Chapter Eleven – Supply Chain Management (terms)

Avoidance – finding ways to minimize the number of items that are returned

Bullwhip effect – inventory oscillations become progressively larger looking backward through the supply chain

Centralized purchasing – purchasing is handled by one special department

Collaborative Planning, Forecasting, and Replenishment (CPFR) – a supply chain initiative that focuses on information sharing among supply chain trading partners in planning, forecasting, and inventory replenishment

Cross-docking – a technique whereby goods arriving at a warehouse from a supplier are unloaded from the supplier’s truck and loaded onto outbound trucks, thereby avoiding warehouse storage

Decentralized purchasing – individual departments or separate locations handle their own purchasing requirements

Delayed differentiation – production of standard components and subassemblies, which are held until late in the process to add differentiating features

Disintermediation – reducing one or more steps in a supply chain by cutting out one or more intermediaries

Distribution requirements planning (DRP) – a system for inventory management and distribution planning

E-business – the use of electronic technology to facilitate business transactions

Event management – the ability to detect and respond to unplanned events

Fill rate – the percentage of demand filled from stock on hand

Gatekeeping – screening returned goods to prevent incorrect acceptance of goods

Information velocity – the rate at which information is communicated in a supply chain

Inventory velocity – the rate at which inventory (material) goes through the supply chain

Logistics – the part of a supply chain involved with the forward and reverse flow of goods, services, cash, and information

Outsourcing – buying goods of services instead of producing or providing them in-house

Purchasing cycle – series of steps that begin with a request for purchase and end with notification of shipment received in satisfactory condition

Reverse logistics – the backward flow of goods returned to the supply chain from their final destination

Radio frequency identification (RFID) – a technology that uses radio waves to identify objects, such as goods in supply chains

Strategic partnering – two or more business organizations that have complementary products or services join so that each may realize a strategic benefit

Supply chain – a sequence of organizations – their facilities, functions, and activities – that are involved in producing and delivering a product or service

Supply chain visibility – a major trading partner can connect to its supply chain to access data in real time

Third-party logistics (3-PL) – the outsourcing of business management

Traffic management – overseeing the shipment of incoming and outgoing goods

Vendor analysis – evaluating the sources of supply in terms of price, quality, reputation, and service

Vendor-managed inventory (VMI) – vendors monitor goods and replenish retail inventories when supplies are low

Chapter Five – Strategic Capacity Planning for Products and Services (terms)

Bottleneck operation – an operation in a sequence of operations whose capacity is lower than that of the other operations

Break-even point (BEP) – the volume of output at which total cost and total revenue are equal

Capacity – the upper limit or ceiling on the load that an operating unit can handle

Capacity cushion – extra demand intended to offset uncertainty; =100% – Utilization

Cash flow – the difference between cash received from sales and other sources, and cash outflow for labor, material, overhead, and taxes

Diseconomies of scale – if the output rate is more than the optimal level, increasing the output rate results in increasing average unit costs

Economies of scale – if the output rate is less than the optimal level, increasing the output rate results in decreasing average unit costs

Outsource – obtain a good or service from an external provider, (make or buy?)

Present value – the sum, in current value, of all future cash flows of an investment proposal

Chapter Four – Product and Service Design (terms)

Computer-aided design (CAD) – product design using computer graphics

Concurrent engineering – bringing engineering design and manufacturing personnel together early in the design phase

Design for assembly (DFA) – design that focuses on reducing the number of parts in a product and on assembly methods and sequence

Design for disassembly (DFD) – design so that used products can be easily taken apart

Design for manufacturing (DFM) – the designing of products that are compatible with an organization’s capabilities

Design for recycling (DFR) – design that facilitates the recovery of materials and components in used products for reuse

Designing for operations – taking into account the capabilities of the organization in designing goods and services

Failure – situation in which a product, part, or system does not perform as intended

Life cycle – incubation, growth, maturity, and decline

Manufacturability – the ease of fabrication and/or assembly

Mass customization – a strategy of producing basically standardized goods, but incorporating some degree of customization

Modular design – a form of standardization in which component parts are grouped into modules that are easily replaced or interchanged

Normal operating conditions – the set of conditions under which an item’s reliability is specified

Product bundle – the combination of goods and services provided to a customer

Product liability – the responsibility of a manufacturer for any injuries or damages caused by a faulty product

Quality function deployment (QFD) – an approach that integrates “voice of the customer” into both product and service development

Recycling – recovering materials for future use

Reliability – the ability or a product, part, or system to perform its intended function under a prescribed set of conditions

Remanufacturing – refurbishing used products by replacing worn-out or defective components

Research and development (R&D) – organized efforts to increase scientific knowledge or product innovation

Reverse engineering – dismantling and inspecting a competitor’s product to discover product improvements

Robust design – design that results in products or services that can function over a broad range of conditions

Service – something that is done to or for a customer

Service blueprint – a method used in service design to describe and analyze a proposed service

Service delivery system – the facilities, process, and skills needed to provide a service

Service package – the physical resources needed to perform the service, the accompanying goods, and the explicit and implicit services included

Standardization – extent to which there is absence of variety in a product, service, or process

Uniform Commercial Code – products carry an implication of merchantability and fitness

Value analysis – examination of the function of parts and materials in an effort to reduce cost and /or improve product performance

Chapter Three – Forecasting (terms)

Associative model – forecasting technique that uses explanatory variables to predict future demand

Bias – persistent tendency for forecasts to be greater or less than the actual values of a time series

Centered moving average – a moving average positioned at the center of the data that were used to compute it

Control chart – a visual tool of monitoring forecast errors

Correlation – a measure of the strength and direction of relationship between two variables

Cycle – wavelike variations lasting more than one year

Delphi method – an iterative process in which managers and staff complete a series of questionnaires, each developed from the previous one, to achieve a consensus forecast

Error – difference between the actual value and the value that was predicted for a given period

Exponential smoothing – a weighted averaging method based on previous forecast plus a percentage of the forecast error

Forecast – a statement about the future value of a variable of interest

Irregular variation – caused by unusual circumstances, not reflective of typical behavior

Judgmental forecasts – forecasts that use subjective inputs such as opinions from consumer surveys, sales staff, managers, executives, and experts

Least squares line – minimizes the sum of the squared vertical deviations around the line

Linear trend equation – Ft = a + bt, used to develop forecasts when trend is present

Mean absolute deviation (MAD) – the average absolute forecast error

Mean absolute percent error (MAPE) – the average absolute percent error

Mean squared error (MSE) – the average of squared forecast errors

Moving average – technique that averages a number of recent actual values, updated as new values become available

Naïve forecast – a forecast for any period that equals the previous period’s actual value

Predictor variables – variables that can be used to predict values of the variable of interest

Random variations – residual variations after all other behaviors are accounted for

Regression – technique for fitting a line to a set of points

Seasonal relative – percentage of average or trend

Seasonal variations – regularly repeating movements in series values that can be tied to recurring events

Seasonality – short-term regular variations related to the calendar or time of day

Time series – a time-ordered sequences of observations taken at regular intervals

Time-series forecasts – forecasts that project patterns identified in recent time-series observations

Tracking signal – the ratio of cumulative forecast error to the corresponding value of MAD, used to monitor a forecast

Trend – a long-term upward or downward movement in data

Trend-adjusted exponential smoothing (also double smoothing) – variation of exponential smoothing used when a time series exhibits a linear trend

Weighted average – more recent values in a series are given more weight in computing a forecast

Chapter One – Intro to Operations Management (terms)

Agility – the ability of an organization to respond quickly to demands or opportunities.

Craft production – system in which highly skilled workers use simple, flexible tools to produce small quantities of customized goods

Division of labor – the breaking up of a production process into small tasks, so that each worker performs a small portion of the overall job

E-business – use of the Internet to transact business

E-commerce – consumer-to-business transactions

Interchangeable parts – parts of a product made to such precision that they do not have to be custom fitted

Lead time – the time between ordering a good or service and receiving it

Lean production – system that uses minimal amounts of resources to produce a high volume of high-quality goods with some variety

Mass production – system in which low-skilled workers use specialized machinery to produce high volumes of standardized goods

Model – an abstraction of reality; a simplified representation of something

Operations management – the management of systems or processes that create goods and/or provide services

Outsourcing – obtaining a product or service from outside the organization

Pareto phenomenon – a few factors account for a high percentage of the occurrence of some event(s)

Six sigma – a process for reducing costs, improving quality, and increasing customer satisfaction

Supply chain – a sequence of activities and organizations involved in producing and delivering a good or service

System – a set of interrelated parts that must work together

Technology – the application of scientific discoveries to the development and improvement of goods and services

Value-added – the term used to describe the difference between the cost of inputs and the value or price of outputs