University of San CarlosSchool of Business and Economics

A Report on 50 Technical Terms

In Partial Fulfillment of the Requirements ofPRODUCTION MANAGEMENT (BA-107AB)

Time 3:00 – 4:30 Day MW Room GR346MC AY 2015 – 2016

Submitted By:JERALD OLIVER N. MACABAYA

Submitted to:JEOFFREY R. ESCALA, BSME, MMExM, CSP

August, 2015

BA -107AB[Production Management]

50 Technical Terms Commonly Used

1.0 ERP/MRP/MRP II Operates using information form the inventory records, the master

schedule, and the bill of materials.(Chase, 2007) Integration of financial, manufacturing, and human resources on a single

computer system. (Stevenson, 2001)2.0 PERT/CPM

Plans and monitors the entire portfolio of consulting engagements of the firm as well as individual consulting projects. .(Chase, 2007)

Program evaluation and review technique, for planning and coordinating large projects.(Stevenson, 2001)

3.0 Dependent Demand Is the for a product or service caused by demand for other products or

services.(Chase, 2007) Demand for items that are subassemblies or component parts to be used

in the production of finished goods. (Stevenson, 2001)4.0 Independent Demand

Type of internal demand need not a forecast, just a tabulation.(Chase, 2007)

Fairly stable once allowances are made for seasonal variations, but dependent tends to be sporadic or lumpy; large quantities are used at specific points in time with little or no usage at other times. (Stevenson, 2001)

5.0 Executive Opinions A small group of upper-level managers (e.g. in marketing, operations and

finance) may meet and collective develop a forecast. (Stevenson, 2001) Simple and easy to use collects the forecast of a number of top-level

executives. (Vonderembse, 1991)6.0 Delphi Method

Group of experts responds to questionnaire.(Chase, 2007) Managers and staff complete a series of questionnaires m each

developed from the previous one, to achieve a consensus forecast. (Stevenson, 2001)

7.0 Naïve Forecast The forecast for any period equals the previous period’s actual value.

(Stevenson, 2001) Demand in the current period is used as the next period’s forecast.

(Russell, 2011)8.0 Judgmental Forecast

Forecast that use subjective inputs such as opinions from consumer, surveys, sales, staff, mangers, executives and experts.(Stevenson, 2001)

Are methods in which the forecast is made subjectively by the forecaster.( Reid, 2002)

9.0 Seasonal Variations Regularly repeating movements in series values that can be tried recurring

events. (Stevenson, 2001) Regular upward or downward movements in a time series that tie to

recurring events. (Heizer, 2007) 10.0 Weighted Moving Average

Specific points may be weight more or less than the others, as seen fit by experience.(Chase, 2007)

More recent values in series are given more weight in computing forecast. (Stevenson, 2001)

11.0 Predictor Values Variables that can be used to predict values of the variable interest.

(Stevenson, 2001) This models are used to predict values. (Schroeder, 2008)

12.0 Activity Are defined within the context of the work breakdown structure and are

pieces of work that consume time.(Chase, 2007) Projects steps that consume resources and/or time. (Stevenson, 2001)

13.0 Moving Average Technique that averages a number of recent actual values, updated as

knew values become available. (Stevenson, 2001) method uses several demand values during the recent past to develop a

forecast. (Russell, 2011)14.0 Holding Cost

Cost to carry an item in inventory for a length of time, usually a year. (Stevenson, 2001)

Cost of money to hold an inventory. (Vonderembse, 1991) 15.0 MSE/ MAD

Is the average error in the forecast, using absolute values.(Chase, 2007) The average absolute forecast error. (Stevenson, 2001)

16.0 Event The starting and finishing activities, designated by nodes in the AOA

convention. (Stevenson, 2001) A beginning, completion point, or milestone accomplishment within the

project. An activity begins and ends with events.(Gaither, 2002) 17.0 Lot Sizing

The sample is taken firm have relatively little effect on the quality of protection.(Chase, 2007)

Determining the quantities in which items are usually made or purchased. (Russell, 2011)

18.0 Qualitative forecast Permit inclusion of soft information (e.g. human factors, personal options,

hunches) in forecasting process.(Stevenson, 2001). Non quantitative, subjective forecasts based on judgment, opinion,

experience, and expert opinion. (Russell, 2011)19.0 Perpetual Inventory System

System that keeps track of removals from inventory continuously, thus monitoring current levels of each item. (Stevenson, 2001)

Stock records are maintained in computers. In such systems stock records, rather than being periodically updated, are updated at the time materials are received into or dispensed from inventory. (Gaither, 2002)

20.0 FOI Orders are placed at fixed time intervals.(Stevenson,2001) Used when a company can continuously monitor inventory level to know

when the order point is reached. (Vonderembse, 1991)21.0 Safety Stock

Stock that is held in excess of expected demand due to variable demand rate and/or lead time. (Stevenson, 2001)

Quality of a material held in inventory to be used in time periods when demand is greater than expected or when supply is less than expected.(Gaither, 2002)

22.0 Trend A long-term upward or downward movement of data.(Stevenson, 2001) Is a gradual, long-term up or down movement of demand. (Russell, 2011)

23.0 Forward Pass/Backward Pass Refers to the situation in which the system takes an order and then

schedules each operation that must be completed forward/backward in time.(Chase, 2007)

Scheduling ahead form some point in time. (Stevenson, 2001)24.0 Dummy Activity

An activity that consumes no time but shows procedure among activities. (Gaither, 2002)

Is inserted into the network to show a precedence relationship, but it does not represent any actual passage of time. (Russell, 2011)

25.0 Shortage Cost When the stock of an item is depleted, an order for that item must either

wait until the stock is replenished or be canceled.(Chase, 2007) Cost resulting when demand exceeds the supply of inventory on hand;

often unrealized profit per unit. (Stevenson, 2001)26.0 Critical Path

Is the sequence of activities that from the longest chain in terms of the time to complete.(Chase, 2007)

The longest path; determines expected project duration. (Stevenson, 2001)

27.0 Service Level Probability that demand will not exceed supply during lead time.

(Stevenson, 2001) The probability that the inventory available during lead time will meet

demand. (Russell, 2011)28.0 Backflushing

Is used to periodically explode an end item’s bill of materials to calculate how many of each par went into the products.(Chase, 2007)

Described as the update of component inventory balances when the finished goods are received into stock. (Young, 2010)

29.0 Time-Series Forecast Based on the idea that data relating to past demand can be used to

predict future demand.(Chase, 2007) A time-ordered sequence of observations taken at regular intervals over

time. (Stevenson, 2001)30.0 Correlation

A measure of strength and direction of relationship between two variables. (Stevenson, 2001)

Linear regression equation is a measure of the strength of the relationship between the independent and dependent variables. (Russell, 2011)

31.0 Pegging Allows to retrace a material requirement upward in the product structure

through each level.(Chase, 2007) In material requirements planning systems, tracing upward in the bill of

material (BOM) from the component to the parent item.(Heizer, 2007)32.0 EOQ/EPQ/ROP

When the quantity on hand of an item drops of this amount, the item is reordered. (Stevenson, 2001)

The optimal order quantity that will minimize total inventory costs. (Russell, 2011)

33.0 Random Variations Variation that is inherent in the process itself.(Chase, 2007) Residual variations after all other behaviors are accounted for.

(Stevenson, 2001)34.0 Salesforce Opinions

The sales staff of the customer service staff is often a good source of information because of the direct contact to consumers. (Stevenson, 2001)

Sales people in the field are asked for their opinion. (Vonderembse, 1991)35.0 Irregular Variations

Caused by unusual circumstances, not reflective of typical behavior. (Stevenson, 2001)

One-time variation that is explainable. (Collier, 2013)36.0 Exponential Smoothing

Recent data points are weighted more with weighting declining exponentially as date became older.(Chase, 2007)

Weighted averaging method based on previous forecast plus a percentage of the forecast error. (Stevenson, 2001)

37.0 Regression Defined as a functional relationship between two or more correlated

variables.(Chase, 2007) Techniques for fitting a line to a set of points. (Stevenson, 2001)

38.0 Chase Demand Capacity

Matching capacity to demand; the planned output for a period id set at the expected demand for that period. (Stevenson, 2001)

Production is identical to the expected demand for the period in question. (Meredith, 2007)

39.0 Qualitative Forecast based on judgment, opinion, past experience, or best guesses, to make

forecasts.(Russell, 2011) based on subjective interpretation of historical data and observations are

frequently used. (Vonderembse, 1991)40.0 Leadtime

Time interval between ordering and receiving the order. (Stevenson, 2001) Number of days from order receipt to customer delivery.(Russell, 2011)

41.0 Cycle/Seasonabililty Short-term regular variations related to the calendar or time of day.

(Stevenson, 2001) Seasonal patterns that are fluctuations, usually within one year, and that

tend to be repeated and annually. (Gaither, 2002) 42.0 Trend Adjusted Exponential Smoothing

Variation of exponential smoothing used when a time series exhibits trend. (Stevenson, 2001)

The exponential smoothing model described but modified to accommodate data with a trend pattern. (Gaither, 2002)

43.0 Ordering Cost These cost refer to the managerial and clerical cost to prepare the

purchase or production order.(Chase, 2007) Cost of ordering and receiving inventory. (Stevenson, 2001).

44.0 Inventory A stock or store of goods. (Stevenson, 2001) Insurance against supply chain Uncertainty. (Russell, 2011)

45.0 Consumer Surveys They can tap information that might not be available elsewhere.

(Stevenson, 2001) This method solicits input from customers or potential customers

regarding future purchasing plans. (Heizer, 2007)46.0 Level Capacity Strategy

Maintaining a steady rate of regular time output while meeting variation in demand by a combination of options. (Stevenson, 2001)

Production capacity is held constant over the planning horizon.(Gaither, 2002)

47.0 Time Series Chronologically ordered data that may contain one or more components of

demands.(Chase, 2007) Time-ordered sequence of observation taken at regular intervals over

time. (Stevenson, 2001)48.0 Aggregate Planning

Meat to capture the importance of cross-functional work.(Chase, 2007)

Intermediate-range capacity planning, usually covering 2 to 12 months. (Stevenson, 2001)

49.0 Crashing Shortening activity durations.(Stevenson, 2001) Reducing project time by expending additional resources. (Russell, 2011)

50.0 Associative Models Forecast using technique that uses explanatory variables to predict future

demand. (Stevenson, 2001) Incorporate the variables or factors might influence the quality being

forecast. (Heizer, 2007)

References:

Chase, R. B., Aquilano, N. J., & Jacobs, F. R. (2007). Operations management for competitive advantage. Boston, Mass: McGraw-Hill.

Collier D. & Evans J.R., (2013). OM 4 Operations Management. Florence, US: Cengage Learning.

Gaither, N. and Frazier, G. (2002) Production and Operations Management, 9th ed.,South-Western, Cincinnati.

Heizer, J. H., & Render, B. (2007). Operations management. Upper Saddle River, N.J: Pearson Education.

Meredith, J. R., & Shafer, S. M. (2007). Operations management for MBAs. Hoboken, N.J: John Wiley & Sons.

Reid, R. D., & Sanders, N. R. (2002). Operations management. New York: Wiley.

Russell, R.S., and Taylor, B. W. (2011). Operations management: creating value along the supply chain. Hoboken, NJ: John Wiley & Sons.

Schroeder, R.G. (2008). Operations Management Contemporary Concepts and Cases. New York: McGraw-Hill/Irwin

Stevenson, W. J. (2001). Operations management. New York: McGraw-Hill/Irwin.

Vonderembse, M. A., & White, G. P. (1991). Operations management: Concepts, methods, and strategies. St. Paul: West.

Young, S. T. (2010). Essentials of operations management. Los Angeles: Sage Publications, Inc.