Acknowledgment

Typically, this is a response, either electronic or as a physical document, which confirms the receipt of an order from the supplier to the buyer.

Acquisition Categories(ACAT)

U.S. DoD ACAT programs are Milestone Decision Authority programs or programs designated by the Milestone Decision Authority.

Acquisition Cost

The net price, plus other costs needed to purchase the item and get it to the point of use, include the item's purchasing costs (closing, research, accounting, commissions, legal fees), transportation, preparation, and installation costs.

ACSI

American Customer Satisfaction Index

Action Message

A system message is usually created during MRP calculations to draw attention to a current or potential problem and suggest corrective action.

Action Plan

A specific method or process is used to achieve the results called for by one or more objectives. An action plan may be a simpler version of a project plan.

Action Report

A system message is usually created during MRP calculations to draw attention to a current or potential problem and suggest corrective action.

Activation

TOC recognizes that it is possible to produce without contributing to throughput. TOC defines production that contributes to throughput as utilization. Production that does not contribute to throughput is known as activation. Activation is not desired because it not only fails to increase throughput, but it also increases inventory and operating expenses. This is consistent with the Just-In-Time (JIT) philosophy.

Active Inventory

Materials held in a facility, which are intended to be consumed in manufacturing/assembly or sold in a specified period, are referred to as Active Stock Goods. These goods are stored in active pick locations and are ready for order filling.

Activity

Work is performed by people, equipment, technologies, or facilities. Activities are usually described by the 'action-verb-adjective-noun' grammar convention. Activities may occur in a linked sequence, and activity-to-activity assignments may exist.

Activity Analysis

The process of identifying and cataloguing activities for detailed understanding and documentation of their characteristics is called activity analysis. This analysis is accomplished through interviews, group sessions, and questionnaires.

Activity Based Budgeting (ABB)

An approach to budgeting where a company uses an understanding of its activities and driver relationships to quantitatively estimate workload and resource requirements as part of an ongoing business plan. Budgets show the types, number of, and cost of resources that activities are expected to consume based on forecasted workloads. The budget is part of an organization's activity-based planning process and can be used in evaluating its success in setting and pursuing strategic goals.

Activity-based costing (ABC)

A common method for cost assigning, ABC includes overhead expenses related to activities, such as units of work or tasks completed with a specific purpose. This provides a precise breakdown of costs on a per client or per product basis.

Activity Based Costing (ABC)

A methodology that measures the cost and performance of cost objects, activities, and resources. Cost objects consume activities, and activities consume resources. Resource costs are assigned to activities based on their use of those resources, and activity costs are reassigned to cost objects (outputs) based on the cost objects' proportional use of those activities. Activity-based costing incorporates causal relationships between cost objects and activities and between activities and resources.

Activity-Based Management (ABM)

A discipline focusing on the management of activities within business processes as the route to continuously improve both the value received by customers and the profit earned in providing that value. ABM uses activity-based cost information and performance measurements to influence management action. See Activity-Based Costing.

Activity Based Planning (ABP)

Activity-based planning (ABP) is an ongoing process to determine activity and resource requirements (both financial and operational) based on the ongoing demand for products or services by specific customer needs. Resource requirements are compared to available resources, and capacity issues are identified and managed. Activity-based budgeting (ABB) is based on the outputs of activity-based planning.

Activity Dictionary

A listing and description of activities that provides a common/standard definition of activities across the organization, an activity dictionary can include information about an activity and/or its relationships. This information may consist of the activity description, business process, function source, whether it is value-added, inputs, outputs, supplier, customer, output measures, cost drivers, attributes, tasks, and any other desired information to describe the activity.

Activity Driver

The best single quantitative measure of the frequency and intensity of the demands placed on an activity by cost objects or other activities is used to assign activity costs to cost objects or to other activities.

Activity Level

A description of types of activities dependent on the functional area: product-related and customer-related. Product-related activity levels may include unit, batch, and product levels. Customer-related activity levels may include customer, market, channel, and project levels.

Activity Network Diagram

An arrow diagram is used in planning and managing processes and projects.

Actual Costs

The actual labor, material, and allocated overhead costs incurred in the acquisition or production of a product.

Actual Cost System

A managerial accounting system that records and measures all cost elements at their actual acquisition value. Indirect costs are then applied as overhead using a cost allocation technique.

Actual Demand

The known demand for a specific product is based on customer orders and open production orders. Once an order is shipped or production is completed, the specific demand quantity will become usage. Actual demand should be netted against any forecast for the same period. This means that as orders are received, they are considered to be part of an earlier forecast, and forecasts should be considered as satisfied.

Actual to Target Gap Analysis

The process of determining and documenting the variance (gap) between goals and current performance.

Actual to Theoretical Cycle Time

The ratio of the measured time required to produce a given output, divided by the sum of the time required to produce a given output based on the rated efficiency of the machinery and labor operations.

Adaptive Smoothing

A special type of exponential smoothing that takes the success of previous forecasts into account when setting a value of ALPHA for the next period. In this manner, periods that experienced high error will cause ALPHA to be set high and, thus, adjust quickly. When error is low, AS assumes the technique is doing well and sets ALPHA at a low level. This makes ES much more responsive to changes in the level of the data and less reactive to noise. The advantage of adaptive smoothing is that the decision of what value of ALPHA to use in exponential smoothing is eliminated. A disadvantage of adaptive smoothing is that trend and seasonality are ignored.

ADR

Alternate Dispatch Resolution

Advanced Planning and Scheduling (APS)

Refers to a manufacturing management process by which raw materials and production capacity are optimally allocated to meet demand. APS is especially well-suited to environments where simpler planning methods cannot adequately address complex trade-offs between competing priorities.

Advanced Shipping Notice (ASN)

Detailed shipment information is transmitted to a customer or consignee in advance of delivery, designating the contents (individual products and quantities of each) and nature of the shipment. In EDI data standards, it is referred to as an '856 transaction.' It may also include carrier and shipment specifics, including the time of shipment and expected time of arrival. This is also known as an assumed receipt.

Advance Material Request

A request for materials, which is created in advance of formal need due to long lead times for components, etc.

Aftermarket

A market for parts and accessories used in the repair or enhancement of a product is known as a secondary market. This market is created after the original market sales are finished.

After-Sale Service

Services provided to the customer after products have been delivered. This can include repairs, maintenance, and/or telephone support. Synonym: Field Service.

Agency Tariff

A publication of a rate bureau that contains rates for many carriers.

Agent

An enterprise authorized to transact business for or in the name of another enterprise.

Agglomeration

A net advantage is gained by locating with other companies.

Aggregate Forecast

Forecasting the future demand for a family of products or for a single product across multiple dimensions of sources, including planned production and customer orders, is essential in logistics.

Aggregate Inventory

The total inventory available for any given product across multiple locations and/or multiple stock-keeping units is called the total inventory.

Aggregate InventoryManagement

A method of managing inventory through the use of levels set against overall inventory or class value.

Aggregate Plan

A plan for the production process, 2 to 18 months in advance, is designed to give management an idea of the quantity of materials and other resources to be procured and when. This helps to minimize the total cost of operations for the organization over that period.

Aggregate Planning

An operational activity that compiles an aggregate plan for the production process.

Aggregate Tender Rate

A reduced rate is offered to a shipper who tenders two or more class-rated shipments at one time and one place.

Agile Manufacturing

Tools, techniques, and initiatives that enable a plant or company to thrive under conditions of unpredictable change. Agile manufacturing not only enables a plant to achieve a rapid response to customer needs but also includes the ability to quickly reconfigure operations and strategic alliances to respond rapidly to unforeseen shifts in the marketplace. In some instances, it also incorporates 'mass customization' concepts to satisfy unique customer requirements. In broad terms, it includes the ability to react quickly to technical or environmental surprises.

Agility

The ability to rapidly and cost-effectively adapt to market changes with no significant negative impact on quality or dependability.

AGVS

A system for material handling equipment that uses wired or wireless guidance to move materials around facilities based on system commands.

Air Cargo

Freight that is moved by air transportation.

Air Cargo Containers

Containers are designed to conform to the inside of an aircraft. There are many shapes and sizes of containers. Air cargo containers fall into three categories: 1) air cargo pallets, 2) lower deck containers, and 3) box-type containers.

Airport and Airway Trust Fund

A federal fund collects passenger ticket taxes and disburses those funds for airport facilities.

Air Taxi

An exempt for-hire air carrier that will fly anywhere on demand. Air taxis are restricted to a maximum payload and passenger capacity per plane.