OPERATIONS MANAGEMENT GLOSSARY
Compiled and edited by R. Eugene Goodson University of Michigan Business School
May 2002 ©
Copyright 2002
This glossary includes terms pertinent to operations management. It was compiled to assist operations management students in courses at the University of Michigan Business School. Corrections, additions, and editorial suggestions are welcome (please send to ggoodsn@umich.edu). ABC: See Activity Based Costing. ABSENTEE POLICY: The policy that covers allowed absence from the workplace and the penalties that accrue for excessive absence. This policy is typically part of the employee handbook. ACCOUNTS PAYABLE: Liabilities that result from a purchase of goods or services on an open account. Amounts owed to suppliers of goods or services. ACCOUNTS RECEIVABLE: Amounts owed to a company by customers as a result of delivering goods or services and extending credit in the ordinary course of business. ACQUISITION: Typically the purchase of a company or a significant business asset. In the defense industry, acquisition means the purchase of products and systems. ACTIVITY: Generally the processing at a work station or equipment location ACTIVITY BASED COSTING (ABC): An ABC system identifies and then classifies the major activities of a facility's production process into one of the following four categories: unit-level, batch-level, product-level, and facility-level activities. Costs in the first three categories of activities are assigned to products using bases (i.e. cost drivers) that capture the underlying behavior of the costs that are being assigned. The costs of facility-level activities, however, are treated as period costs or allocated to products in some arbitrary manner. AD&D: Disability insurance as part of an employee benefit package ADD: American Disabilities Act AGGREGATION: The concept indicating that pooling of demand or other random variables reduces the variance of the resulting aggregated variable. ALLOCATION: The... [continues]
Compiled and edited by R. Eugene Goodson University of Michigan Business School
May 2002 ©
Copyright 2002
This glossary includes terms pertinent to operations management. It was compiled to assist operations management students in courses at the University of Michigan Business School. Corrections, additions, and editorial suggestions are welcome (please send to ggoodsn@umich.edu). ABC: See Activity Based Costing. ABSENTEE POLICY: The policy that covers allowed absence from the workplace and the penalties that accrue for excessive absence. This policy is typically part of the employee handbook. ACCOUNTS PAYABLE: Liabilities that result from a purchase of goods or services on an open account. Amounts owed to suppliers of goods or services. ACCOUNTS RECEIVABLE: Amounts owed to a company by customers as a result of delivering goods or services and extending credit in the ordinary course of business. ACQUISITION: Typically the purchase of a company or a significant business asset. In the defense industry, acquisition means the purchase of products and systems. ACTIVITY: Generally the processing at a work station or equipment location ACTIVITY BASED COSTING (ABC): An ABC system identifies and then classifies the major activities of a facility's production process into one of the following four categories: unit-level, batch-level, product-level, and facility-level activities. Costs in the first three categories of activities are assigned to products using bases (i.e. cost drivers) that capture the underlying behavior of the costs that are being assigned. The costs of facility-level activities, however, are treated as period costs or allocated to products in some arbitrary manner. AD&D: Disability insurance as part of an employee benefit package ADD: American Disabilities Act AGGREGATION: The concept indicating that pooling of demand or other random variables reduces the variance of the resulting aggregated variable. ALLOCATION: The... [continues]
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