Absolute Percentage of Error (APE) formula - l A - F l divided by A * 100% Adaptive smoothing - a form of exponential smoothing in which the smoothing

constant is automatically adjusted as a function of forecast error measurement ATP formula (2nd, etc) - MPS - Sum of CO before next MPS ATP formula (first period) - On-hand invty + MPS - Sum of CO before next MPS Available to promise - scheduled production that is unconsumed or uncommitted after known customer orders are covered Ave. Invty formula - (Beginning on-hand + Ending on-hand) / 2 Backlog - a demand item, sometimes referred to as Open Orderrs. All customer orders received but not yet shipped. has a future delivery date. Backorder - past due/unfilled customer order or commitment. must be replanned. Benchmarking - process of comparing many aspects of operational performance with performance of other organizations Bias - consistent deviation from the mean in one direction; tendency of the forecast to be either above or below the actual observations Bias formula - Sum of (A-F) divided by n Bill of Material (BOM) - an engineering document that identifies the ingredients or subordinate components required to physically make each part, formula, or assembly. Bill of Resources - listing of required amount of constraining resources needed to manufacture one unit of a selected item or family BOM effectivity phase-in date - new revision number of the BOM becomes active. plans the phasing of a BOM BOM effectivity phase-out date - the current revision number of the BOM becomes inactive. Bottom Up Replanning - ability of the planner to evaluate the effects of possible alternative solutions caused by lower level shortages. Business plan - a statement of long-range strategy and revenue, cost and profit objectives usually accompanied by budgets, a projected balance sheet, and a cash flow (source and application of funds) statement. It is usually stated in terms of dollars and grouped by product family. It is then translated into synchronized tactical functional plans through the production planning process (or the sales and operations planning process). Although frequently stated in different terms (dollars versus units), these tactical plans should agree with each other and with the business plan

Capable to promise - process of committing customer orders against inventory and the capacity available to determine the delivery date of the new order, using finite scheduling CEO or GM - publishes policies and procedures statement circulated to all S&OP participants chase method - a production planning method that maintains a stable inventory level while varying production to meet demand Combination/Hybrid Method - a trade off between level and chase. produces at or close to full capacity for some part of the cycle and at a lower rate during the rest of the cycle. Common Parts BOM (or KIT) - groups common components for a product or family into one BOM or one section of the BOM. Critical resources - Bottlenecks in the process that must be carefully planned to enable MPS to be achieved Cumulative ATP - ATP method where it is assumed that inventory can be carried forward. Customer Orders - the backlog of planned shipments for the product. Daily Usage formula - Total Usage or reqmts divided by n Days of Supply formula - Total Supply - Safety Stock divided by Total Daily Usage Decomposition - a method of forecasting where time series data are separated into up to three components: trend, seasonal and cyclical; where trend includes the general horizontal upward or downward movement over time; where seasonal includes a recurring demand pattern such as day of the week, weekly, monthly or quarterly; and cyclical includes any repeating, nonseasonal pattern. A fourth component is random, that is, data with no pattern. The new forecast is made by projecting the patterns individually determined and then combining them Demand - A need for a particular product or component Demand filter - a standard that is set to monitor sales data for individual items in forecasting models. It is usually set to be tripped when the demand for a period differs from the forecast by more than some number of mean absolute deviations Demand Management - Function of recognizing all demands for goods and services to support the market place. It involves prioritizing demand when supply is lacking. Proper demand management facilitates the planning and use of resources for profitable business results Demand Time Fence - that point in time inside of which the forecast is no longer included in total demand and projected available invty calculations. only customer orders are considered. Distribution - physical transfer of goods and services

Distribution Efficiency - tracks the use of distribution resources such as transportation and warehousing resources. goal is to minimize the total distribution costs. distribution resource planning (DRP II) - the extension of distribution requirements planning into the planning of the key resources contained in a distribution system: warehouse space, workforce, money, trucks, freight cars, etc. Econometric modeling - use of a set of equations intended to be used simultaneously to capture the way in which dependent and independent variables are interrelated Economic Order Qty (EOQ) - formula for deriving the optimum qty that minimizes the annual sum of ordering and inventory carrying costs. Ending Backlog formula - Beginning Backglog + Demand - Supply Ending On-Hand Inventory formula - Beginning On-hand + Production - Demand Engineering Change - revision to a drawing or design released by Engineering to modify or correct a part. Exponential smoothing - a type of weighted moving average forecasting technique in which past observations are geometrically discounted according to their age. The heaviest weight is assigned to the most recent data. The smoothing is termed exponential because data points are weighted in accordance with an exponential function of their age. The technique makes use of a smoothing constant to apply the difference between the most recent forecast and the critical sales data. The approach can be used for data that exhibit no trend or seasonal patterns. Higher order exponential smoothing models can be used for data with either (or both) trend and seasonality Extrinsic - Forecasting data source based on external patterns from information outside the company Final Assembly Schedule (FAS) - actual build schedule. schedule for finishing operations. constrained by material and capacity. schedule of end items required to complete products for specific customers in MTO, ATO or ETO environments.

Firm Planned Order - supply order that has been reviewed by the master scheduler. system cannot change this. planned order that has been frozen in qty and time.

Flexible Zone - or Slushy Zone. some changes are tolerated but must be carefully controlled. tradeoff changes only includes mix of firm planned orders and released orders.

Focus forecasting - computer-based simulation technique that compares the forecasts generated using any one of a number of simple strategies

Forecast - an estimate of future demand

Forecast error - the difference between actual demand and forecast demand, stated as an absolute value or as a percentage

Forecast error formula - Actual demand - Forecast

Forecast frequency - the planned manner in which the forecast will formally be reviewed and potentially revised

Forecast horizon - length of time into the future over which a forecast will be prepared

Forecast management - the process of making, checking, correcting and using forecasts. It also includes determination of the forecast horizon

Forecasting by aggregation - Summing up of all the final distribution points served by an area constitutes the forecast for the area stocking point

Forecasting by allocation - determining forecasts at final distribution centers by forecasting the total nationwide or worldwide sales for the product in terms of the number of units

Free Zone - large amount of change is permissible as long as it doesnt exceed the production plan limits. constrained by production plan includes planned orders based on forecasts

Frozen Zone - time zone that is closest to the present time. emergency changes only. includes released orders for customer orders

Graphical methods - use of visual information to predict demand patterns

Hedge - scheduled qty to protect against uncertainty in demand/supply. it has the dimension of timing and amount.

Intrinsic - Forecasting data source based on historical patterns of the data itself from the company data

Inventory - a supply item

Inventory Turnover formula - Annual cost of sales divided by Ave. invty level

level schedule - In traditional management, a production schedule or master production schedule that generates material and labor requirements that are as evenly spread over time as possible. Finished goods inventories buffer the production system against seasonal demand

Load % formula - (Total Load / Capacity available) * 100

Look-ahead ATP (Backward ATP) - ATP method where a large order in the future period may be satisfied by borrowing from current available production.

Lot-for-Lot (L4L) - The production qty is "as required" -- equal to the demand qty. expensive and common to make to order products. subject to frequent model changes or have a short shelf life. consistent with goal of one piece flow in lean/JIT.

MAD * 1.25 - Standard Deviation

Mandatory or Immediate Engineering Change - fall into 3 categories: product safety issues, product enhancement issues, and product corrections.

Master Production Schedule (MPS) - a line on the master schedule grid. The anticipated build schedule for those items assigned to the master scheduler. The master scheduler maintains this schedule, and in turn, it becomes a set of planning numbers that drives material requirements planning. It represents what the company plans to produce expressed in specific configurations, quantities and dates. It is not a sales forecast that represents a statement of demand. It must take into account the forecast, the production plan, and other important considerations such as backlog, availabilty of material, availability of capacity, and management policies and goals.

Master Scheduling - Translates actual orders into an anticipated build schedule for end items to meet the stated product family volume per the production plan

Mean - point in the distribution of measurements where the summed deviations are equal to 0

Mean Absolute Deviation (MAD) formula - Sum of l A - F l divided by n

Mean Absolute Percentage of Error (MAPE) formula - Sum of (A - F)/A *100% divided by n

Median - the observation in a set that divides the set so that the same number of observation lies on each side of it

Mixed-Model Production - making several different parts or products in varying lot sizes so that a factory produces close to the same mix of products that will be sold that day.

Mode - the observation that occurs with greatest frequency

Modular BOM (assemble-to-order) - artificially arranged according to product modules/options.

Modules - standard units that can be prepared in advance of receiving a customer order.

Moving average - average of a certain number of most recent observations

Multilevel BOM - structure the BOM in a way that corresponds to the sequential build process or to how many lower-level items go into each higher-level item.

Multilevel Master Scheduling - allows any level in an end item's bill of material to be master scheduled. requirements are received from both independent and dependent demand sources.

New Forecast formula - Actual forecast * (alpha) + Old forecast * (1-alpha)

Non-cumulative ATP - ATP method where no inventory or planned production can be carried forward. no possibility of overbooking the product.

Offsetting - taking lead time into consideration. important for planning accuracy.

Option - a customer-selectable choice from an offered product feature.

Order management - the planning, directing, monitoring and controlling of the processes related to customer orders, manufacturing orders and purchase orders

Order processing - primary contact between customer and supplier

Order promising - the activity of committing delivery dates to the customer based on the availability of product or capacity within the supply operation

Order service - the function that encompasses receiving, entering, and promising orders from customers, distribution centers, and interplant operations. Order service is also typically responsible for responding to customer inquiries and interacting with the master scheduler on availability of products

Outlier - a data point that differs significantly from other data for a similar phenomenon. For example, if the average sales for some products were 10 units per month, and one month had sales of 500 units, this sales point might be considered as an outlier

Outsourcing - process of having suppliers provide goods/services that were previously provided internally. involves substitution, the replacement of internal capacity and prodn by that of the supplier.

PAB formula (after DTF) - Prev PAB + MPS - CO or Forecast (whichever is higher)

PAB formula (before DTF) - Prev PAB + MPS - Customer Order

Pegging - capability to identify, for a given item, the sources of its gross requirements and/or allocations.

Performance Measurement System - system for collecting, measuring, and comparing measure to a standard for a specific criterion for an operation, item, good, service, business, etc.

Phantom BOM - consists of child components grouped for convenience.

used primarily for transient (nonstocked) subassemblies.

Phased In or Optional Engineering Change - product enhancements that can be planned using effectivity dates for future implementation.

Planned Order - supply order generated automatically by the planning system whenever the system detects that the projected available balance is negative. lowest level of supply order.

Planning BOM - artificial grouping of items in BOM format, used to facilitate master scheduling and material planning.

Planning horizon - amount of time a plan extends into the future

Planning Time Fence - A point in time denoted in the planning horizon of the master scheduling process that marks a boundary inside of which changes to the schedule may adversely affect component schedules, capacity plans, customer deliveries, and cost.

point of sale - the relief of inventory and computation of sales data at the time and place of sale, generally through the use of bar coding or magnetic media and equipment

Policy - a statement of management intent

Procedure - a "how to" document designed to make clear how the policy is to be enacted.

Product Families - represent how the product/service is presented to the market. logical groupings based on similar sales and manufacturing reqmts. ideally should be no more than 6-12 per business unit

Product Mix Hedge - approach where several interrelated optional items are overplanned.

Project - an endeavor with a specific objective to be met within predetermined time and dollar limitations and that has been assigned for definition or execution

Project manufacturing - a type of manufacturing process used for larger, often unique, items or structures that require a custom design capability (ETO). This type of process is highly flexible and can cope with a broad range of product designs and design changes

Projected Available Balance - inventory balance projected into the future

Qualitative - forecasting technique based on intuitive or judgmental evaluation or informed opinion regarding future product demands

Quantitative - forecasting technique based on computational projection of a numeric relationship; based on the premise that the past demand is a good indicator of future demand

Quantity to Send formula - Requirements - On-hand qty

Quick Response - ability to respond rapidly to the customer with the proper product, quantity, price and location at a minimal cost

RCCP - process of converting the MPS into requirements for key resources.

Regression analysis - a statistical trend analysis tool which determines best mathematical expression to be used to describe actual data. That mathematical expression can then be used to project to the future

Released Order (Scheduled Receipt) - either a purchase or a production order.

represents a firm commitment.

Remnant - remaining materials tha can be used for another run.

Reorder Point formula - Demand during lead time + Safety Stock

Required Load hrs (RCCP) formula - Standard Hrs divided by Efficiency

Requirements formula - Daily Usage rate * Days of Supply

Rescheduling - process of moving due dates of MPS orders to that supply and demand are kept in balance.

Resource - anything that adds values to a product/service in its creation, prodn, or delivery

Resource Planning - Process of establishing, measuring and adjusting limits or levels of long-range capacity. checks the feasibility of the production plan on a monthly basis.

Resource Profile - reflect a typical unit of the product family and the consumption rate for a resource, for an average unit of the product family.

Rough-Cut Capacity Planning - The process on which a preliminary master production schedule is developed then tested against the constraint of critical resources

Safety capacity - provides reserve capacity at key workcenter

Safety lead time - ensures against delivery delays.

Safety Stock (all DCs) formula - SS per DC * total number of DCs

Safety Stock (Buffer) - quantity of stock planned to be in inventory to protect against fluctuations in demand/supply.

Safety Stock per DC formula - SS/DC divided by square root of total # of DCs

Sales and operations planning - A process that provides management the ability to strategically direct its businesses to achieve competitive advantage on a continuous basis by integrating customer-focused marketing plans for new and existing products with the management of the supply chain. The process brings together all the plans for the business (sales, marketing, development, manufacturing, sourcing, and financial) into one integrated set of plans. It is performed at least once a month and is reviewed by management at an aggregate (product family) level. The process must reconcile all supply, demand, and new-product plans at both the detail and aggregate level and tie to the business plan. It is the definitive statement of the company's plans for the near to intermediate term covering a horizon sufficient to plan for resources and to support the annual business planning process. Executed properly, the S&OP process links the strategic plan fo the business with its execution and rviews performance measures for continuous improvement.

Scrap - material outside of specifications and possessing characteristics that make rework impractical.

Seasonal Index formula - period average divided by average for all periods

Selective Stocking - maximizing available warehouse space in the channel by determining which items are to be stocked at what echelon level based on item ABC classification

Single Level BOM - maintains a unique end item for each possible configuration. the simplest format of the BOM.

Standard Deviation formula - square root of: Sum of (A-F)2 divided by (n-1)

Std Deviation / 1.25 - MAD

Subcontracting - sending production work outside to another manufacturer

Super BOM or Super Bill - ties together various modular bills to define the product structure or a product family. a marketing tool.

Supply chain - the global network used to deliver products and services from raw materials to end customers through an engineered flow of information, physical distribution and cash

Time Fence - artificial time boundary established by S&OP participants. used to separate periods/groups for planning purposes

Total Customer Service - series of complex relationships a company develops with the external world. meeting or exceeding customer's expectations.

Total Quality Management (TQM) - management approach to long term business success through customer satisfaction.

Tracking signal - Detects forecast bias

Tracking Signal formula - Sum of (A-F) divided by MAD

vendor-managed inventory - a means of optimizing supply chain performance in which the supplier has access to customer's inventory data and is responsible for maintaining the inventory level required by the customer. This activity is accomplished by a process in which resupply is done by the vendor through regularly scheduled reviews of the on-site inventory. The on-site inventory is counted, damaged or outdated goods are removed, and the inventory is restocked to predefined levels. The vendor contains a receipt for the restocked inventory and accordingly invoices the customer

Volume Hedge or Market Hedge - permits authorized overplanning. sets increments for the total number of products by a certain amount or proportion. demand is higher than forecast

Workcenter - machine (person) or group of machines (people) that are capable of performing interchangeable work.