PRODUCTION AND OPERATION MANAGEMENT MODULE

·         ABC	Activity Based Costing
·         ABSENTEE POLICY	The policy that covers allowed absence from the workplace and the penalties that accrue for excessive absence. This policy is typically part of the employee handbook.
·         ACCOUNTS PAYABLE	Liabilities that result from a purchase of goods or services on an open account. Amounts owed to suppliers of goods or services
·         ACCOUNTS RECEIVABLE	Amounts owed to a company by customers as a result of delivering goods or services and extending credit in the ordinary course of business
·         ACQUISITION	Typically the purchase of a company or a significant business asset. In the defense industry, acquisition means the purchase of products and systems
·         ACTIVITY BASED COSTING (ABC):	An ABC system identifies and then classifies the major activities of a facility's production process into one of the following four categories: unit-level, batch-level, product-level, and facility-level activities. Costs in the first three categories of activities are assigned to products using bases (i.e. cost drivers) that capture the underlying behavior of the costs that are being assigned. The costs of facility-level activities, however, are treated as period costs or allocated to products in some arbitrary manner.
·         AD&D	Disability insurance as part of an employee benefit package
·         ALLOCATION	The assignment of costs incurred in one area or function of a plant or company to another because of the service to the charged unit
·         AMORTIZATION	The systematic reduction of an asset, specifically when referring to a long-lived intangible asset such as goodwill or intellectual property. It usually means the allocation of costs of intangible assets to the periods that benefit from these assets. See also depreciation.
·         ANDON	The visible light or sign that denotes the state of an operation (i.e., on, trouble or off.) The process can be stopped or investigated for quality issues or defects as a result of the status of the lights. In addition, everyone in the immediate area can see that the problem is being addressed.
·         BACKROOM COSTS	Indirect costs that do not add direct value to a product and may or may not be necessary to support its production. Examples are matching supplier material receipts to their invoices to make sure that they are being paid accurately; sending invoices to customers; matching computer inventory records to actual inventory; accounting for product costs at each station on a production routing; keeping track of hazardous materials receipt, control, and proper disposal; tracking customer warranty issues; operation of the computer systems that control the production process, etc.
·         BATCH	The number of production units in an aggregation of units that can be produced by an activity that produces in batches. A multiple of units in a plant designated for any purpose such as packaging, outside services, etc
·         BENCHMARKING	Benchmarking is defined as a process of continuous comparison of a company’s performance on predetermined measure against that of the best in an industry or a class, considered the standard or the reference. Benchmarking is one of the most popular business management tools for establishing competitive advantage and initiating performance improvements. The Benchmarking process supports the adoption of best practices with enhanced organization performance. The goal is to attain low-cost producer status
·         BILL OF MATERIAL (BoM):	A bill of material is an ordered listing of all the parts in a finished product. The listing usually includes the part number, how many of each part is required, and a brief word description of the part. It is best practice to use only words that appear in a parts dictionary. Bills of material are usually organized by indenting subsystems.
·         BLOCKAGE	Prevention of a processing unit to produce more units because of inadequate storage space or lack of authorization to produce
·         BLUE SKY	Goodwill associated with an acquisition of a company or asset
·         BUFFERS	Inventory between processing or activity units
·         BUILDING TO CUSTOMER ORDER versus BUILDING TO FORECAST	Building to customer order means that at least the final assembly, packaging, and shipping awaits a firm order for the product. Building to forecast means that the product is manufactured to a forecasted demand. Building to customer order means that the product is pulled by customer order rather than pushed by a forecast.
·         BURDEN	Also known as overhead and sometimes as indirect costs. It is the support system cost with respect to the direct costs for manufacturing a product. Burden rates vary widely among operations depending on the equipment investment and other factors. Burden rates include all indirect costs and are usually referenced to direct labor cost excluding fringes required for the direct product manufacture.
·         CAD	Computer aided design is a process of generating and manipulating product designs through computer software. The software allows all information of a part to be generated and stored electronically at a computer terminal and transferred to other sites or machines
·         CAM	Computer aided manufacturing (often used synonymously with CAD) is a similar process of generating manufacturing processes electronically
·         CIM	Computer-integrated-manufacturing. Popular in the 1980s, it implied fully computer- controlled manufacturing processes. It has been supplanted by lean manufacturing concepts in the main.
·         CLASSIFICATION	The designation of the job function that an employee is proficient in and assigned to, e.g. machinist, welder, assembler
·         CNC	Computer numerical control generally refers to equipment that is operated through the use of digital information rather than human input. For instance, a CNC milling machine will automatically produce the desired net shape of a part as specified by the controlling program
·         CONTRIBUTION MARGIN	Sales minus the variable costs—the contribution of a sale to the fixed costs of an operation
·         CONTROL CHARTS	Statistical charting process that is used to identify sporadic and chronic faults in a process. Mean and variance measurements of a product are charted and acceptable limits are set on these values. An out of control process can be identified and adjustments made to remedy the situation through the use of control charts
·         CORRELATED DEMANDS	Implies that aggregated demand would have less variability than separate demands because of correlation among demands
·         COST OF GOODS SOLD (COGS)	The term appearing on the income statement of a company or plant representing the manufacturing cost of the goods sold. The COGS does not include sales and marketing, engineering, and corporate administration
·         COST OF SALES (COS):	This abbreviation denotes the "cost of sales". It denotes all the costs in a plant. It is the sum of materials cost and value added. The COS can also be referred to as "cost of goods sold
·         CRITICAL PATH	That path through a process or activity system that has the longest theoretical flow time
·         DECOUPLING	Implies that through buffers and inventory, processes in a product line can operate relatively independently of the each other
·         EBIT	Earnings before interest and taxes
·         EBITDA	Earnings before interest, taxes, amortization, and depreciation. The single most used measure in valuing companies. It represents free cash flow quite accurately
·         EPS	Earnings per share of common stock for a company
·         ERROR PROOFING (POKA YOKA	Error proofing seems to be a simple concept, but there are many variations on the primary theme. The basic concept is that a product is prohibited from being taken out of its fixture if it has a quality defect as a result of the machine or operator action. The defect must be corrected prior to release of the product from the fixture
·         EVA	Economic Value Added--the amount the profits of a company or entity differs from its cost of capital times its net assets. EVA is increasingly used as a performance measure replacing return on equity and return on investment
·         FLOW SHOP	An operation that produces products at volume in a continuous flow or by a well-defined, connected sequence of activities or processes
·         FLOW TIME	The average (actual) time for a unit of production to flow through a process unit or activity including input and output inventories. Theoretical Flow Time is the flow time without inventories
·         FMEA	Failure mode and effects analysis--the process by which failures are hypothesized, valued, and corrected
·         FOREWARD BUYING	Buying of materials in advance of need
·         FORKLIFT	A general-purpose small truck for lifting and transporting materials and containers in a plant; not conducive to lean operations
·         HAZMAT	Hazardous material handling process defined by environmental laws and legal precedents. A process has been defined by regulations that impose stiff fines for a plant if the regulations are ignored.
·         IRR	Internal rate of return--that period interest rate that makes the present value of the discounted cash flows zero. Given a stream of cash flows, iteration is required to find that interest rate that makes the net present value zero
·         ISO 9000	International Standards Organization quality standard. The "9000" designation is a general one. Levels of quality achievement encompassing wider functions in a firm from manufacture to complete product design, customer service, and manufacture progress from "9003" to "9001".            This quality standard is administered by approved consulting firms and denotes a company's commitment to follow standard processes in its business practice
·         ISO CERTIFICATION	Denotes that a firm or plant has received an ISO quality standard. Also, it is the process by which a firm achieves such certification
·         INVENTORY	Goods and products held by a company in the product value stream that are eventually intended for sale to customers on their own or as part of a product system. Inventory includes the material cost of the goods and the value added by the operation to reach its state of manufacture. Raw materials, work in process, and finished goods are three categories of inventory
·         JIDOKA	The principle of stopping work (or the line) when there is a quality problem--the process for correcting that problem
·         JIT	Just-in-time manufacturing system. In a full JIT system, the only parts that enter a plant or move from process to process in a plant are those identified uniquely with a final product, no more or no less. Thus, every part being supplied and every part in the plant can be related directly to a bill of material of a product that is either in production or will shortly to be in production.
·         JOB SHOP	Job shops refer to those operations where each order is more or less unique and where the volumes are small or only one order. The clearest example of a job shop is a construction firm that constructs unique buildings. The book manufacturing industry is another example of a job shop if the production runs are small as is the case for a textbook. The automotive, appliance, towel, petroleum refining, and computer industries are examples of repetitive manufacturing. See also repetitive manufacturing
·         KAIZEN	The process whereby teams attack a manufacturing operation to make a series of quick, small steps to improve the process. It is also the process by which such small improvements are continued. Standardized work is the result of Kaizens
·         KANBAN	A card that signals the replenishment requirements in a production process. Associated with delivering just the amount of inventory needed at the right time. The heart of a pull system where the process need for inventory is signaled by the placement of a demand card with the supply process
·         LAYOFF	The process by which employees that are not needed for some extended period of time are given notice that their services are not needed. Layoffs are usually associated with unionized operations although not always so. Layoffs do not necessarily imply that the employee will be called back, but in union contracts, laid-off employees have callback rights. Eligibility for unemployment benefits also depends on the layoff process. Seniority generally rules for layoffs, although voluntary layoffs where employees volunteer to a layoff are effective ways to allow flexibility in the layoff process. Benefits may or may not continue in a layoff.
·         LEAN	A term used to indicate that an operation adheres to the Toyota Production System and has achieved the level of quality, productivity, and customer satisfaction associated with application of that system
·         LIFE CYCLE COSTING	Using the full cost of a component or system over its useful life in a financial decision process instead of just original purchase price. For example, life cycle costs brought to present value may justify a higher initial purchase price
·         LINE BALANCING	In a production or process operation line with several processes, machines, or operations in sequence, the discipline of balancing the throughput of each operation in the sequence such that production of any one unit in the sequence is equivalent or "balanced" with each of the other units in the sequence
·         MAKE-TO-ORDER	Operations that make products or deliver services only to customer order--no finished goods inventory
·         MAKE-TO-STOCK	Operations that make products to inventory in anticipation of customer demand--requires demand forecasts
·         MASTER PRODUCTION SCHEDULE (MPS)	The schedule of finished goods that are to be manufactured based on actual or forecasted customer demand. Work centers are scheduled to manufacture the products to meet the MPS.
·         MRP	Material requirements planning. MRP systems are used in almost all plants. They coordinate the bill of materials, forecasted demand, long lead-time parts, and the inventory in the plant. The reasons MRP systems are generally required relate to the fact that all parts cannot be supplied JIT and that schedules are not predictable. There are still suppliers that give price discounts for larger orders. Further, material receipt, inventory tracking, and engineering changes introduce complexity in plants unless the bills of material are few and simple
·         MUDA	Waste. Reducing waste throughout the enterprise is one of the fundamentals tenets of the Toyota Production System.
·         MULTIPLE SOURCING	Sourcing more than one supplier for the same part or system
·         OSHA	Occupational Safety and Health Administration. The federal agency that administers The Occupational Safety and Health Act was formed by an Act of Congress in 1970. Ever since, OSHA’s mission has been clear and unwavering: "to assure so far as possible every working man and women in the nation safe and healthy working conditions." Coverage of the Act extends to all employers and their employees in the 50 states, the District of Columbia, Puerto Rico, and all other territories under Federal Government jurisdiction
·         OEM	Original Equipment Manufacturer. The term OEM denotes a company or sector that manufacturers equipment ready for purchase by the end-use customer. The large automotive companies are referred to as OEMs. Suppliers to such companies supply to the OEMs, they are not OEMs themselves. There is an implication of a distribution entity between an OEM and the ultimate customer.
·         QFD	Quality Function Deployment: The formal process whereby products and services are designed that meet all customer expectations cognizant of costs, competitors, manufacturing, and flexibility
·         QUEUING	Formation of a line. Queuing theory is the study of the formation and variation of queues. It is applied to operations where capacity constraints or variations produce lines or queues.
·         SPC	Statistical process control involves the implementation of statistical tools (including control charts) that monitor processes in order to identify improvement opportunities. Process faults are identified, a root cause of the fault is isolated, and corrective actions are taken to improve the process
·         SUPPLY CHAIN	The supply chain denotes the process by which components are moved and produced from raw material to the ultimate consumer. It also includes the details of that process such as cost, time, transportation, packaging, etc. It may involve two or three levels of suppliers, one or more OEM plants, a distribution system, spare parts replacement parts flow, and the disposal and recycling process
·         TIER ONE	Tier one designated those group of suppliers who have becomes directly responsible for not only product supply but product development. The tier one suppliers in the automotive industry, for example, supply complete seats, braking systems, drive trains, and other complete systems that have been developed in cooperation with the OEMs
·         TERMINAL VALUE	The value of an operation or entity at the end of the time period considered. For discounted cash flow, it is the net value of the entity considering all future cash flows at a terminal time in the future.
·         TQC	Total quality control--a process by which a firm deploys it quality program throughout all functions of the company