CHAPTER 1

Process Nested process External Customers Internal Customers External Suppliers Internal Suppliers Value Chain Core Process Support Process Customer Relationship Process New Service/Product Development Process Order Fulfillment Process Supplier Relationship Process Operations management Productivity
any activity or group of activities that takes one or more inputs, transforms and adds value to them, and provides one or more outputs for its customers the concept of a process within a process a customer who is either an end user or any intermediary (such as manufacturers, financial institutions or retailers) buying the firm's finished products and services one or more employees or processes that rely on inputs from other employees or processes in order to perform their work the businesses or individuals who provide the resources, services, products, and materials for the firm's short term or long term needs the employees or processes that supply important information or materials to a firm's processes an interrelated series of processes that produces a service or product a chain of activities that delivers value to external customers a process that provides vital resources and inputs to the core processes and therefore is essential to the management of the business a process that identifies, attracts, builds relationships with external customers, and facilities the placement of orders by customers, sometimes referred to as customer relationship management a process that designs and develops new services or products from inputs received from external customer specifications or from the market in general through the customer relationship process a process that includes the activities required to produce and deliver the service or product to the external customer a process that selects the suppliers of services, materials, and information and facilitates the timely and efficient flow of these items into the firms the systematic design, direction and control of processes that transform inputs into products and services for internal, as well as external, customers the value of outputs (products and services) produced divided by the values of input resources (wages, costs of equipment, and the like)

SUPPLEMENT A
Break even point Break even analysis Variable cost Fixed cost Sensitivity analysis Preference matrix
the volume at which total revenues equal total costs the use of the break even point; can be used to compare processes by finding the volume at which two different processes have equal total costs the portion of the total cost that varies directly with volume of output the portion of the total cost that remains constant regardless of changes in levels of output a technique for systematically changing parameters in a model to determine the effects of such changes a table that allows the manager to rate an alternative according to several performance criteria

Decision theory Payoff table Value of perfect information Decision tree

a general approach to decision making when the outcomes associated with alternatives are often in doubt a table that shows the amount for each alternative if each possible event occurs the amount by which the expected payoff will improve if the manager knows which event will occur a schematic model of alternatives available to the decision maker, along with their possible consequences

CHAPTER 2
Operations strategy Core competencies Competitive priorities Competitive capabilities Low-cost operations Top quality Consistent quality Delivery speed Lead time On time delivery Development speed Time based competition Customization Variety
the means by which operations implements the firm's corporate strategy the unique resources and strengths that an organization's mgmt considers when formulating strategy the critical dimensions that a process must possess to satisfy its internal or external customers, both now and in the future the cost, quality, time, and flexibility dimensions that a process actually possesses and is able to deliver delivering a service or producing a product at the lowest possible cost to the satisfaction of the process's external or internal customers delivering an outstanding service or product producing services or products that meet design specifications on a consistent basis quickly filling a customer's order a measure often used for delivery speed meeting delivery-time promises quickly introducing a new product or service a strategy that focuses on the competitive priorities of delivery speed and development speed satisfying the unique needs of each customer by changing product or service designs handling a wide assortment of services or products efficiently accelerating or decelerating the rate of production of services or products quickly to

Volume flexibility handle large fluctuations in demand

a collection of goods and services provided by a service process to its external or

Service package internal customers Quality function deployment a means of translating customer requirements into the appropriate technical requirements for each stage of service or product development and production (QFD) Concurrent engineering Mass customization
a concept that brings product engineers, process engineers, marketers, buyers, information specialists, quality specialists, and suppliers together to work jointly to design a service or product and the required processes that will meet customer expectations a strategy whereby a firm's flexible processes generate a wide variety of services or products at reasonably low costs

Postponement

an organizational concept whereby some of the final activities in the provision of a service or product are delayed until the orders are received

CHAPTER 3
Process design ISO 14001 Process structure Customer involvement Vertical integration Resource flexibility Capital intensity Customer contact Active contact Passive contact Process complexity Process divergence Process flow Line flow Front office Hybrid office Back office Process choice Project process Job process Batch process Line process
the selection of the inputs, resources, work flows, and methods that transform inputs into outputs a set of standards on how a company goes about eliminating pollution a process decision that determines how processes are designed relative to the kinds of resources needed, how resources are partitioned between them, and their key characteristics the ways in which customers become part of the process and the extent of their participation the degree to which a firm's own production system or service facility handles the entire value chain the ease with which employees and equipment can handle a wide variety of products, output levels, duties, and functions the mix of equipment and human skills in a process the extent to which the customer is present, is actively involved, and receives personal attention during the service process the customer is very much part of the creation of the service and affects the service process itself the customer is not involved in tailoring the process to meet special needs or in how the process is performed the number and intricacy of the steps required to perform the process the extent to which the customer is present, is actively involved, and receives personal attention during the service process the manner in which work progresses through the sequence of steps in a process, which could range from highly diverse to linear the customers, materials, or information move linearly from one operation to the next, according to a fixed sequence a process with high customer contact where the service provider interacts directly with the internal or external customer a process with moderate levels of customer contact and standard services with some options available a process with low customer contact and little service customization a way of structuring the process by organizing resources around the process or organizing them around the products a process characterized by a high degree of product customization, the large scope of each product, and the release of substantial resources once it is completed a process with the flexibility needed to produce a wide variety of products in significant quantities, with considerable complexity and divergence in the steps performed a process that differs from the job process with respect to volume, variety, and quantity a process that lies between the batch and continuous processes on the continuum; volumes are high and products are standardized, which allows resources to be organized around particular products

Continuous process Make-to-stock strategy

the extreme end of high-volume standardized production, with rigid line flows a strategy that involves holding items in stock for immediate delivery, thereby minimizing customer delivery times

a term sometimes used in the popular press for a line process that uses the makeMass production to-stock strategy

Assemble-toorder strategy Make-to-order strategy Outsourcing Make-or-buy decisions Backward integration Forward integration Virtual corporation Network companies Flexible workforce Automation Fixed automation Flexible (or programmable) automation Economies of scope Specialization

a strategy for a wide variety of products from relatively few assemblies and components after the customer orders are received a strategy used by manufacturers that make products to customer specifications in low volumes allotting work to suppliers and distributors to provide needed services and materials and to perform those processes that the organization does not perform itself decisions that either involve more integration (a make decision) or more outsourcing (a buy decision) a firm's movement upstream toward the sources of raw materials and parts a firm's movement downstream by acquiring more channels of distribution, such as its own distribution centers (warehouses) and retail stores a situation in which competitors enter into short-term partnerships to respond to market opportunities companies that contract with other firms for most of their production an for many of their other functions a workforce whose members are capable of doing many tasks, either at their own workstations or as they move from one workstation to another a system, process, or piece of equipment that is elf-acting and self-regulating a manufacturing process that produces one type of part or product in a fixed sequence of simple operations a manufacturing process that produces can be changed easily to handle various products economies that reflect the ability to produce multiple products more cheaply in combination than separately the degree to which a job involves a narrow range of tasks, low complexity, low divergence, and , presumable, great efficiency and high quality

Job enlargement the horizontal expansion of a job, increasing the range of tasks at the same level Job rotation Job enrichment Plants within plants (PWPs) Cell Focused factories
a system whereby workers exchange jobs periodically, thus getting more diverse experience in task assignment a vertical expansion of job duties, workers have greater control and responsibility for an entire process not just a specific skill or operation different operations within a facility with individualized competitive priorities, processes, and workforces under the same roof a group of two or more dissimilar workstations located close to each other that process a limited number of parts or models with similar process requirements the result of a firm's splitting large plants that produced all the company's products into several specialize smaller plants

Reengineering Process improvement

the fundamental rethinking and radical redesign of processes to improve performance dramatically in terms of cost, quality, service, and speed the systematic study of the activities and flows of each process to improve it

CHAPTER 4
the documentation an detailed understanding of how work is performed and how it

Process analysis can be redesigned Suggestion a voluntary system by which employees submit their ideas on process improvements system Design team Metrics Flowchart
a group of knowledgeable, team-oriented individuals who work at one or more steps in the process, do the process analysis, and are motivated to make the necessary changes performance measures that are established for a process and the steps within it a diagram that traces the flow of information, customers, equipment, or materials through the various steps of a process a special flowchart of a service process that shows which of its steps have high

Service blueprint customer contact Process chart Checklist Histogram Bar chart
an organized way of documenting all of the activities performed by a person, by a machine, at a workstation, with a customer, or on materials a form used to record the frequency of occurrence of certain service or product characteristics related to performance a summarization of data measured on a continuous scale, showing the frequency distribution of some quality characteristic (in statistical terms, the central tendency and dispersion of the data) a series of bars representing the frequency of occurrence of data characteristics measured on a yes-or-no basis a bar chart on which the factors are plotted in decreasing order of frequency along the horizontal axis a plot of two variables showing whether they are related

Pareto chart Scatter diagram Cause-and-effect a diagram that relates a key performance problem to its potential causes diagram Graphs Process simulation Brainstorming session Benchmarking

representation of data in a variety of pictorial forms, such as line charts and pie charts the act of reproducing the behavior of a process, using a model that describes each step of the process a time when a group of people, knowledgeable on the process and its disconnects, propose ideas for change in a rapid-fire manner a systematic procedure hat measures a firm's process, services, and products against those of the industry leaders

SUPPLEMENT B
Simulation Time compression Monte Carlo simulation
the act of reproducing the behavior of a system using a model that describes the processes of the system the feature of simulation models that allows them to obtain operating characteristic estimates in much less time than is required to gather the same operating data from a real system a simulation process that uses random numbers to generate simulation events

Random number Decision variables Uncontrollable variables Steady state Defect

a number that has the same probability of being selected as any other number variables that are controlled by the decision maker and will change from one run to the next as different events are simulated random events that the decision maker cannot control the state that occurs when the simulation is repeated over enough time that the average results for performance measures remain constant

CHAPTER 5
any instance when a process fails to satisfy its customer

Prevention costs costs associated with preventing defects before they happen Appraisal costs Internal failure costs External failure costs Warranty Total quality management (TQM) Quality Teams Employee empowerment Quality circles Special-purpose teams Self-managing team Continuous improvement Plan-do-checkact cycle Statistical process control (SPC) Acceptance sampling
costs incurred in assessing the level of performance attained by the firm's processes costs resulting from defects that are discovered during the production of a service or product costs that arise when a defect is discovered after the customer has received the service or product a written guarantee that the producer will replace or repair defective parts or perform the service to the customer's satisfaction a philosophy that stresses three principles for achieving high levels of process performance and quality: customer satisfaction, employee involvement, and continuous improvement in performance a term used by customers to describe their general satisfaction with a service or product small groups of people who have a common purpose, set their own performance goals and approaches, and hold themselves accountable for success an approach to teamwork that moves responsibility for decisions farther down the organizational chart - to the level of the employee actually doing the job another name for problem-solving teams; small groups of supervisors and employees who meet to identify, analyze, and solve process and quality problems groups that address issues of paramount concern to management, labor, or both a small group of employees who work together to produce a major portion, or sometimes all, of a service or product the philosophy of continually seeking ways to improve processes based on a Japanese concept called kaizen a cycle, also called the Deming Wheel, used by firms actively engaged in continuous improvement to train their work teams in problem solving the application of statistical techniques to determine whether a process is delivering what the customer wants the application of statistical techniques to determine whether a quantity of material should be accepted or rejected based on the inspection or test of a sample

Common causes the purely random, unidentifiable sources of variation that are unavoidable with the current process of variation Assignable causes of any variation-causing factors that can be identified and eliminated variation Variables Attributes Sampling plan Sample size Control chart Type I error Type II error R-chart
service or products characteristics, such as weight, length, column, or time, that can be measured service or products characteristics that can be quickly counted for acceptable performance a plan that specifies a sample size, the time between successive samples, and decision rules that determine when action should be taken a quantity of randomly selected observations of process outputs a time-ordered diagram that is used to determine whether observed variations are normal an error that occurs when the employee concludes that the process is out of control based on a sample result that falls outside the control limits, when in fact it was due to pure randomness an error that occurs when the employee concludes that the process is in control and only randomness is present, when actually the process is out of statistical control a chart used to monitor process variability a chart used to see if the process is generating output on average consistent with a target value management has set for the process or whether its current performance, with respect to the average of the performance measure, is consistent with past performance a chart used for controlling the proportion of defective services or products generated by the process a chart used for controlling the number of defects when more than one defect can be present in a service or product the ability of the process to meet the design specifications for a service or product a target for design specifications an allowance above or below the nominal value

x-bar chart p-chart c-chart Process capability Nominal value Tolerance Process capability ration, Cp Process capability index, Cpk Quality engineering Quality loss function Six sigma ISO 9000

the tolerance width divided by 6 standard deviations (process variability) an index that measures the potential for a process to generate defective outputs relative to either upper or lower specifications an approach originated by Genichi Taguchi that involves combining engineering and statistical methods to reduce costs and improve quality by optimizing product design and manufacturing processes the rationale that a service or product that barely conforms to the specifications is more like a defective service or product than a perfect one a comprehensive and flexible system for achieving, sustaining, and maximizing business success a set of standards governing documentation of a quality program

ISO 14000

documentation standards that require participating companies to keep track of their raw materials use and their generation, treatment, and disposal of hazardous wastes

Malcolm Baldrige an award named for the late secretary of commerce, who was a strong proponent National Quality of enhancing quality s a means of reducing the trade deficit; the award promotes, recognizes, and publicizes quality strategies and achievements Award

CHAPTER 6
Capacity Utilization Bottleneck Theory of constraints (TOC) Drum-buffer-rope method Diseconomies of scale
the maximum rate of output for a process the degree to which equipment, space, or labor is currently being used an operation that has the lowest capacity of any operation in the process and thus limits the system's output an approach to management that focuses on whatever impedes progress toward the goal of maximizing the flow of total value-added funds or sales less discounts and variable costs. Also referred to as drum-buffer-rope method. see theory of constraints when the average cost per unit increases as the facility's size increases

the amount of reserve capacity that a process has to handle sudden increases in demand or temporary losses of production capacity; it measures the amount by Capacity cushion which the average utilization (in terms of total capacity) falls below 100 percent what the process capacity should be for some future time period to meet the Capacity demand of its customers (external or internal), allowing for the desired capacity cushion requirement

Planning horizon the set of consecutive time periods considered for planning purposes Setup time Capacity gap Base case Cash flow Waiting line Customer population Service facility Priority rule Service system Phase Preemptive discipline
the time required to change a machine from making one service or product to making another any difference (positive or negative) between projected demand and current capacity the act of doing nothing and losing orders from any demand that exceeds current capacity the difference between the flows of funds into and out of an organization over a period of time, including revenues, costs, and changes in assets and liabilities

SUPPLEMENT C
one or more "customers" waiting for service an input that generates potential customers a person (or crew), a machine (or group of machines), or both necessary to perform the service for the customer` a rule that selects the next customer to be served by the service facility the number of lines and the arrangement of the facilities a single step in providing a service a rule that allows a customer of higher priority to interrupt the service of another customer

Interarrival times the time between customer arrivals Little's law

a fundamental law that relates the number of customers in a waiting-line system to the waiting time of customers

CHAPTER 7
Layout planning Economic activity center Flexible-flow layout Line-flow layout Hybrid layout Fixed-position layout Layout flexibility One-worker, multiplemachines (OWMM) cell
planning that involves decisions about the physical arrangement of economic activity centers needed by a facility's various processes anything that consumes space; for example, a person or a group of people, a customer reception area, a teller window, a machine, a workbench or workstation, a department, a stairway or an aisle, a time card rack, a cafeteria or a storage room a layout that organizes resources (employees and equipment) by function rather than by service or product a layout in which workstations or departments are arranged in a linear path an arrangement in which the service or manufacturing site is fixed in place; employees along with their equipment, come to the site to do their work an arrangement in which service or manufacturing site is fixed in place; employees along with their equipment, come to the site to do their work the property of a facility to remain desirable after significant changes occur or to be easily and inexpensively adapted in response to changes

a one-person cell in which a worker operates several different machines simultaneously to achieve a line flow an option for achieving line-flow layouts with low-volume processes; this technique Group creates cells not limited to just one worker and has a unique way of selecting work technology (GT) to be done by the cell a plan that allocates space and indicates placement of each department Block plan a table that gives a measure of the relative importance of each pair of centers being

Closeness matrix located close together Weighteddistance method Euclidean distance Rectilinear distance Automated layout design program (ALDEP)
a mathematical model used to evaluate flexible-flow layouts based on proximity factors the straight-line distance, or shortest possible path, between two points the distance between two points with a series of 90-degree turns, as along city blocks

a computer software package that constructs a good layout from scratch, adding one department at a time

Computerized relative allocation of facilities technique a heuristic method that begins with the closeness matrix and an initial block layout, and makes a series of paired exchanges of departments to find a better block plan (CRAFT)

Line balancing Work elements Immediate predecessors Precedence diagram Cycle time Theoretical minimum - TM Balance delay Pacing Mixed-model time

the assignment of work to stations in a line so as to achieve the desired output rate with the smallest number roof workstations the smallest units of work that can be performed independently work elements that must be done before the next element can begin a diagram that allows one to visualize immediate predecessors better; work elements are denoted by circles, with the time required to perform the work shown below each circle the maximum time allowed for work on a unit at each station a benchmark or goal for the smallest number of stations possible, where the total time required to assemble each unit (the sum of all work-element standard times) is divided by the cycle time the amount by which efficiency falls short of 100 percent the movement of product from one station to the next as soon as the cycle time has elapsed a production line that produces several items belonging to the same family

CHAPTER 8
Project
an interrelated set of activities that have a definite starting and ending point, which results in a unique outcome fro a specific allocation of resources

Work breakdown structure (WBS) a statement of all work that has to be completed Activity
the smallest unit of work effort consuming both time and resources that the project manager can schedule and control a network planning method, designed to depict the relationships between activities,

Network diagram that consists of nodes (circles) and arc (arrows) Program evaluation and review technique (PERT) Critical path method (CPM) Precedence relationship Activity-on-arc (AOA) network

a network planning method created for the U.S. Navy's Polaris missile project in the 1950's. which involved 3000 separate contractors and suppliers a network planning method developed in the 1950s as a means of scheduling maintenance shutdowns at chemical-processing plants a relationship that determines a sequence for undertaking activities; it specifies that one actively cannot start until a preceding activity has been completed an approach used to create a network diagram that uses arcs to represent activities an nodes to represent events the point at which one or more activities are to be completed and one or more other activities are to begin

Event Activity-on-node an approach used to create a network diagram, in which nodes represent activities (AON) network and arcs represent the precedence relationships between them the sequence of activities between a project's start and finish Path Critical path Activity slack

the sequence of activities between a project's start and finish that takes the longest time to complete the maximum length of time that an activity can be delayed without delaying the entire project

Earliest finish time (EF) Earliest start time (ES) Latest finish time (LF) Latest start time (LS) Gantt chart Total slack Free slack

an activity's earliest start time plus its estimated duration, t , or EF = ES + t the earliest finish time of the immediately preceding activity the latest start time of the activity that immediately follows the latest finish time of an activity minus its estimated duration, t , or LS = LF - t a project schedule, usually created by the project manager using computer software, that superimposes project activities, with their precedence relationships and estimated duration times, on a time line slack shared by other activities; calculated as S = LS - ES or S = LF - EF the amount of time that an activity's earliest finish time can be delayed without delaying the earliest start time of any activity that immediately follows

Normal time (NT) the time necessary to complete an activity under normal conditions Normal cost (NC) the activity cost associated with the normal time Crash time (CT) the shortest possible time to complete an activity Crash cost (CC) the activity cost associated with the crash time Minimum-cost schedule Riskmanagement plan Optimistic time (a) Most likely time (m) Pessimistic time (b) Close out
a schedule determined by starting with the normal time schedule and crashing activities along the critical path, in such a way that the costs of crashing do not exceed the savings in indirect and penalty costs a plan that identifies the key risks to a project's success and prescribes ways to circumvent them the shortest possible time in which an activity can be completed, if all goes exceptionally well the probable time required to perform an activity the longest estimated time required to perform an activity an activity that includes writing final reports, completing remaining deliverables, and compiling the team's recommendations for improving the project process

CHAPTER 9
the customer relationship, order fulfillment, and supplier relationship processes and their interconnected linkages among the suppliers of services, materials, and information, and the customers of the firm's services or products the design of a firm's customer relationship, order fulfillment, and supplier relationship process and the synchronization of these processes with the key processes of its suppliers and customers in order to match the flow of services, ;materials, and information a stock of materials used to satisfy customer demand or to support the production of services or goods

Supply chain Supply-chain management Inventory

Raw materials (RM) Work-inprogress (WIP) Finished goods (FG) Bullwhip effect Purchasing Production Distribution Materials management Channel assembly

the inventories that are needed for the production of services or goods items, such as components or assemblies, needed for a final product in manufacturing the items in manufacturing plants, warehouses, and retail outlets that are sold to the firm's customers the phenomenon in supply chains whereby ordering patterns experience increasing variance as you proceed upstream in the chain the management of the acquisition process, which includes deciding which suppliers to use, negotiating contracts, and deciding whether to buy locally the management of the transformation process devoted to producing the service or product the management of the flow of services or materials from firms to external customers the decisions that are made by a firm concerning the purchase of services and materials, inventories, production levels, staffing patterns, schedules, and distribution the process of using members of the distribution channel as if they were assembly stations in the factory a reduction in inventory and safety stock because of the merging of variable

Inventory pooling demands from customers Forward locating stock closer to customers at a warehouse, DC, wholesaler, or retailer placement

Vendor-managed inventories (VMI) Continuous replenishment program (CRP) Green purchasing Competitive orientation Cooperative orientation Sole sourcing Value analysis Early supplier involvement

an extreme application of the forward placement tactic, which involves locating the inventories at the customer AVMI method in which the supplier monitors inventory levels at the customer and replenishes the stock as needed to avoid shortages the process of identifying, assessing, and managing the flow of environmental waste and finding ways to reduce it and minimize its impact on the environment a supplier relation that views negotiations between buyer and seller as a zero-sum game: Whatever one side loses, the other side gains and short-term advantages are prized over long-term commitments a supplier relation in which the buyer and seller are partners, each helping the other as much as possible the awarding of a contract for a service or item to only one supplier a systematic effort to reduce the cost or improve the performance of services or products, either purchased or produced a program that includes suppliers in the design phase of a service or product in the automotive industry, a level of supplier involvement in which suppliers are selected early in a vehicle's concept development stage and are given significant, if not total, responsibility for the design of certain components or systems

Presourcing

Average aggregate inventory value

the total value of all items held in inventory for a firm an inventory measure obtained by dividing the average aggregate inventory value

Weeks of supply by sales per week at cost Inventory an inventory measure obtained by dividing annual sales at cost by the average aggregate inventory value maintained during the year turnover

CHAPTER 10
Globalization Facility location Quality of life Critical mass Load-distance method
the description of businesses' deployment of facilities and operations around the world the process of determining a geographic site for firm's operations a factor that considers the availability of good schools, recreational facilities, cultural events, and an attractive lifestyle a situation whereby several competing firms clustered in one location attract more customers than the total number who would shop at the same stores at scattered locations a mathematical model used to evaluate locations based on proximity factors

a good starting point in evaluating locations is with eh load-distance model; the center of gravity's x-coordinate (x*) is found by multiplying each point's x-coordinate Center of gravity () by its load (li), summing these products, and then dividing by the sum of the loa

Transportation method Heuristics Simulation Optimization

a quantitative approach that can help solve multiple-facility location problems solution guidelines, or rules of thumb, that find feasible-but not necessarily the bestsolutions to problems a modeling technique that reproduces the behavior of a system a procedure used to determine the "best" solution; generally utilizes simplified and less realistic views of a problem

CHAPTER 11
Lean systems Just-in-time (JIT) the belief that waste can be eliminated by cutting unnecessary capacity or inventory and removing non-value-added activities in operations philosophy JIT system Push method Pull method Lot Setup
the organization of resources, information flows, and decision rules that can enable an organization to realize the benefits of a JIT philosophy a method in which the production of the item begins in advance of customer needs a method in which customer demand activates production of the service or item a quantity of items that are processed together the group of activities needed to readjust a process between successive lots of items, sometimes referred to as a changeover operations systems that maximize the value added of each of their activities by paring unnecessary resources and delays from them

Single-digit setup the goal of having a setup time of less than ten minutes Mixed-model a type of assembly that produces a mix of models in smaller lots assembly Kanban
a word meaning "card" or "visible record" in Japanese; refers to cards used to control the flow of production through a factory

CHAPTER 12
Technology Support network Product technology Information technology Hardware Software
the know-how, physical equipment, and procedures used to produce services and products a network comprised of the physical, informational, and organizational relationships that make a technology complete and allow it to function as intended ideas that are developed within the organization and translated into new services and products technology used to acquire process and information with which to make more effective decisions a computer and the devices connected to it the computer programs that make hardware work and carry out different application tasks a collection of interrelated data or information stored on a data storage device, such as a computer hard drive, a floppy disk, or tape

Database Telecommunicati the final component of information technology that makes electronic networks possible ons Intranet Electronic Commerce (e-commerce)

an internal internet network, surrounded by a "firewall" for security purposes, that connects an organization's various electronic systems

the application of information and communication technology anywhere along the entire value chain of business processes a network of networks, a medium to exchange all forms of digital data, including text, graphics, audio, video, programs, and faxes Internet an internet service that consists of software called Web servers running on thousands of independently owned computers and computer networks that run World Wide Web together software that allows users to view documents at Web sites Web Browsers the process of coding customer information and sending it over the Internet in scrambled form Encryption

Electronic Data Interchange (EDI) Catalog Hubs Exchange Auction Enterprise Resource Planning Enterprise Process Interoperability

a technology that enables the transmission of routine business documents having a standard format from computer to computer over telephone or direct leased lines an approach to e-purchasing that is used to reduce the costs of placing orders to suppliers as well as the costs of the services or goods themselves an electronic marketplace where buying firms and selling firms come together to do business an extension of the exchange in which firms place competitive bids to buy something a large, integrated information system that supports many exchange processes and data storage needs a companywide process that cuts across functional areas, business units, geographic regions, and product lines the ability of one piece of software to interact with others

CHAPTER 13
Time series
the repeated observations of demand for a service or product in their order of occurrence

Aggregation Stock-keeping unit (SKU) Judgment methods

the act of clustering several similar services or products so that companies can obtain more accurate forecasts an individual item or product that has an identifying code and is held in inventory somewhere along the value chain

a type of qualitative method that translates the opinions of managers, expert opinions, consumer surveys, and sales-force estimates into quantitative estimates a type of quantitative method that uses historical data on independent variables, such as promotional campaigns, economic conditions, and competitors' actions, to Causal methods predict demand

Time-series analysis Collaborative planning, forecasting, and replenishment (CPFR) Sales-force estimates Executive opinion Technological forecasting

a statistical approach that relies heavily on historical demand data to project the future size of demand and recognizes trends and seasonal patterns

a nine-step process for value-chain management that allows a manufacturer and its customers to collaborate on making the forecast by using the Internet the forecasts that are compiled from estimates of future demands made periodically by members of a company's sales force a forecasting method in which the opinions, experience, and technical knowledge of one or more managers are summarized to arrive at a single forecast

an application of executive opinion in light of the difficulties in keeping abreast of the latest advances in technology a systematic approach to determine external consumer interest in a service or Market research product by creating and testing hypotheses through data-gathering surveys a process of gaining consensus from a group of experts while maintaining their anonymity Delphi method

Linear regression Dependent variable Independent variable Nave forecast Simple moving average method Weighted moving average method Exponential smoothing method Trend-adjusted exponential smoothing method

a causal method in which one variable (the dependent variable) is related to one or more independent variables by a linear equation the variable that one wants to forecast variables that are assumed to affect the dependent variable and thereby "cause" the results ovserved in the past a time-series method whereby the forecast for the next period equals the demand for the current period, or Forecast = Dt a time-series method used to estimate the average of a demand time series by averaging the demand for the n most recent time periods a time-series method in which each historical demand in the average can have its own weight; the sum of the weights equal I.O. a weighted moving average method that calculates the average of a time series by giving recent demands more weight than earlier demands

the method for incorporating a trend in an exponentially smoothed forecast

Multiplicative a method whereby seasonal factors are multiplied by an estimate of average seasonal method demand to arrive at a seasonal forecast Additive a method in which seasonal forecasts are generated by adding a constant to the seasonal method estimate of average demand per season Forecast error Cumulative sum of forecast errors (CFE) Mean squared error (MSE) Standard deviation (o*) Mean absolute deviation (MAD) Mean absolute percent error (MAPE) Tracking signal Holdout set Combination forecasts Focus forecasting
the difference found by subtracting the forecast from actual demand for a given period

a measurement of the total forecast error that assesses the bias in a forecast a measurement of the dispersion of forecast errors a measurement of the dispersion of forecast errors a measurement of the dispersion of forecast errors a measurement that relates the forecast error to the level of demand and is useful for putting forecast performance in the proper perspective a measure that indicates whether a method of forecasting is accurately predicting actual changes in demand actual demands from the more recent time periods in the time series, which are set aside to test different models developed from the earlier time periods forecasts that are produced by averaging independent forecasts based on different methods or different data or both a method of forecasting, which selects the best forecast from a group of forecasts generated by individual techniques

CHAPTER 14
Aggregate plan Staffing plan Production plan Product family Business plan Annual plan or financial plan Workforce schedule Master production schedule Reactive alternatives
a statement of a company's production rates, workforce levels, and inventory holdings based on estimates of customer requirements and capacity limitation a service firm's aggregate plan, which centers on staffing and other labor-related factors a manufacturing firm's aggregate plan, which generally focuses on production rates and inventory holdings a group of customers, services, or products that have similar demand requirements and common process, labor, and materials requirements a projected statement of income, costs, and profits a plan for financial assessment used by a nonprofit service organization a schedule that details the specific work schedule for each category of employee a schedule that specifies the timing and size of production quantities for each product in the product families actions that can be taken to cope with demand requirements

Anticipation inventory Overtime Undertime Backlog Backorder Stockout Aggressive alternatives Complementary products Chase strategy Level strategy Mixed strategy Transportation method of production planning Linear programming Objective function Decision variables Constraints Feasible region Parameter Certainty Linearity Nonnegativity

inventory that can be used to absorb uneven rates of demand or supply the time that employees work that is longer than the regular workday or workweek, for which they receive additional pay for the extra hours the situation that occurs when employees do not work productively for the regulartime workday or workweek an accumulation of customer orders that have been promised for delivery at some future date a customer order that cannot be filled immediately but is filled as soon as possible an order that is lost and causes the customer to go elsewhere actions that attempt to modify demand and, consequently, resource requirements services or products that have similar resource requirements but different demand cycles a strategy that matches demand during the planning horizon by varying either the workforce level or the output rate a strategy that maintains a constant workforce level or constant output rate during the planning horizon a strategy that considers and implements a fuller range of reactive alternatives and goes beyond a "pure" chase or level strategy

the use of the transportation method to solve production planning problems, assuming that a demand forecast is available for each period, along with a workforce level plan for regular time

SUPPLEMENT D
a technique that is useful for allocating scarce resources among competing demands an expression in linear programming models that states mathematically what is being maximized (e.g., profit or present value) or minimized (e.g., cost of scrap) the variables that represent choices the decision maker can control the limitations that restrict the permissible choices for the decision variables a region that represents all permissible combinations of the decision variables in a linear programming model a value that the decision maker cannot control and that does not change when the solution is implemented the word that is used to describe that a fact is known without doubt a characteristic of linear programming models that implies proportionality and additively - there can be no products or powers of decision variables an assumption that the decision variables must be positive or zero a one-period type of aggregate-planning problem, the solution of which yields optimal output quantities (or product mix) of a group of services or products subject to resource capacity and market demand constraints

Product-mix problem Graphic method a type of graphic analysis that involves the following five steps: plotting the of linear constraints, identifying the feasible, region plotting an objective function line, finding a visual solution, and finding the algebraic solution programming

Corner point Binding constraint Slack Surplus Range of optimality Coefficient sensitivity

a point that lies at the intersection of two (or possible more) constraint lines on the boundary of the feasible region a constraint that helps form the optimal corner point; it limits the ability to improve the objective function the amount by which the left-hand side falls short of the right-hand side the amount by which the left-hand side exceeds the right-hand side the lower and upper limit over which the optimal values of the decision variables remain unchanged the measurement of how much the objective function coefficient of a decision variable must improve (increase for maximization or decrease for minimization) before the optimal solution changes and the decision variable becomes some positive number the marginal improvement in Z (increase for maximization and decrease for minimization) caused by relaxing the constraint by one unit

Shadow price Range of the interval over which the right-hand-side parameter can vary while its shadow price remains valid feasibility Simplex method an iterative algebraic procedure for solving linear programming problems Degeneracy
a condition that occurs when the number of nonzero variables in the optimal solution is less than the number of constraints

CHAPTER 15
Inventory holding the variable cost of keeping items on hand, including interest, storage and handling, taxes, insurance, and shrinkage cost Ordering cost Setup cost Quantity discount Cycle inventory Lot sizing Safety stock inventory Pipeline inventory Repeatability Special Standard ABC analysis Economic order quantity (EOQ) Time between orders (TBO) Independent demand items Continuous review (Q ) system
the cost of preparing a purchase order for a supplier or a production order for the shop the cost involved in changing over a machine to produce a different item a drop in the price per unit when the order is sufficiently large the portion of total inventory that varies directly with lot size the determination of how frequently and in what quantity to order inventory surplus inventory that a company holds to protect against uncertainties in demand, lead time, and supply inventory moving from point to point in the materials flow system the degree to which the same work can be done again an item made to order; if purchase, it is bought to order an item that is made to stock or ordered to stock, and normally is available upon request the process of dividing items into three classes, according to their dollar usage, so that managers can focus on items that have the highest dollar value the lot size that minimizes total annual inventory holding and ordering costs the average elapsed time between receiving (or placing) replenishment orders of Q units for a particular lot size items for which demand is influenced by market conditions and is not related to the inventory decisions for any other item held in stock a system designed to track the remaining inventory of an item each time a withdrawal is made to determine whether it is time to reorder

Reorder point (ROP) system Inventory position (IP) Scheduled receipts (SR) Open orders

see continuous review (Q) system the measurement of an item's ability to satisfy future demand orders that have been placed but have not yet been received See scheduled receipts (SR) the predetermined minimum level that an inventory position must reach before a

Reorder point (R) fixed quantity Q of the item is ordered Service level Cycle-service level Protection interval Two-bin system Periodic review (P) system Single-bin system Perpetual inventory system Optional replenishment system Base-stock system Cycle counting Economic production lot size (ELS) Material requirements planning (MRP) Dependent demand Parent Component
the desired probability of not running out of stock in any one ordering cycle, which begins at the time an order is placed and ends when it arrives in stock see service level the period over which safety stock must protect the user from running out of stock a visual system version of the Q system in which an item's inventory is stored at two different locations a system in which an item's inventory position is reviewed periodically rather than continuously a system of inventory control in which a maximum level is marked on the storage shelf or bin on a measuring rod, and the inventory is brought up to the mark periodically

a system of inventory control in which the inventory records are always current a system used to review the inventory position at fixed time intervals and, if the position has dropped to (or below) a predetermined level, to place a variable-sized order to cover expected needs an inventory control system that issues a replenishment order, Q , each time a withdrawal is made, for the same amount of the withdrawal an inventory control method, whereby storeroom personnel physically count a small percentage of the total number of items each day, correcting errors that they find

SUPPLEMENT E
the optimal lot size in a situation in which replenishment is not instantaneous

CHAPTER 16
a computerized information system developed specifically to aid in managing dependent demand inventory and scheduling replenishment orders a demand that occurs because the quantity required is a function of the demand for other items held in inventory any product that is manufactured from one or more components an item that may go through one or more operations to be transformed into, or become, part of one or more parents

MRP explosion Bill of materials (BOM) Usage quantity End item Intermediate item Subassembly Purchased item

a process that converts the requirements of various final products into a material requirements plan that specifies the replenishment schedules of all the subassemblies, components, and raw materials needed by the final products a record of all the components of an item, the parent-component relationships, and the usage quantities derived from engineering and process designs the number of units of a component that are needed to make one unit of its immediate parent the final product sold to a customer an item that has at least one parent and at least on component an intermediate item that is assembled (as opposed to being transformed by other means) from more than one component an item that has one or more parents but no components because it comes from a supplier

Part commonality the degree to which a component has more than one immediate parent Master production a part of the material requirements plan that details how many end items will be schedule (MPS) produced within specified periods of time Inventory record Gross requirements Projected onhand inventory Planned receipts Planned order release Fixed order quantity (FOQ) Periodic order quantity (POQ) Lot for lot (L4L) Action notice Capacity requirements planning (CRP) Finite capacity scheduling (FCS) Input-output control report
a record that shows an item's lot-size policy, lead time, and various time-phased data the total demand derived from all parent production plans an estimate of the amount of inventory available each week after gross requirements have been satisfied orders that are not yet released to the shop or the supplier an indication of when an order for a specified quantity of an item is to be issued a rule that maintains the same order quantity each time an order is issued a rule that allows a different order quantity for each order issued but tends to issue the order at predetermined time intervals a rule under which the lot size ordered covers the gross requirements of a single week a computer-generated memo used by inventory planners to make decisions about releasing new orders and adjusting the due dates of scheduled receipts a technique used for projecting time-phased capacity requirements for workstations; its purpose is to match the material requirements plan with the capacity of key processes an algorithm designed to schedule a group of orders appropriately across an entire shop a report that compares planned input (from prior CRP or FCS reports) with actual input and compares planned output with actual output

Manufacturing resource planning (MRP II)

Bill of resources (BOR) Distribution requirements an inventory control and scheduling technique that applies MRP principles to planning (DRP) distribution inventories

a system that ties the basic MRP system to the company's financial system and to other core and supporting processes a record of all the required materials, equipment time, staff, and other resources needed to provide a service, the parent-component relationships, and the usage quantities

CHAPTER 17
Scheduling Demand scheduling Workforce scheduling Operations scheduling Job flow time Makespan Past due Tardiness Work-inprogress (WIP) inventory Total inventory Rotating schedule Fixed schedule Job shop Flow shop Dispatching
the allocation of resources over time to accomplish specific tasks a type of scheduling that assigns customers to a definite time for order fulfillment a type of scheduling that determines when employees work a type of scheduling that assigns jobs to workstations or employees to jobs for specified time periods the amount of time a job spends in the service of manufacturing system the total amount of time required to complete a group of jobs the amount of time by which a job missed its due date or the percentage of total jobs processed over some period of time that missed their due dates see past due any job that is waiting in line, moving from one operation to the next, being delayed for some reason, being processed, or residing in some inventory in a semi finished state the sum of scheduled receipts and on-hand inventories a schedule that rotates employees through a series of workdays or hours a schedule that call for each employee to work the same days and hours each week a firm that specializes in low-to medium-volume production and utilizes job or batch processes a firm that specializes in medium- to high-volume production and utilizes line or continuous processes a method of generating schedules in job shops that allows the schedule for a workstation to evolve over a period of time

Priority the rules that specify the job processing sequence when several jobs are waiting in sequencing rules line at a workstation Critical ration (CR) Earliest due date (EDD) First come, first served (FCFS)
a ration that is calculated by dividing the time remaining until a job's due date by the total shop time remaining for the job, which is defined as the setup, processing, move, and expected waiting times of all remaining operations, including the operatio a priority sequencing rule that specifies that the job with the earliest due date is the next job to be processed a priority sequencing rule that specifies that the job arriving at the workstation first has the highest priority

Shortest processing time (SPT) Slack per remaining operations (S/RO) Single-dimension rules Multipledimension rules Johnson's rule Labor-limited environment Advanced planning and scheduling (APS) systems

a priority sequencing rule that specifies that the job requiring the shortest processing time is the next job to be processed

a priority sequencing rule that determines priority by dividing the slack by the number of operations that remain, including the one being scheduled a set of rules that bases the priority of a job on a single aspect of the job, such as arrival time at the workstation, the due date, or the processing time a set of rules that apply to more than one aspect of a job a procedure that minimizes makespan in scheduling a group of jobs on two workstations an environment in which the resource constraint is the amount of labor available, not the number of machines or workstations

systems that seek to optimize resources across the supply chain and align daily operations with strategic goals

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