| Anticipation or certainty inventories: | Accumulated for a well-defined future need, for example seasonal inventories.
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| Bill of materials (BOM): | Uses information from the engineering and/or process records to detail the subcomponents necessary to manufacture one finished item.
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| Buffer or uncertainty inventories or safety stocks: | Exist as a result of variability in demand or supply.
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| Capacity requirements planning (CRP): | Capacity is how much work can be done in a set amount of time; CRP translates the MRP plan into the required human and machine resources by workstation and time bucket and compares the required resources against available resources.
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| Carrying, holding, or possession costs: | Any cost associated with having, as opposed to not having, inventory, including handling charges; the cost of storage facilities or warehouse rentals; the cost of equipment to handle inventory; storage, labor, and operating costs; insurance premiums; breakage; pilferage; obsolescence; taxes; and investment or opportunity costs.
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| Causal forecasting models: | One class of quantitative forecasting techniques that tries to identify leading indicators, from which linear or multiple regression models are developed.
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| Collaborative Planning, Forecasting and Replenishment (CPFR): | one example of a business practice in which multiple trading partners agree to exchange knowledge and share risks to generate the most accurate forecast possible and develop effective replenishment plans. CPFR links sales and marketing processes to supply chain planning and execution processes.
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| Cycle inventories: | Arise because of management's decision to purchase, produce, or sell in lots rather than individual units or continuously; accumulate at various points in operating systems.
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| Decoupling inventories: | Make it possible to carry on activities on each side of a major process linkage point independently of each other.
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| Delphi technique: | a formal approach to qualitative forecasting.
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| Dependent demand: | The item is part of a larger component or product, and its use is dependent on the production schedule for the larger component.
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| Derived demand: | Dependent demand items are said to be derived because their use is dependent on a larger component.
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| Economic order quantity (EOQ): | A lot-sizing technique that balances inventory holding and setup (or order) costs by using the EOQ formula to set lot sizes, which requires estimates for annual demand, inventory holding costs, and setup (or order) costs.
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| Enterprise resource planning (ERP) systems: | Software that allows all areas of the company—manufacturing, finance, sales, marketing, human resources, and supply—to combine and analyze information.
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| Fixed-period models: | Orders are placed only at review time.
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| Fixed-quantity models: | Orders are placed when the reorder point is reached.
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| Independent demand: | The usage of the inventory item is not driven by the production schedule and is determined directly by customer orders, the arrival of which is independent of production scheduling decisions.
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| Inventory record: | Contains information such as open orders, lead times, and lot-size policy so that the quantity and timing of orders can be calculated.
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| Just-in-time: | components, raw materials, and services arrive at work centers exactly as they are needed.
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| Just-on-time: | materials arrive when they were scheduled to arrive
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| Kanban: | Japanese where "kan" means "card" and "ban" means :visual;" a simple but effective control system used to plan the timing and quantity of purchased materials and internally manufactured materials that helps make JIT production work; double-card systems use conveyance (C-kanban) and production (P-kanban) cards; single-card systems use only the C-kanban.
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| Lean supply: | an approach where relationships with suppliers are managed based on a long-term perspective to eliminate waste and add value.
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| Lean thinking: | a management philosophy focused on eliminating seven forms of waste: (1) overproduction, (2) waiting, time in queue, (3) transportation, (4) non-value-adding processes, (5) inventory, (6) motion, and (7) costs of quality: scrap, rework and inspection.
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| Least-total-cost: | The least-total-cost method is a dynamic lot-sizing method that compares the cost implications of various lot-sizing alternatives and selects the lot size that provides the least total cost.
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| Least-unit-cost: | The least-unit-cost method is a dynamic lot-sizing method which factors inventory holding and setup (or order) costs into the unit cost.
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| Lot-for-lot: | The most common lot sizing technique based on producing net requirements for each period; it does not take into account setup costs, carrying costs, or capacity limitations.
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| Manufacturing Resource Planning (MRP II): | links the firm's planning processes with the financial system to combine the capability of "what if" production scenario testing with financial and cash flow projections to help achieve the sales and profitability objectives of the firm.
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| Master production schedule: | The requirements forecast by time period which details how many end items are to be produced during a specified time period.
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| Material requirements planning (MRP) system: | used to plan the timing and quantity of purchased materials and internally manufactured materials to meet the needs of the master production schedule.
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| Ordering or purchase costs: | include the managerial, clerical, material, telephone, mailing, fax, e-mail, accounting, transportation, inspection, and receiving costs associated with a purchase or production order.
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| Pareto curve: | often called the 80-20 rule or ABC analysis; where A is about 70-80 percent of dollars and 10 percent of items in inventory, B is 10-15 percent of dollars and 10-20 percent of items, and C is 10-20 percent of dollars and 70-80 percent of items in inventory.
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| Pipeline inventories: | See transit inventories.
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| Qualitative forecasting: | gathering opinions from a number of people such as sales staff and district sales managers and using these opinions with a degree of judgment to give a forecast.
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| Quantitative forecasting: | Uses past data to predict the future.
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| Safety inventories: | See buffer inventories.
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| Service coverage: | The portion of user requests served, for example, if there are 400 requests for a particular item in a year and 372 were immediately satisfied, the service coverage would be 372/400 = 93 percent.
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| Setup costs: | All the costs of setting up a production run.
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| Stockout costs: | The costs of not having the required parts or materials on hand when and where they are needed.
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| Systems contracts: | rely on periodic billing procedures; allow nonpurchasing personnel to issue order releases; employ special catalogs; require suppliers to maintain minimum inventory levels, but normally do not specify the volume of contract items a buyer must buy; and improve inventory turnover rates.
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| Time series forecasting: | Assumes that sales (or other items to be forecast) follow a repetitive pattern over time; the analyst identifies the pattern and develops a forecast.
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| Transit or pipeline inventories: | Used to stock the supply and distribution pipelines linking an organization to its suppliers and customers as well as internal transportation points.
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| Uncertainty stock: | See buffer inventories.
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| Vendor-managed inventory (VMI) or supplier managed inventory (SMI): | a merging of the ordering and inventory functions in which a supplier manages and conducts all or some of the inventory management activities.
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