APICS CPIM Notes

"Consuming the forecast"

deducts customer orders from the sales forecast

"Critical Ratio"
Ratio of the time remaining to complete an order (time to
due date) to work remaining (work hours to due date) work remaining is also called 'lead time remaining'

"Mean Absolute Deviation"

(Sum of absolute errors divided by the number of periods)
The average of the absolute values of the deviation of
observed values from some expected value.

4 steps of the master scheduling process (in order)

1. summarize demand
2. schedule demand
3. verify the schedule
4. manage the schedule

Any time when sales are consistently more or less than

predicted is an example of...
bias

Assemble-to-Order
A production environment where a good or service can be
assembled after receipt of a customer's order

Available-to-Promise
The portion of inventory or production that is not
committed to customer orders

Backward Scheduling
Activities are scheduled back from the due date
A technique where 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

Bias
A consistent deviation from the mean in one direction (high
or low)

Name the three Business planning outputs

Sales
Profits
ROI

Capacity Available
The capability of a system or resource to produce a
quantity of output in a particular time period

Capacity Management
The function of establishing, measuring, monitoring, and
adjusting limits or levels of capacity to execute all
schedules

Capacity Requirements
The resources needed to produce the projected level of
work required from a facility over a time horizon

Capacity Requirements Planning

keeps overloaded and underloaded work centers
synchronized

Chase
A production strategy that maintains a stable inventory
level while varying production to meet demand

Chase strategy
matches demand at any given time

Component
The raw material, part or subassembly that goes into a
higher level assembly, compound, or other item

Control
Comparing actual to planned performance and taking
corrective action, as needed, to align performance with
plan

Demand
A need for a particular product or component

Stable demand
Demand that retains the same pattern over time

Dependent
Demand that is directly related to or derived from the bill of
material structure for other items or end products

Due Date
The date when purchased material or production material
is due to be available for use

Efficiency
A measure (%) of the actual output to the standard output
expected

Engineered-to-Order
A production environment where products whose customer
specifications require unique engineering design,
significant customization, or new purchased materials

Enterprise Resource Planning (ERP)

A framework for organizing, defining, and standardizing the
business processes necessary to effectively plan and
control an organization so the organization can use its
internal knowledge to seek external advantage

Exploding
To use the BOM to calculate component quantities

Exponential Smoothing
A type of moving average forecasting techniques in which
planners can choose the relative weighting of the latest
period's actual demand and its forecast in developing the
forecast for the next period
New forecast = (alpha)(latest demand) + (1-alpha)
(previous forecast)

Extrinsic Forecast
Relies on external indicators to make projections or
forecasts of demand. Ex: Economic; Demographic a.k.a. Quantitative Technique

Finite Loading
Assumes that there is a definite limit to capacity at any
work center. Assigning no more work to a work center than

the work center can be expected to execute in a given time

period

Forecast
An estimate of future demand

Forward Scheduling
Activities are scheduled starting from the date the order is
received through the finish date. A technique where the
scheduler proceeds from a known start date and computes
the completion date for an order, usually proceeding from
the first operation to the last

Goal of Material Requirements Planning

Getting the right 'material' in the right quantity in the right
place at the right time.

Gross Profit
Earnings from an ongoing business after direct costs of
goods sold have been deducted from sales revenue for a
given period (gross)

Gross Requirement
The total of independent and dependent demand for a
component before the netting of on-hand inventory and
scheduled receipts

Hybrid
A production strategy that combines the aspects of both
the chase and level production strategies

Independent
Customer orders, forecasts, replenishment orders, and
interplant transfers are all sources of ____________ demand.
The demand for an item that is unrelated to the demand
for other items

Infinite Loading
Assumes that capacity is infinite at any work center
Calculation of the capacity required at work centres in the
time periods required regardless of the capacity available
to perform this work

Intrinsic
A forecast based on internal factors, such as an average of
past sales

JIT production
A philosophy that assures that the right products are
delivered to the right customers in the right quantities at
the right time and at the right price.

Keep Priorities Current

An objective of material requirements planning

Layout (Process)
Physical arrangement of resources or centres of economic
activity (machines, groups of people, workstations, storage
areas, aisles) within a facility

Lead Time
The time from preparation of the order to use of the
product

Lead Time Offset

A technique used in MRP where a planned order receipt in
one time period will require the release of that order in an
earlier time period based on the lead time for this item

Level Production Strategy

The basic production planning strategy that builds
inventory and avoids the costs of excess capacity

Level Schedule
A production schedule that generates material and labour
requirements that are as evenly spread over time as
possible

Made-to-Order
A production environment where a good or service can be
made after receipt of a customer's order
This production environment (manufacturing strategy)
produces the longest delivery lead time

Made-to-Stock

A production environment where products can be and

usually are finished before receipt of a customer order

Mass Customization
The creation of a high-volume product with large variety so
that a customer may specify an exact model out of a large
volume of possible end items, while manufacturing cost is
low due to large volume

Master Planning
A group of business processes that includes the following
activities: demand management, production and resource
planning; and master scheduling

Master Production
A type of schedule; a line on the master schedule grid that
reflects the anticipated build schedule for those items
assigned to the master scheduler

Moving Average
An arithmetic average of a certain number (n) of the most
recent observations. As each new observation is added, the
oldest observation is dropped