Chapter 6 terms Assemble-to-order A production environment where pre-assembled components, subassemblies, and modules are put together in response to a specific customer order. Assembly line A process structure designed to make discrete parts. Parts are moved through a set of specially designed workstations at a controlled rate. Assembly-line balancing The problem of assigning all the tasks to a series of workstations so that each workstation has no more than can be done in the workstation cycle time and so that idle time across all workstations is minimized. Continuous process An often automated process that converts raw materials into a finished product in one contiguous process. Customer order decoupling point The place where inventory is positioned to allow processes or entities in the supply chain to operate independently. Days-of-supply The number of days of inventory of an item. If an item were not replenished, this would be the numbers of days until the firm would run out of the item (on average). Also, the inverse of inventory turn expressed in days. Engineer-to-order Here the firm works with the customer to design the product, which is then made from purchased materials, parts, and components. Flow time The time it takes a unit to flow through a process from beginning to end. Inventory turn The cost of goods sold divided by the total average value of inventory. Lead time The time needed to respond to a customer order. Lean manufacturing The attempt to achieve high customer service with minimum levels of inventory investment. Little’s law A mathematical expression that relates inventory, throughput, and flow time. Make-to-order A production environment where the product is built directly from raw materials and components in response to a specific customer order. Make-to-stock A production environment where the customer is served “on-demand” from finished goods inventory. Manufacturing cell An area where simple items that are similar in processing requirements are produced. Precedence relationship The order in which tasks must be performed in the assembly process. Product–process matrix Shows the relationships between different production units and how they are used depending on product volume and the degree of product standardization. Project layout The product, because of its sheer bulk or weight, remains fixed in a location. Equipment is moved to the product rather than vice versa. Throughput The long-term average rate that items flow through a process. Total average value of inventory The total average investment in raw material, work-in-process, and finished goods inventory. This is valued at the cost to the firm. Workcenter Often referred to as a job shop, a process structure suited for low-volume production of a great variety of nonstandard products. Workcenters sometimes are referred to as departments and are focused on a particular type of operation. Workstation ...

1. Chapter 6 terms
Assemble-to-order
A production environment where pre-assembled components,
subassemblies, and modules are put together in response to a
specific customer order.
Assembly line
A process structure designed to make discrete parts. Parts are
moved through a set of specially designed workstations at a
controlled rate.
Assembly-line balancing
The problem of assigning all the tasks to a series of
workstations so that each workstation has no more than can be
done in the workstation cycle time and so that idle time across
all workstations is minimized.
Continuous process
An often automated process that converts raw materials into a
finished product in one contiguous process.
Customer order decoupling point
The place where inventory is positioned to allow processes or
entities in the supply chain to operate independently.

2. Days-of-supply
The number of days of inventory of an item. If an item were not
replenished, this would be the numbers of days until the firm
would run out of the item (on average). Also, the inverse of
inventory turn expressed in days.
Engineer-to-order
Here the firm works with the customer to design the product,
which is then made from purchased materials, parts, and
components.
Flow time
The time it takes a unit to flow through a process from
beginning to end.
Inventory turn
The cost of goods sold divided by the total average value of
inventory.
Lead time
The time needed to respond to a customer order.
Lean manufacturing
The attempt to achieve high customer service with minimum
levels of inventory investment.

3. Little’s law
A mathematical expression that relates inventory, throughput,
and flow time.
Make-to-order
A production environment where the product is built directly
from raw materials and components in response to a specific
customer order.
Make-to-stock
A production environment where the customer is served “on-
demand” from finished goods inventory.
Manufacturing cell
An area where simple items that are similar in processing
requirements are produced.
Precedence relationship
The order in which tasks must be performed in the assembly
process.
Product–process matrix
Shows the relationships between different production units and

4. how they are used depending on product volume and the degree
of product standardization.
Project layout
The product, because of its sheer bulk or weight, remains fixed
in a location. Equipment is moved to the product rather than
vice versa.
Throughput
The long-term average rate that items flow through a process.
Total average value of inventory
The total average investment in raw material, work-in-process,
and finished goods inventory. This is valued at the cost to the
firm.
Workcenter
Often referred to as a job shop, a process structure suited for
low-volume production of a great variety of nonstandard
products. Workcenters sometimes are referred to as departments
and are focused on a particular type of operation.
Workstation cycle time
The time between successive units coming off the end of an
assembly line.

5. Chapter 10 terms
Assignable variation Deviation in the output of a process that
can be clearly identified and managed.
Attributes Quality characteristics that are classified as either
conforming or not conforming to specification.
Capability index (Cpk) The ratio of the range of values
produced by a process divided by the range of values allowed
by the design specification.
Common variation Deviation in the output of a process that is
random and inherent in the process itself.
Conformance quality The degree to which the product or
service design specifications are met.
Cost of quality Expenditures related to achieving product or
service quality, such as the costs of prevention, appraisal,
internal failure, and external failure.
Design quality The inherent value of the product in the
marketplace.
DMAIC An acronym for the Define, Measure, Analyze,
Improve, and Control improvement methodology followed by
companies engaging in Six Sigma programs.
DPMO (defects per million opportunities) A metric used to
describe the variability of a process.
Dimensions of quality Criteria by which quality is measured.
Malcolm Baldrige National Quality Award An award
established by the U.S. Department of Commerce given
annually to organizations that excel in quality.
Quality at the source The person who does the work is
responsible for ensuring that specifications are met.
Six Sigma A statistical term to describe the quality goal of no
more than four defects out of every million units. Also refers to
a quality improvement philosophy and program.
Statistical process control (SPC) Techniques for testing a
random sample of output from a process to determine whether
the process is producing items within a prescribed range.
Total quality management (TQM) Managing the entire
organization so that it excels on all dimensions of products and

6. services that are important to the customer.
Upper and lower specification limits The range of values in a
measure associated with a process that are allowable given the
intended use of the product or service.
Variables Quality characteristics that are measured in actual
weight, volume, inches, centimeters, or other measure.
Chapter 11
ABC inventory classification Divides inventory into dollar
volume categories that map into strategies appropriate for the
category.
Cycle counting A physical inventory-taking technique in which
inventory is counted on a frequent basis rather than once or
twice a year.
Dependent demand The need for any one item is a direct result
of the need for some other item, usually an item of which it is a
part.
Fixed–order quantity model (or Q-model) An inventory control
model where the amount requisitioned is fixed and the actual
ordering is triggered by inventory dropping to a specified level
of inventory.
Fixed–time period model (or P-model) An inventory control
model that specifies inventory is ordered at the end of a
predetermined time period. The interval of time between orders
is fixed and the order quantity varies.
Independent demand The demands for various items are
unrelated to each other.
Inventory position The amount on-hand plus on-order minus
backordered quantities. In the case where inventory has been
allocated for special purposes, the inventory position is reduced
by these allocated amounts.
Inventory The stock of any item or resource used in an
organization.
Safety stock The amount of inventory carried in addition to the
expected demand.
Chapter 12

7. Backflush Calculating how many of each part were used in
production and using these calculations to adjust actual on-hand
inventory balances. This eliminates the need to actually track
each part used in production.
Customer value In the context of lean, something for which the
customer is willing to pay.
Freeze window The period of time during which the schedule is
fixed and no further changes are possible.
Group technology A philosophy in which similar parts are
grouped into families, and the processes required to make the
parts are arranged in a specialized workcell.
Kaizen Japanese philosophy that focuses on continuous
improvement.
Kanban and the kanban pull system An inventory or production
control system that uses a signaling device to regulate flows.
Lean production Integrated activities designed to achieve high-
volume, high-quality production using minimal inventories of
raw materials, work-in-process, and finished goods.
Level schedule A schedule that pulls material into final
assembly at a constant rate.
Preventive maintenance Periodic inspection and repair designed
to keep equipment reliable.
Quality at the source Philosophy of making factory workers
personally responsible for the quality of their output. Workers
are expected to make the part correctly the first time and to stop
the process immediately if there is a problem.
Uniform plant loading Smoothing the production flow to
dampen schedule variation.
Value stream mapping A graphical way to analyze where value
is or is not being added as material flows through a process.
Value stream These are the value-adding and non-value--adding
activities required to design, order, and provide a product from
concept to launch, order to delivery, and raw materials to
customers.
Waste reduction The optimization of value-adding activities
and elimination of non-value-adding activities that are part of

8. the value stream.
Waste Anything that does not add value from the customer’s
perspective.
Chapter 13
Average aggregate inventory value The total value of all items
held in inventory for the firm, valued at cost.
Bullwhip effect The variability in demand is magnified as we
move from the customer to the producer in the supply chain.
Cost of goods sold The annual cost for a company to produce
the goods or services provided to customers.
Functional products Staples that people buy in a wide range of
retail outlets, such as grocery stores and gas stations.
Innovative products Products such as fashionable clothes and
personal computers that typically have a life cycle of just a few
months.
Inventory turnover and weeks of supply Measures of supply
chain efficiency that are mathematically the inverse of one
another.
Logistics Management functions that support the complete
cycle of material flow: from the purchase and internal control of
production materials; to the planning and control of work-in-
process; to the purchasing, shipping, and distribution of the
finished product.
Outsourcing Moving some of a firm’s internal activities and
decision responsibility to outside providers.
Strategic sourcing The development and management of
supplier relationships to acquire goods and services in a way
that aids in achieving the immediate needs of a business.
Total cost of ownership (TCO) Estimate of the cost of an item
that includes all the costs related to the procurement and use of
the item including disposing of the item after its useful life.
Vendor managed inventory When a customer allows the
supplier to manage an item or group of items.
Weeks of supply A measure of how many weeks’ worth of
inventory is in the system at a particular point in time.