CPIM flashcards

32 cards. Read the term and the definition here. The deck at the top of this page is optional.

Order winner versus order qualifier

An order qualifier is the minimum standard a supplier must meet to be considered at all; an order winner is the characteristic that actually makes the customer choose one supplier over another.

SCOR model processes

SCOR defines six management processes: Plan, Source, Make, Deliver, Return, and Enable, giving a common language for describing, benchmarking, and improving supply chain activities.

Bullwhip effect

The amplification of demand variability as orders move upstream from customer to supplier, driven by forecast updating, order batching, price fluctuation, and shortage gaming.

Strategic fit

Matching supply chain responsiveness to the implied demand uncertainty of the products served: high-uncertainty products need responsive chains, while low-uncertainty products suit efficient chains.

Executive S&OP meeting

The final monthly S&OP step in which senior management reconciles demand and supply plans and authorizes a single balanced consensus plan for the whole business.

Level production strategy

An aggregate planning approach that holds the workforce and output rate constant, absorbing demand variation through inventory build and depletion or through backlogs.

Chase production strategy

An aggregate planning approach that matches output to demand in each period by hiring, laying off, using overtime, or subcontracting, keeping inventory low but labor cost volatile.

Exponential smoothing formula

F(t+1) = alpha x A(t) + (1 - alpha) x F(t), where alpha is the smoothing constant; a higher alpha makes the forecast more responsive to the most recent actual demand.

Tracking signal

The running sum of forecast errors divided by MAD; a value outside roughly plus or minus four signals persistent bias and the need to revise the forecast model.

Mean absolute deviation

The average of the absolute differences between actual demand and forecast demand, expressing forecast error in the same units as demand and avoiding offsetting of positive and negative errors.

Delphi method

A structured qualitative forecasting technique in which dispersed experts submit anonymous forecasts over several rounds until consensus emerges, preventing dominant personalities from skewing the result.

MRP net requirement

Net requirement equals gross requirement plus safety stock minus scheduled receipts and projected available balance; it drives planned order receipts and, after lead-time offset, planned order releases.

MPS time fence

A designated span in the master production schedule within which changes are restricted or need higher authorization, protecting execution from disruptive short-term order changes.

Low-level code

The deepest level in a bill of material at which a component appears; it determines the sequence in which items are exploded during material requirements planning.

Kraljic matrix

A purchasing portfolio model classifying items by profit impact and supply risk into strategic, leverage, bottleneck, and noncritical segments, each calling for a different sourcing strategy.

Total cost of ownership

A purchasing evaluation covering all costs of acquiring, using, and disposing of an item, including price, freight, duty, quality, inventory, and lifecycle costs rather than price alone.

OTIF

On-time in-full: a supplier performance measure counting deliveries that arrive by the promised date in the exact quantity ordered, expressed as a percentage of total deliveries.

Economic order quantity

EOQ equals the square root of (2DS/H), where D is annual demand, S is order cost, and H is annual holding cost per unit; it minimizes combined ordering and holding cost.

Reorder point

The inventory level that triggers a new replenishment order; it equals expected demand during the lead time plus the safety stock needed for the target service level.

Safety stock formula

Safety stock = Z x sigma-d x square root of L, where Z reflects the target service level, sigma-d is the standard deviation of demand per period, and L is lead time.

ABC classification

A Pareto-based ranking of inventory by annual usage value: A items are few but high value and tightly controlled, B items moderate, and C items numerous but low value.

Shortest processing time rule

A sequencing priority rule that runs the job with the shortest processing time first; it minimizes average flow time and average waiting time but can delay long jobs.

Critical ratio

Critical ratio = (due date - current date) / remaining processing time; a value below 1 means the job is behind schedule, while a value above 1 means it is ahead.

Drum-buffer-rope

A theory of constraints scheduling method in which the bottleneck sets the pace (drum), a time buffer protects it, and the rope communicates that pace back to the material release point.

Distribution requirements planning

A time-phased technique that explodes finished-good requirements from central supply through the distribution network to determine replenishment orders at each warehouse.

Cross-docking

A warehouse practice in which inbound shipments move directly across the dock to outbound vehicles with little or no storage, reducing handling cost and order cycle time.

Square root law

Total safety stock held across multiple stocking locations is roughly proportional to the square root of the number of locations, so consolidating locations reduces total inventory.

Cost of quality

The sum of prevention and appraisal costs plus internal and external failure costs; increasing prevention spending generally reduces total failure costs and total cost of quality.

Process capability index

Cpk = minimum of [(USL - mean)/(3 sigma)] and [(mean - LSL)/(3 sigma)]; it compares both process spread and centering to specification limits, with 1.33 often a minimum target.

Control chart

A statistical process control chart plotting a quality characteristic over time with upper and lower control limits at plus or minus three sigma, separating common-cause from special-cause variation.

Net present value

The sum of a project's future cash flows discounted at the cost of capital, minus the initial investment; a positive NPV means the project adds economic value.

Takt time

Takt time = available production time / customer demand rate; it sets the pace at which work must be completed to meet demand exactly without building excess inventory.