Detailed Scheduling and Planning Key Terminology

action message
An output of a system that identifies the need for, and the type of action to be taken to correct, a
current or potential problem. Examples of action messages in an MRP system include released
order, reschedule in, reschedule out, and cancel. Syn: exception message, action report

activation
Putting a resource to work.

aggregate planning
A process to develop tactical plans to support the organization's business plan. Aggregate
planning usually includes the development, analysis, and maintenance of plans for total sales, total
production, targeted inventory, and targeted customer backlog for families of products. The
production plan is the result of the aggregate planning proccess. Two approaches to aggregate
planning exist: (1) production planning and (2) sales and operations planning. See: production
planning, sales and operations planning, sales plan

allocation
1) The classification of quantities of items that have been assigned to specific orders but have not
yet been released from the stockroom to production. It is an "uncashed" stockroom requisition. 2)
A process used to distribute material in short supply. Syn: assignment. See: reservation

alternate routing
A routing that is usually less preferred than the primary routing but results in an identical item.
Alternate routings may be maintained in the computer or off-line via manual methods, but the
computer software must be able to accept alternate routings for specific jobs.

availability
The percentage of time that a worker or machine is capable of working. The formula is: (S-
B) availability = ------------ X 100% S where S is the scheduled time and B is the downtime.

available time
The number of hours a work center can be used, based on management decisions regarding shift
structure, extra shifts, regular overtime, observance of weekends and public holidays, shutdowns,
and the like. See: capacity available, utilization

budgeted capacity
The volume/mix of throughput on which financial budgets were set and overhead/burden
absorption rates established.

buffer stock
Syn: safety stock


business-to-business commerce B2B
Business conducted over the internet between businesses. The implication is that this
connectivity will cause businesses to transform themselves via supply chain management to
become virtual organizations-reducing costs, improving quality, reducing delivery lead time, and
improving due date performance



by-product
A material of value produced as a residual of or incidental to the production process. The ratio of
by-product to primary product is usually predictable. By-products may be recycled, sold as-is, or
used for other purposes. See: co-product.

calculated capacity
Syn: rated capacity.

central point scheduling
A variant of scheduling that employs both forward and backward scheduling, starting from the
scheduled start date of a particluar operation.

co-product
A product that is usually manufactured together or sequentially because of product or process
similarities. See: by-product

concurrent engineering
Syn: participative design/engineering

dedicated capacity
A work center that is designated to produce a single item or limited number or similar items.
Equipment that is dedicated may be special equipent or may be grouped general-purpose
equipment commited to a composite part.

dedicated line
A production line permanently configured to run well-defined parts, one piece at a time, from
station to station.

demand forecasting
Forecasting the demand of a particular good, component, or service.

e-commerce
Abbreviation for electronic commerce.

effective date
The date on which a component or an operation is to be added or removed from a bill of material
or an assembly process. The effective dates are used in the explosion process to create demands
for the correct items. Normally, the bills of material and routing systems provide ofr an effectivity
start date and stop date, signifying the start or stop of a particular relationship. Effectivity control
also may be serial number rather than date. Syn: effectivity, effectivity date.

first in, first out (FIFO)
A method of inventory valuation for accounting purposes. The accounting assumption is that the
oldest inventory (first in) is the first to be used (first out), but there is no necessary relationship
with the actual physical movement of specific items. See: first-come-first-served rule, average cost
system.

flexibility
1) The ability of the manufacturing system to respond quickly, in terms of range and time, to
external or internal changes. Six different categories of flexibility can be considered: mix
flexibility, design changeover flexibility, modification flexibility, volume flexibility, rerouting
flexibility, and material flexibility (see each term for a more detailed discussion). In addition,
flexibility involves converns of product flexibility. Flexibility can be useful in coping with various
types of uncertainty (regarding mix, volume, and so on). 2) The ability of a supply chain to
mitigate, or neutralize, the risks of demand forecast variability, supply continuity variability, cycle
time plus lead-time uncertainty, and transit time plus customs-clearance time incertainty during
periods of increasing or diminishing volume.

forward flow scheduling
A procedure for building process train schedules that starts with the first stage and proceeds
sequentially through the process structure until the last stage is scheduled.

gateway work center
A work center that performs the first operation of a particular routing sequence.

idle time
The time when operators or resources (e.g. machines) are not producing product because of
setup, maintenance, lack of material, lack of tooling, or lack of scheduling.

inactive inventory
Stock designated as in excess of consumption within a defined period or stocks of items that have
not been used for a defined period.

inventory accounting
The branch of accounting dealing with valuing inventory. Inventory may be recorded or valued
using either a perpetual or a periodic system. A perpetual inventory record is updated frequently
or in real time, while a periodic inventory record is counted or measured at fixed time intervals
(e.g. every two weeks or monthly). Inventory valuation methods of LIFO, or FIFO, or average costs
are used with either recording system.

inventory investment
The dollars that are in all levels of inventory.

inventory policy
A statement of a company's goals and approach to the management of inventories.

joint replenishment
Coordinating the lot sizing and order release decision for related items and treating them as a
family of items. The objective is to achieve lower costs because of ordering, setup, shipping, and
quantity discount economies. This term applies equally to joint ordering (family contracts) and to
composite part (group technology) fabrication scheduling. Syn: joint replenishment system.

landed cost
This cost includes the product cost plus the costs of logistics, such as warehousing, transportation,
and handling fees.

last in, first out (LIFO)
A method of inventory valuation for accounting purposes. The accounting assumption is that the
most recently received (last in) is the first to be used or sold (first out) for costing purposes, but
there is no necessary relationship with the actual physical movement of specific items. See:
average cost systems.

load profile
A display of future capacity requirements based on released and/or planned orders over a given
span of time. Syn: load projection. See: capacity requirements plan.

load projection
Syn: load profile.


lot splitting
Dividing a lot into two or more sublots and simultaneously processing each sublot on identical (or
very similar) facilities as separate lots, usually to compress lead time or to expedite a small
quantity. Syn: operation splitting.

low-level code
A number that identifies the lowest level in any bill of material at which a particular component
appears. Net requirements for a given component are not calculated until all the gross
requirements have been calculated down to that level. Low-level codes are normally calcuated
and maintained automatically by the computter software. Syn: explosion level.

machine center
A production area consisting of one or more machines (and, if appropriate for capacity planning,
the necessary support personnel) that can be considered as one unit for capacity requirements
planning and detailed scheduling.

machine hours
The amount of time, in hours, that a machine is actually running. Machine hours, rather than labor
hours, may be used for planning capacity for scheduling, and for allocating costs.

machine loading
The accumulation by workstation, machine, or machine group of the hours generated from the
scheduling of operations for released orders by time period. Machine loading differs from
capactity requirements planning in that it does not use the planned orders from MRP but operates
solely from released orders. It may be of limited value because of its limited visibility of resources.

material-dominated scheduling (MDS)
A technique that schedules materials before processors (equipment or capacity). This technique
facilitates the efficient use of materials. MDS can be used to schedule each stage in a process flow
scheduling system. MRP systems use material-dominated scheduling logic. See: processor-
dominated scheduling.

mixed-flow scheduling
A procedure used in some process industries for building process train schedules that start at an
initial stage and work toward the terminal process stages. This procedure is effective for
scheduling where several bottleneck stages may exist. Detailed scheduling is done at each
bottleneck stage.

network planning
A generic term for techniques that are used to plan complex projects. Two of the best known
network planning techniques are critical path method (CPM) and the program evaluation and
review technique (PERT).

obsolete inventory
Inventory items that have met the obsolescence criteria established by the organization. For
example, inventory that has been superseded by a new model or otherwise made obsolescent.
Obsolete inventory will never be used or sold at full value. Disposing of the inventory may reduce
a company's profit.

operations sequencing
A technique for short-term planning of actual jobs to be run in each work center based upon
capacity (i.e., existing workforce and machine availability) and priorities. The result is a set of
projected completion times for the operations and simulated queue levels for facilities.


order policy
A set of procedures for determining the lot size and other parameters related to an order. See: lot
sizing.

phantom bill of material
A bill-of-material coding and structuring technique used primarily for transient (non stocked)
subassemblies. For the transient item, lead time is set to zero and the order quantity to lot-for-lot.
A phantom bill of material represents an item that is physically built, but rarely stocked, before
being used in the next step or level of manufacturing. This permits MRP logic to drive
requirements straight through the phantom item to its components, but the MRP system usually
retains its ability to net against any occasional inventories of the item. This technique also
facilitates the use of common bills of materials for engineering and manufacturing. Syn:
blowthrough, transient bill of material. See: pseudo bill of material.

planned load
The standard hours of work required by the planned production orders.

point-of-use delivery
Direct delivery of material to a specified location on a plant floor near the operation where it is to
be used.

probable scheduling
A variant of scheduling that considers slack time to increase or decrease the calculated lead time
of an order. Interoperation and adminstrative lead time components are expanded or compressed
by a uniform "stretching factor" until no difference exists between the schedule of operations
obtained by forward and backward scheduling. See: lead time scheduling.

process flow scheduling
A generalized method for planning equipment usage and material requirements that uses the
process structure to guide scheduling calculations. It is used in flow environments common in
process industries.

process manufacturing
Production that adds value by mixing, separating, forming, and/or performing chemical reactions.
It may be done in either batch or continuous mode. See: project manufacturing.

process train
A representation of the flow of materials through a process industry manufacturing system that
shows equipment and inventories. Equipment that perfoms a basic manufacturing step, such as
mixing or packaging, is called a process unit. Process units are combined into stages, and stages
are combined into process trains. Inventories decouple the scheduling of sequential stages within
a process train.

productive capacity
In the theory of contraints: The maximum of the output capabilities of a resource (or series of
resources) or the market demand for that output for a given time period. See: excess capacity, idle
capacity, protective capacity.

program evaluation and review technique (PERT)
In project management, a network analysis technique in which each activity is assigned a
pessimistic, most likely, and optimistic estimate of its duration. The critical path method is then
applied using a weighted average of these times for each node. PERT computes a standard
deviation of the estimate of project duration. See: critical path mentod, graphical evaluation and
review technique, and network analysis.

project management
The use of skills and knowledge in coordinating the organizing, planning, scheduling, directing,
controlling, monitoring, and evaluating of prescribed activities to ensure that the stated objectives
of a project, manufactured good, or service are achieved. See: project.

project phase
In project management, a set of related project activities that usually go together to define a
project deliverable.

project plan
In project management, a document that has been approved by upper management that is to be
used in executing and controlling a project. It documents assumptions, facilitates communication,
and documents the approved budget and schedule. It may exist at a summary or a detalied level.

queue time
The amount of time a job waits at a work center before setup or work is performed on the job.
Queue time is one element of total manufacturing lead time. Increases in queue time result in
direct increases to manufacturing lead time and work-in-process inventories.

replanning frequency
In an MRP system, the amount of time between successive runs of the MRP model. If the planner
does not run MRP frequently enough, the material plan becomes inaccurate as material
requirements and inventory status change with the passage of time.

requisition
Syn: see parts requisition.

rescheduling
The process of changing order or operation due dates, usually as a result of their being out of
phase with when they are needed.

rework
Reprocessing to salvage a defective item or part.

risk pooling
A method often associated with the management of inventory risk. Manufacturers and retailers
that experience high variability in demand for their products can pool together common inventory
components associated with a broad family of products to buffer the overall burden of having to
deploy inventory for each discrete product.

safety capacity
In the theory of contraints: The planned amount by which the available capacity exceeds current
productive capacity. This capacity provides protection from planned activities, such as resource
contention, and preventive maintenance and unplanned activities, such as resource breakdown,
poor quality, rework, or lateness. Safety capacity plus productive capacity plus excess capacity is
equal to 100 percent of capacity. Syn: capacity cushion. See: protective capacity.

safety lead time
An element of time added to normal lead time to protect against fluctuations in lead time so that
an order can be completed before it's real need date. When used, the MRP system, in offsetting for
lead time, will plan both order release and order completion for earlier dates than it would
otherwise. Syn: protection time, safety time.

scheduled load
The standard hours of work required by scheduled receipts (i.e., open production orders).

semifinished goods
Products that have been stored uncompleted awaiting final operations that adapt them to
different uses or customer specifications.

shelf life
The amount of time an item may be held in inventory before it becomes unusable.

shrinkage
Reductions of actual quantities of items in stock, in process, or in transit. The loss may be caused
by scrap, theft, deterioration, evaporation, and so forth.

standard deviation
A measurement of dispersion of data or of a variable. The standard deviation is computed by
finding the differences between the average and actual observations, squaring each difference,
adding the squared differences, dividing by n-1 (for a sample), and taking the square root of the
result. See: estimate of error.

supplier measurement
The act of measuring the supplier's performance to a contract. Measurements usually cover
delivery reliability, lead time, and price. Syn: purchasing performance measurement. See: vendor
measurement.

target inventory level
In a min-max inventory system, the equvalent of the maximum. The target inventory is equal to
the order point plus a variable order quantity. It is often called an order-up-to inventory level and
is used in a periodic review system. Syn: order-up-to level.

theoretical capacity
The maximum output capability, allowing no adjustments for preventive maintenance, unplanned
downtime, shutdown, and so forth.

third-party logistics (3PL)
A buyer and supplier team with a third party that provides product delivery services. This third
party may provide added supply chain expertise.

transient state
In waiting line models, early behavior of a characteristic of the model, such as line length, is more
erratic than eventual performance of the line. Data are usually not collected from the model until
less erratic behavior emerges. See: steady state.

unplanned repair
Repair or replacement requirements that are unknown until remanufacturing teardown and
inspection.