment order once existing stock drops to a designated level.

Kaizen

A continuous improvement philosophy often implemented as a short-term, dedicated blitz event where cross-functional team members work together to optimize a workstation.

Toyota Production System (TPS)

A renowned lean manufacturing framework oriented around just-in-time production, whose primary operational mandate is to produce items exactly when they are needed.

Six Sigma

A data-driven quality improvement methodology that concentrates primarily on identifying root causes to reduce process variation.

Conformance Quality

A core dimension of product quality assessing whether an item meets established design specifications and explicit dimensional standards (e.g., garment dimensions).

Appraisal Costs

Costs of quality associated with measuring, evaluating, or auditing incoming parts, raw materials, or finished items received from suppliers to verify standards.

External Failure Costs

The most expensive category within the cost of quality framework, incurred when defects escape detection and are identified only after receipt by the customer.

Empathy (Service Quality)

A service quality dimension marked by caring, individualized, and personal attention provided to customers, such as staff knowing a customer's name and regular order by heart.

Profit Leverage Effect

The principle that purchasing savings contribute dollar-for-dollar directly to operating profits, meaning a $10\text{ million dollars}$ reduction in procurement costs directly increases profit by $10\text{ million dollars}$.

Takt Time

The theoretical pace of production required to match consumer demand, calculated by dividing net available work time by total customer demand.

Cycle Time

The actual time elapsed to process and finish one unit of output; if cycle time exceeds takt time, the firm must take corrective actions to reduce it.

Common Cause Variation

Inherent, everyday process variability that falls safely within established upper ($\text{UCL}$) and lower ($\text{LCL}$) statistical process control limits.

Cycle Counting

A modern inventory auditing method where selected subsets of stock are counted on a rotational, periodic basis throughout the year rather than shutting down for an annual physical inventory count.