Operations Management

Topics: Management, Process management, Supply chain management Pages: 114 (43952 words) Published: June 5, 2011
The Encyclopedia of Operations Management Terms

Professor Arthur V. Hill
Curtis L. Carlson School of Management 321-19th Avenue South University of Minnesota Minneapolis, MN 55455-0413 USA ahill@umn.edu Revised July 20, 2003


Production Operations Management Society

The electronic version of this encyclopedia is distributed free of charge by the Production Operations Management Society (POMS) under the conditions that (1) you send corrections and additions to ahill@umn.edu and (2) it not be used for commercial purposes of any kind. It is available on the POMS website (www.poms.org). Instructors are encouraged to make this required reading for their students. The encyclopedia includes definitions of a wide range of operations management terms. Extensive explanations are provided for many terms and concepts. Many new service management, strategic management, manufacturing management, and e-business terms are included here that are not found in other dictionaries and encyclopedia. Essential terms for business and engineering students are marked with an asterisk (*) in front of the term. The OM Encyclopedia is available on the POMS website at www. poms.org. Look for the link to education.

Copyright ©2003 Professor Arthur V. Hill, Carlson School of Management, University of Minnesota, ahill@umn.edu.

The Encyclopedia of Operations Management Terms Condition for Use All instructors using the Operations Management Encyclopedia are required to send Professor Hill at least one new or edited term each semester they use it. All contributors will be given attribution. Date: _____________________ To: Professor Art Hill (ahill@csom.umn.edu) Fax 612-624-8804 (email is preferred to fax)

From: _________________________________________________ Re: OM Encyclopedia

Suggested new terms:

Edits/corrections for terms already in the OM Encyclopedia:

Note: The OM Encyclopedia is available on the POMS website at http://www.poms.org/POMSWebsite/Education.html.

Copyright ©2003 Professor Arthur V. Hill, Carlson School of Management, University of Minnesota, ahill@umn.edu.

The Encyclopedia of Operations Management Terms
5S concept – See the five S concept. *ABC classification – A method for prioritizing items based on the product of the annual demand and the unit cost. The high “annual dollar volume” items are classified as “A” item. The low annual dollar volume items are classified as “C” items. Based on Pareto’s Law, the ABC classification system drives us to manage “A” items more carefully. This means that these item should be ordered more often, counted more often, located closer to the door, and be forecasted more carefully. Conversely, “C” items are not very important from an investment point of view, and therefore should be ordered rarely and not counted often. Some firms use other methods for defining the ABC classification -- such as the stockout cost or the medical criticality of the item. This has nothing to do with Activity Based Costing. See Pareto’s Law. Acceptable Quality Level (AQL) – When deciding whether or not to accept a batch, a sample of n parts is taken from the batch and an decision is made to accept the batch if the number or percent of defects is better than the AQL. See acceptance sampling. *acceptance sampling – Acceptance sampling plans are used to make accept/reject decisions for each lot. With attribute sampling plans, these decisions are based on a count of the number of defects and defectives; with variable sampling plans these decisions are based on measurements. Plans requiring only a single sample set are known as single sampling plans; double and multiple sampling plans may require additional samples sets. For example, an attribute single sampling plan with a sample size n=50 and an accept number a=1 requires that a sample of 50 units be inspected. If the number of defectives in that sample is one or zero, the lot is accepted. Otherwise it is rejected. Ideally, when a...
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