| backward scheduling | When a completion date or due date is known and that date must determine a start date.
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| batch processing | A system in which a group of identical products or customers is processed through one step in the process and then the entire group moves to the next step.
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| beginning on-hand inventory | The quantity of inventory on hand at the beginning of a time period.
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| bill of material | In material requirements planning, this is a computer file containing information about the materials required to produce a product or component.
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| carrying cost | Costs associated with carrying inventory.
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| changeover cost | The cost of changing equipment from producing one product or service to another.
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| continuous replenishment | The delivery of inventory, frequently in small quantities.
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| decouple | To reduce the direct dependency of a process step on its predecessor.
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| dependent demand inventory | Inventory whose demand is determined by the production schedule for finished products. Dependent demand items usually are components and raw materials.
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| dollar days | The dollar value of an item in inventory multiplied by the number of days until it will be sold.
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| economic order quantity model | An approach used to determine an order quantity that minimizes the sum of ordering and carrying costs.
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| ending on hand inventory | The quantity of inventory on hand at the end of a time period.
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| finished goods inventory | Inventory consisting of products that have completed all stages of production.
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| fixed quantity order policy | In material requirements planning, rather than ordering the quantity of the net requirements, orders are placed in increments of a fixed quantity.
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| fixed-quantity reorder point (ROP) model | An independent demand inventory management system that reorders when inventory drops to a specific level.
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| gross requirements | In material requirements planning, the total quantity needed to meet demand.
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| independent demand inventory | Inventory whose demand is dictated by the marketplace.
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| inventory master file | In material requirements planning, this is a computer file containing information about an inventory item such as the quantity on hand, the cost, and so on.
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| inventory turns | A measure of inventory productivity computed by dividing sales by the average value of inventory.
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| level production | An aggregate planning approach that uses inventory stored from period to period to reduce the need to change the output rate as demand changes.
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| lot-for-lot ordering | In material requirements planning, ordering exactly the amount of the net requirements.
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| maintenance, repair, and operating (MRO) inventory | Inventory that consists of items consumed in the day-to-day activities of a business.
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| master production schedule (MPS) | A schedule of end products that must be completed in a specific time period.
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| material requirements planning (MRP) | An inventory management approach used to manage dependent demand inventory that plans order releases for the future based on production schedules.
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| net requirements | In material requirements planning, gross requirements minus beginning on-hand inventory.
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| netting | The process of computing net requirements.
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| order cost | The fixed cost associated with ordering inventory.
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| periodic review system | An independent demand management system that orders inventory on fixed time intervals.
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| pipeline inventory | Inventory in transit.
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| planned order receipt | In material requirements planning, this is the planned receipt of material that results from a planned order release.
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| planned order release | In material requirements planning, this is the order planned to be released to satisfy a future net requirement.
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| replenishment lead time | The time required to receive inventory that has been ordered.
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| safety stock | Additional inventory used to help meet demand uncertainty.
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| service level | The percent of orders satisfied from existing inventory.
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| stockout | An instance when demand cannot be satisfied by existing inventory.
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| stockout cost | The cost associated with not having inventory when a customer demands it.
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| transfer batch | The quantity produced at a workcenter before transferring the products to the next step in the process.
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| two-bin system | A primitive reorder point inventory system in which two containers of inventory are kept. An order for more is placed when one container becomes empty.
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| work-in-process inventory | Inventory that has begun processing, but has not yet completed it.
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