In information systems, the term for the primary, high-speed connection among large computer centers. These large computer centers are then linked to other computers.

A method of inventory bookkeeping where the book (computer) inventory of components is automatically reduced by the computer after completion of activity on the component’s upper-level parent item based on what should have been used as specified on the bill of material and allocation records. This approach has the disadvantage of a built-in differential between the book record and what is physically in stock. Syn: explode-to-deduct, post-deduct inventory transaction processing. See: pre-deduct inventory transaction processing.

Backflush costing
The application of costs based on the output of a process. Backflush costing is usually associated with repetitive manufacturing environments.

The process of a transportation vehicle returning from the original destination point to the point of origin. The 1980 Motor Carrier Act deregulated interstate commercial trucking and thereby allowed carriers to contract for the return trip. The backhaul can be with a full, partial, or empty load. An empty backhaul is called deadheading. See: deadhead.

All the customer orders received but not yet shipped. Sometimes referred to as open orders or the order board. See: order backlog, past due order.

An unfilled customer order or commitment. A backorder is an immediate (or past due) demand against an item whose inventory is insufficient to satisfy the demand. See: stockout.

Back scheduling
A technique for calculating operation start dates and due dates. The schedule is computed starting with the due date for the order and working backward to determine the required start date and/or due dates for each operation. Syn: backward scheduling. Ant: forward scheduling.

The procedure of making backup copies of computer files or disks and, in case of loss of or damage to the original, using the backups to restore the files or disks. In such a case, the only work lost is that done since the backup was made.

Backup support
An alternate location or maintainer that can provide the same service response or support as the primary location or maintainer.

Backward integration
The process of buying or owning elements of the production cycle and channel of distribution back toward raw material suppliers. See: vertical integration.

Backward pass
In the critical path method of project planning, working from the finish node backward through the network logic to the start node to determine the various late start dates and late finish dates. See: critical path method, forward pass.

Backward scheduling
Syn: back scheduling.

Bad-debt loan ratio
In financial management, the fraction of accounts receivable that is never recovered.

1) The act of evenly distributing the work elements between the two hands performing an operation. 2) The state of having approximately equal working times among the various operations in a process, or the stations on an assembly line. See: balance delay.

Balance delay
1) The idle time of one hand in an operation caused by uneven workload balancing. 2) The idle time of one or more operations in a series caused by uneven workload balancing. See: balance, lost time factor.

Balanced scorecard™
A list of financial and operational measurements used to evaluate organizational or supply chain performance. The dimensions of the balanced scorecard might include customer perspective, business process perspective, financial perspective, and innovation and learning perspectives. It formally connects overall objectives, strategies, and measurements. Each dimension has goals and measurements.

Balance-of-stores record
A double-entry record system that shows the balance of inventory items on hand and the balances of items on order and available for future orders. Where a reserve system of materials control is used, the balance of material on reserve is also shown.

Balance sheet
A financial statement showing the resources owned, the debts owed, and the owner’s share of a company at a given point in time. See: funds flow statement, income statement.

Balancing operations
In repetitive Just-in-Time production, matching actual output cycle times of all operations to the demand or use for parts as required by final assembly and, eventually, as required by the market.

Baldrige Award
Syn: Malcolm Baldrige National Quality Award.

In telecommunications, a measurement of how much data can be moved along a communications channel per unit of time, usually measured in bits per second.

In e-commerce, a portion of a Web page that contains advertising or the name of a Web site. The banner usually contains a hypertext connection to a Web page of the company doing the advertising.

Bar code
A series of alternating bars and spaces printed or stamped on parts, containers, labels, or other media, representing encoded information that can be read by electronic readers. A bar code is used to facilitate timely and accurate input of data to a computer system.

Bar coding
A method of encoding data using bar code for fast and accurate readability.

Barrier to entry
Factors that prevent companies from entering into a particular market, such as high initial investment in equipment.

Baseband coax
A coaxial cable offering a single channel for text, voice, or video transmission.

Base demand
The percentage of a company’s demand that derives from continuing contracts and/or existing customers. Because this demand is well known and recurring, it becomes the basis of management’s plans. Syn: baseload demand.

Base index
Syn: base series.

Base inventory level
The inventory level made up of aggregate lot-size inventory plus the aggregate safety stock inventory. It does not take into account the anticipation inventory that will result from the production plan. The base inventory level should be known before the production plan is made. Syn: basic stock. See: aggregate inventory.

Baseline measures
A set of measurements (or metrics) that seeks to establish the current or starting level of performance of a process, function, product, firm, and so on. Baseline measures are usually established before implementing improvement activities and programs.

Baseload demand
Syn: base demand.

Base point pricing
A type of geographic pricing policy where customers order from designated shipping points without freight charges if they are located within a specified distance from the base point. Customers outside area boundaries pay base price plus transportation costs from the nearest base point.

Base series
A standard succession of values of demand-over-time data used in forecasting seasonal items. This series of factors is usually based on the relative level of demand during the corresponding period of previous years. The average value of the base series over a seasonal cycle will be 1.0. A figure higher than 1.0 indicates that the demand for that period is more than the average; a figure less than 1.0 indicates less than the average. For forecasting purposes, the base series is superimposed upon the average demand and trend in demand for the item in question. Syn: base index. See: seasonal index, seasonality.

Base stock system
A method of inventory control that includes as special cases most of the systems in practice. In this system, when an order is received for any item, it is used as a picking ticket, and duplicate copies, called replenishment orders, are sent back to all stages of production to initiate replenishment of stocks. Positive or negative orders, called base stock orders, are also used from time to time to adjust the level of the base stock of each item. In actual practice, replenishment orders are usually accumulated when they are issued and are released at regular intervals.

Basic producer
A manufacturer that uses natural resources to produce materials for other manufacturing. A typical example is a steel company that processes iron ore and produces steel ingots; others are those making wood pulp, glass, and rubber.

Basic stock
Syn: base inventory level.

1) A quantity scheduled to be produced or in production. See: process batch, transfer batch. 2) For discrete products, the batch is planned to be the standard batch quantity, but during production, the standard batch quantity may be broken into smaller lots. See: lot. 3) In nondiscrete products, the batch is a quantity that is planned to be produced in a given time period based on a formula or recipe that often is developed to produce a given number of end items. 4) A type of manufacturing process used to produce items with similar designs and that may cover a wide range of order volumes. Typically, items ordered are of a repeat nature, and production may be for a specific customer order or for stock replenishment. See: project manufacturing.

Batch bill of materials
A recipe or formula in which the statement of quantity per is based on the standard batch quantity of the parent. Syn: batch formula.

Batch card
A document used in the process industries to authorize and control the production of a quantity of material. Batch cards usually contain quantities and lot numbers of ingredients to be used, processing variables, pack-out instructions, and product disposition. See: assembly parts list, batch sheet, blend formula, fabrication order, manufacturing order, mix ticket.

Batch formula
Syn: batch bill of materials.

Batch number
Syn: lot number.

Batch picking
A method of picking orders in which order requirements are aggregated by product across orders to reduce movement to and from product locations. The aggregated quantities of each product are then transported to a common area where the individual orders are constructed. See: discrete order picking, order picking, zone picking.

Batch processing
1) A manufacturing technique in which parts are accumulated and processed together in a lot. 2) A computer technique in which transactions are accumulated and processed together or in a lot. Syn: batch production.

Batch production
Syn: batch processing.

Batch sensitivity factor
A multiplier that is used for the rounding rules in determining the number of batches required to produce a given amount of product.

Batch sheet
In many process industries, a document that combines product and process definition. See: batch card.

The number of bits transmitted per second.

Bayesian analysis
Statistical analysis where uncertainty is incorporated, using all available information to choose among a number of alternative decisions.

Abbreviation for business continuation plan.

Beginning available balance
Syn: available inventory.

Beginning inventory
A statement of the inventory count at the end of last period, usually from a perpetual inventory record.

The process of measuring the company’s products, services, costs, and practices. Two types of benchmarking exist—competitive, a comparison against your industry best, and process, a comparison of a process to the best in class. See: competitive benchmarking, performance benchmarking, process benchmarking.

Benchmark measures
A set of measurements (or metrics) that is used to establish goals for improvements in processes, functions, products, and so on. Benchmark measures are often derived from other firms that display best in class achievement.

Bench stocks
Syn: floor stocks.

An organization, often from another industry, recognized for excellence in a specific process area. See: process benchmarking.

Best practices
In benchmarking, the measurement or performance standard by which similar items are evaluated. Defining a best practice identifies opportunities to improve effectiveness. The process of comparing an actual result to a best practice may be applied to resources, activities, or cost objects.

Beta test
A term used to describe the pilot evaluation of a good or service, i.e., “the second evaluation.”

A consistent deviation from the mean in one direction (high or low). A normal property of a good forecast is that it is not biased. See: average forecast error.

A quotation specifically given to a prospective purchaser upon request, usually in competition with other vendors. See: quotation.

Bid evaluation
A comparison of supplier quotes for a product based on price, quality, lead time, delivery performance, and other criteria and, based on that comparison, selecting a supplier.

Bid pricing
Offering a specific price for each job rather than setting a standard price that applies for all customers.

Bid proposal
The response to the written request from a potential customer asking for the submission of a quotation or proposal to provide goods or services. The bid proposal is in response to an RFP or RFQ.

Big Q, little q
A term used to contrast the difference between managing for quality in all business processes and products (big Q) and managing for quality in a limited capacity—traditionally in only factory products and processes (little q).

Bilateral contract
An agreement wherein each party makes a promise to the other party.

Bill of activities
In activity-based cost accounting, a summary of activities needed by a product or other cost object. The bill of activities includes volume and cost of each activity.

Bill of batches
A method of tracking the specific multilevel batch composition of a manufactured item. The bill of batches provides the necessary where-used and where-from relationships required for lot traceability.

Bill of capacity
Syn: bill of resources.

Bill of distribution
Syn: distribution network structure.

Bill of labor
A structured listing of all labor requirements for the fabrication, assembly, and testing of a parent item. See: bill of resources, capacity bill procedure, routing.

Bill of lading (uniform)
A carrier’s contract and receipt for goods the carrier agrees to transport from one place to another and to deliver to a designated person. In case of loss, damage, or delay, the bill of lading is the basis for filing freight claims.

Bill of Material (BOM)
1) A listing of all the subassemblies, intermediates, parts, and raw materials that go into a parent assembly showing the quantity of each required to make an assembly. It is used in conjunction with the master production schedule to determine the items for which purchase requisitions and production orders must be released. A variety of display formats exist for bills of material, including the single-level bill of material, indented bill of material, modular (planning) bill of material, transient bill of material, matrix bill of material, and costed bill of material. 2) A list of all the materials needed to make one production run of a product, by a contract manufacturer, of piece parts/components for its customers. The bill of material may also be called the formula, recipe, or ingredients list in certain process industries.

Bill-of-material Explosion
The process of determining component identities, quantities per assembly, and other parent/component relationship data for a parent item. Explosion may be single level, indented, or summarized.

Bill-of-material processor
A computer program for maintaining and retrieving bill-of-material information.

Bill-of-material structuring
The process of organizing bills of material to perform specific functions.

Bill of operations
Syn: routing.

Bill of resources
A listing of the required capacity and key resources needed to manufacture one unit of a selected item or family. Rough-cut capacity planning uses these bills to calculate the approximate capacity requirements of the master production schedule. Resource planning may use a form of this bill. Syn: bill of capacity. See: bill of labor, capacity planning using overall factors, product load profile, resource profile, rough-cut capacity planning, routing.

1) A storage device designed to hold small discrete parts. 2) A shelving unit with physical dividers separating the storage locations.

Bin location file
A file that specifically identifies the location where each item in inventory is stored.

Bin reserve system
Syn: two-bin inventory system.

Bin tag
1) A type of perpetual inventory record, designed for storekeeping purposes, maintained at the storage area for each inventory item. 2) An identifying marking on a storage location.

Bin transfer
An inventory transaction to move a quantity from one valid location (bin) to another valid location (bin).

Bin trips
Usually, the number of transactions per stockkeeping unit per unit of time.

Acronym for binary digit. It can have only the values 0 or 1.

Black belt
In six sigma, team leader for process improvement. Responsibilities include defining, measuring, and controlling the improvement process.

Blanket order
Syn: blanket purchase order.

Blanket purchase order
A long-term commitment to a supplier for material against which short-term releases will be generated to satisfy requirements. Often blanket orders cover only one item with predetermined delivery dates. Syn: blanket order, standing order.

Blanket release
The authorization to ship and/or produce against a blanket agreement or contract.

Blanket routing
A routing that lists groups of operations needed to produce a family of items. The items may have small differences in size, but they use the same sequence of operations. Specific times or tools for each individual item can be included.

An imperfection that is severe enough to be noticed but should not cause any real impairment with respect to intended normal or reasonably foreseeable use. See: defect, imperfection, nonconformity.

Blend formula
An ingredient list for a product in process industries. See: batch card, manufacturing order, mix ticket.

The process of physically mixing two or more lots or types of material to produce a homogeneous lot. Blends normally receive new identification and require testing.

Blending department
In process industries, the name of the department where the ingredients are mixed. See: final assembly department.

Blend off
In process industries, the rework of material by introducing a small percentage into another run of the same product.

Blend order
A manufacturing order to a blending department authorizing it to mix the ingredients of a product. See: assembly order.

Block control
Control of the production process in groups, or “blocks,” of shop orders for products undergoing the same basic processes.

Block diagram
A diagram that shows the operations, interrelationships, and interdependencies of components in a system. Boxes, or blocks (hence the name), represent the components; connecting lines between the blocks represent interfaces. There are two types of block diagrams: functional block diagrams, which show a system’s subsystems and lower level products, their interrelationships, and interfaces with other systems; and reliability block diagrams, which are similar to the functional block diagram except that they are modified to emphasize those aspects influencing reliability. See: flowchart.

Blocked operation
An upstream work center that is not permitted to produce because of a full queue at a downstream work center or because no kanban authorizes production.

Blocked operations
A group of operations identified separately for instructions and documentation but reported as one.

The condition requiring a work center that has parts to process to remain idle as long as the queue to which the parts would be sent is full or kanbans authorizing production are not present.

Block scheduling
An operation scheduling technique where each operation is allowed a “block” of time, such as a day or a week.

Block system
A system for selecting items to be cycle counted by a group or block of numbers.

Syn: phantom bill of material.

In engineering, a line drawing showing the physical characteristics of a part.

Body of knowledge
The knowledge in a given area that a person is expected to understand to be certified as a practitioner.

The standard terms and conditions on a purchase order or other document.

Abbreviation for bill of material.

Bona fide
Latin for in good faith.

A long-term debt of a firm.

Bond (performance)
A guarantee of satisfactory work completion that is executed in connection with a contract and that secures the performance and fulfillment of all the undertakings, covenants, terms, conditions, and agreements contained in the contract.

Bonded warehouse
Buildings or parts of buildings designated by the U.S. Secretary of the Treasury for storing imported merchandise, operated under U.S. Customs supervision.

Book inventory
An accounting definition of inventory units or value obtained from perpetual inventory records rather than by actual count.

Book value
The accounting value of an asset.

Boolean algebra
A form of algebra that, like ordinary algebra, represents relationships and properties with symbols. However, Boolean algebra also has classes, propositions, on-off circuit elements, and operators (and, or, not, except, if, then). Boolean algebra is useful in defining the logic of a complex system.

A facility, function, department, or resource whose capacity is less than the demand placed upon it. For example, a bottleneck machine or work center exists where jobs are processed at a slower rate than they are demanded.

Bottom-up replanning
In MRP, the process of using pegging data to solve material availability or other problems. This process is accomplished by the planner (not the computer system), who evaluates the effects of possible solutions. Potential solutions include compressing lead time, cutting order quantity, substituting material, and changing the master schedule.

The adjustment of a shop order quantity of a parent to use the remaining units of a component, raw material, or lot.

Box-Jenkins model
A forecasting method based on regression and moving average models. The model is based not on regression of independent variables, but on past observations of the item to be forecast at varying time lags and on previous error values from forecasting. See: forecast.

Abbreviation for business process reengineering.

Bracketed recall
Recall from customers of suspect lot numbers plus a specified number of lots produced before and after the suspect ones.

A technique that teams use to generate ideas on a particular subject. Each person on the team is asked to think creatively and write down as many ideas as possible. The ideas are not discussed or reviewed until after the brainstorming session.

Branch and bound
Operations research models for determining optimal solutions based on the enumeration of subsets of possible solutions, which implicitly enumerate all possible solutions.

Branch warehouse
Syn: distribution center.

Branch warehouse demand
Syn: warehouse demand.

The use of a name, term, symbol, or design, or a combination of these, to identify a product.

Brand loyalty
The tendency of some consumers to stay with a preferred product in spite of a competitor’s advantages.

Brand manager
The person in charge of the marketing program for a given brand. Syn: product manager.

Brand name
A word or combination of words used to identify a product and differentiate it from other products; the verbal part of a trademark, in contrast to the pictorial mark; a trademark word.

Brand plan
Syn: market plan.

Brand recognition
The degree to which customers recognize a particular brand identity and associate it with a particular product line relative to other available brands.

Dividing truckloads of homogeneous items into smaller, more appropriate quantities for use.

Breakdown maintenance
Remedial maintenance that occurs when equipment fails and must be repaired on an emergency or priority basis.

Break-even chart
A graphical tool showing the total variable cost and fixed cost curve along with the total revenue curve. The point of intersection is defined as the break-even point, i.e., the point at which total revenues exactly equal total costs. See: total cost curve.

Break-even point
The level of production or the volume of sales at which operations are neither profitable nor unprofitable. The break-even point is the intersection of the total revenue and total cost curves. See: total cost curve.

Break-even time
The total elapsed time of a technology transfer beginning with a scientific investigation and ending when the profits from a new product offset the cost of its development.

Breeder bill of material
A bill of material that recognizes and plans for the availability and usage of by-products in the manufacturing process. The breeder bill allows for complete by-product MRP and product/by-product costing.

A coaxial cable offering several channels for text, voice, and/or video transmission.

Broadcast system
A sequence of specific units to be assembled and completed at a given rate. This sequence is communicated to supply and assembly activities to perform operations and position material so that it merges with the correct assembled unit.

Software used on the Web to retrieve and display documents on-screen, connect to other sites using hypertext links, display images, and play audio files.

Abbreviation for business-to-business commerce.

Abbreviation for business-to-consumer sales.

Bubble chart
A diagram that attempts to display the interrelationships of systems, functions, or data in a sequential flow. It derives its name from the circular symbols used to enclose the statements on the chart.

A time period, usually a week.

Bucketed system
An MRP, DRP, or other time-phased system in which all time-phased data are accumulated into time periods, or buckets. If the period of accumulation is one week, then the system is said to have weekly buckets.

Bucketless system
An MRP, DRP, or other time-phased system in which all time-phased data are processed, stored, and usually displayed using dated records rather than defined time periods, or buckets.

A plan that includes an estimate of future costs and revenues related to expected activities. The budget serves as a pattern for and a control over future operations.

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

Budgeted cost of work performed
In project management, this term has been replaced with the term earned value.

Budgeted cost of work scheduled
In project management, this term has been replaced with the term planned value.

1) A quantity of materials awaiting further processing. It can refer to raw materials, semifinished stores or hold points, or a work backlog that is purposely maintained behind a work center. 2) In the theory of constraints, buffers can be time or material and support throughput and/or due date performance. Buffers can be maintained at the constraint, convergent points (with a constraint part), divergent points, and shipping points.

Buffer management
In the theory of constraints, a process in which all expediting in a shop is driven by what is scheduled to be in the buffers (constraint, shipping, and assembly buffers). By expediting this material into the buffers, the system helps avoid idleness at the constraint and missed customer due dates. In addition, the causes of items missing from the buffer are identified, and the frequency of occurrence is used to prioritize improvement activities.

Buffer stock
Syn: safety stock.

Build cycle
The time period between a major setup and a cleanup. It recognizes cyclical scheduling of similar products with minor changes from one product/model to another.

Bulk issue
Parts issued from stores to work-in-process inventory, but not based on a job order. They are issued in quantities estimated to cover requirements of individual work centers and production lines. The issue may be used to cover a period of time or to fill a fixed-size container.

Bulk storage
Large-scale storage for raw materials, intermediates, or finished products. Each vessel normally contains a mixture of lots and materials that may be replenished and withdrawn for use or pack-out simultaneously.

Bullwhip effect
An extreme change in the supply position upstream in a supply chain generated by a small change in demand downstream in the supply chain. Inventory can quickly move from being backordered to being excess. This is caused by the serial nature of communicating orders up the chain with the inherent transportation delays of moving product down the chain. The bullwhip effect can be eliminated by synchronizing the supply chain.

Syn: overhead.

Burden rate
A cost, usually in dollars per hour, that is normally added to the cost of every standard production hour to cover overhead expenses.

Business continuation plan (BCP)
A contingency plan for sustained operations during periods of high risk, such as during labor unrest.

Business cycle
A period of time marked by long-term fluctuations in the total level of economic activity. Measures of business cycle activity include the rate of unemployment and the level of gross domestic product.

Business environment
Syn: operating environment.

Business judgment rule
Under common law, an absence of liability for corporate directors and officers if they have used rational business judgment and have no conflict of interest.

Business market
Syn: industrial market.

Business plan
1) 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. A business plan is usually stated in terms of dollars and grouped by product family. The business plan 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. See: long-term planning, strategic plan. 2) A document consisting of the business details (organization, strategy, and financing tactics) prepared by an entrepreneur to plan for a new business.

Business planning
The process of constructing the business plan. See: business plan.

Business process
A set of logically related tasks or activities performed to achieve a defined business outcome.

Business process reengineering (BPR)
A procedure that involves the fundamental rethinking and radical redesign of business processes to achieve dramatic organizational improvements in such critical measures of performance as cost, quality, service, and speed. Any BPR activity is distinguished by its emphasis on (1) process rather than functions and products and (2) the customers for the process. Syn: reengineering.

Business service
The software aspect of electronic commerce. It performs activities, such as encryption, that are required to support business transactions.

Business-to-business commerce (B2B)
Business being 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.

Business-to-consumer sales (B2C)
Business being conducted between businesses and final consumers largely over the Internet. It includes traditional brick and mortar businesses that also offer products online and businesses that trade exclusively electronically.

Business unit
A division or segment of an organization generally treated as a separate profit-and-loss center.

An individual whose functions may include supplier selection, negotiation, order placement, supplier follow-up, measurement and control of supplier performance, value analysis, and evaluation of new materials and processes. In some companies, the functions of order placement and supplier follow-up are handled by the supplier scheduler.

Buyer behavior
The way individuals or organizations behave in a purchasing situation. The customer-oriented concept finds out the wants, needs, and desires of customers and adapts resources of the organization to deliver need-satisfying goods and services.

Buyer code
A code used to identify the purchasing person responsible for a given item or purchase order.

Buyer cycle
The purchasing sequence that generally follows the buyer’s product and budget cycles.

A buyer who also does material planning. This term should not be confused with planner/buyer, which is a synonym of supplier scheduler.

Buyer’s market
A market in which goods can easily be secured and in which the economic forces of business tend to cause goods to be priced at the purchaser’s estimate of value.

Buying capacity
Syn: capacity buying.

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.

A string of 8 bits used to represent a single character in a computer code.


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