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PAC
Acronym for production activity control.
Package to order
A production environment in which a good or service can be packaged after receipt
of a customer order. The item is common across many different customers; packaging
determines the end product.
Packing and marking
The activities of packing for safe shipping and unitizing one or more items
of an order, placing them into an appropriate container, and marking and labeling
the container with customer shipping destination data, as well as other information
that may be required.
Packing slip
A document that itemizes in detail the contents of a particular package, carton,
pallet, or container for shipment to a customer. The detail includes a description
of the items, the shipper’s or customer’s part number, the quantity shipped,
and the stockkeeping unit (SKU) of items shipped.
Pack-out department
The department that performs the final steps (often including packaging and
labeling) before shipment to the customer. See: final assembly department.
Page
In information systems, an Internet document containing both text and hypertext
links to other pages that are stored on the server.
Pallet ticket
A label to track pallet-sized quantities of end items produced to identify the
specific sublot with specifications determined by periodic sampling and analysis
during production.
Panel consensus
A judgmental forecasting technique by which a committee, sales force, or group
of experts arrives at a sales estimate. See: Delphi method, management estimation.
Paperless purchasing
A purchasing operation that does not employ purchase requisitions or hard-copy
purchase orders. In actual practice, a small amount of paperwork usually remains,
normally in the form of the supplier schedule.
Parallel conversion
A method of system implementation in which the operation of the new system overlaps
with the operation of the system being replaced. The old system is discontinued
only when the new system is shown to be working properly, thus minimizing the
risk and negative consequences of a poor system implementation.
Parallel engineering
Syn: participative design/engineering.
Parallel implementation strategy
A system implementation technique whereby the current system and the new system
are both executed for some period of time. The results of the two systems are
compared to ensure that the new system is executing properly. When a level of
confidence is built that the new system is executing properly, the old system
is turned off and the new system becomes the designated business system.
Parallel schedule
The use of two or more machines or job centers to perform identical operations
on a lot of material. Duplicate tooling and setup are required.
Parameter
A coefficient appearing in a mathematical expression, each value of which determines
the specific form of the expression. Parameters define or determine the characteristics
or behavior of something, as when the mean and standard deviation are used to
describe a set of data.
Parent item
The item produced from one or more components. Syn: parent.
Pareto analysis
In the 1890s, Vilfredo Pareto found that in all economies, a small number of
people control a large portion of the wealth and vice-versa. This observation
has evolved into the concept that 20 percent of products create 80 percent of
the costs. It has further evolved into the concept that 20 percent of any entity
represent the very important few and the remaining 80 percent are less important,
and it enables identifying and focusing on the very important few. In inventory
control, this idea is effective as ABC classification. See: ABC classification.
Pareto chart
A graphical tool for ranking causes from most significant to least significant. It is based on Pareto’s law, which was first defined with respect to quality by J.M. Juran in 1950. The Pareto chart is one of the seven tools of quality.
Pareto’s law
A concept developed by Vilfredo Pareto, an Italian economist, that states that
a small percentage of a group accounts for the largest fraction of the impact,
value, etc. In an ABC classification, for example, 20% of the inventory items
may constitute 80% of the inventory value. See: ABC classification.
Par level
In service operations, the maximum supply volume based on established quotas from previous use for a particular supply item, in a particular department, for a specified time period.
Part
Generally, a material item that is used as a component and is not an assembly,
subassembly, blend, intermediate, etc.
Part coding and classification
A method used in group technology to identify the physical similarity of parts.
Part family
A collection of parts grouped for some managerial purpose
Partial order
Any shipment received or shipped that is less than the amount ordered.
Partial productivity factor
Syn: single-factor productivity.
Participative design/engineering
A concept that refers to the simultaneous participation of all the functional
areas of the firm in the product design activity. Suppliers and customers are
often also included. The intent is to enhance the design with the inputs of
all the key stakeholders. Such a process should ensure that the final design
meets all the needs of the stakeholders and should ensure a product that can
be quickly brought to the marketplace while maximizing quality and minimizing
costs. Syn: co-design, concurrent design, concurrent engineering, new product
development team, parallel engineering, simultaneous design/engineering, simultaneous
engineering, team design/engineering. See: early manufacturing involvement.
Participative management
A system that encompasses various activities of high involvement in which subordinates
share a significant degree of decision-making power with their immediate superiors.
Participative management draws on the rationale that everyone in an organization
is capable of and willing to help guide and direct the organization toward agreed-on
goals and objectives.
Part master record
Syn: item record.
Partnership
1) A form of business ownership that is not organized as a separate legal entity
(i.e., unincorporated business), but entailing ownership by two or more persons.
See: corporation, private ownership, public ownership, sole proprietorship.
2) In a supply chain, a relationship based on trust, shared risk, and rewards
aimed toward achieving a competitive advantage.
Part period balancing (PPB)
A dynamic lot-sizing technique that uses the same logic as the least total cost
method, but adds a routine called look ahead/look back. When the look ahead/look
back feature is used, a lot quantity is calculated, and before it is firmed
up, the next or the previous period’s demands are evaluated to determine whether
it would be economical to include them in the current lot. See: discrete order
quantity, dynamic lot sizing.
Parts bank
1) In the narrow sense, an accumulation of inventory between operations that
serves to keep a subsequent operation running although there are interruptions
in the preceding operations. See: buffer. 2) In the larger sense, a stockroom
or warehouse. The implication is that the contents of these areas should be
controlled like the contents of a bank.
Parts list
A list of parts, materials, and components required to make an item. See: single
level bill of material.
Parts planner
Syn: material planner.
Parts requisition
An authorization that identifies the item and quantity required to be withdrawn
from an inventory. Syn: requisition. See: purchase requisition.
Part standardization
A program for planned elimination of superficial, accidental, and deliberate
differences between similar parts in the interest of reducing part and supplier
proliferation.
Part type
A code for a component within a bill of material, e.g., regular, phantom, reference.
Passwords
Computer terms for the set of characters that identify users in order for them
to log on to and use the system.
Past due order
A line item on an open customer order that has an original scheduled ship date
that is earlier than the current date. Syn: delinquent order, late order, order
backlog. See: backlog.
Patent
A legal document giving exclusive rights to the production, use, sale, or other action regarding a product or process.
Path
In project management, a set of serially related activities in a network diagram.
Path convergence
In project management, the point in a network diagram where one or more parallel
paths come together. A delay on any of the parallel paths can conceivably delay
network completion.
Payback
A method of evaluating an investment opportunity that provides a measure of
the time required to recover the initial amount invested in a project.
Payback period
The period of time required for a stream of cash flows resulting from a project
to equal the project’s initial investment.
Pay for knowledge
A pay restructuring scheme by which competent employees are rewarded for the
knowledge they acquire before or while working for an organization, regardless
of whether such knowledge is actually being used at any given time.
PC
Abbreviation for personal computer.
P chart
A control chart for evaluating the stability of a process in terms of the percentage
of the total number of units in a sample in which an event of a given classification
occurs over time. P charts are used where it is difficult or costly to make
numerical measurements or where it is desired to combine multiple types of defects
into one measurement. Syn: percent chart.
PDCA
Abbreviation for plan-do-check-action.
PDF
Abbreviation for portable document format.
PDM
Abbreviation for product data management.
P:D ratio
A ratio where P is the manufacturing lead time and D is the customer required
delivery time. If the P:D ratio exceeds 1.00, either a customer’s order will
be delayed or production will start as the result of a forecast (make-to-stock)
or an anticipated customer order (make-to-order).
Pegged requirement
A requirement that shows the next-level parent item (or customer order) as the
source of the demand.
Pegging
In MRP and MPS, the capability to identify for a given item the sources of its
gross requirements and/or allocations. Pegging can be thought of as active where-used
information. See: requirements traceability.
Penetration pricing
Introducing a product below its long-run price to secure entry into a market.
People involvement
Syn: employee involvement.
PE ratio
Abbreviation for price to earnings ratio.
Percent completed
A comparison of work completed to the current projection of total work.
Percent of fill
Syn: customer service ratio.
Performance
The degree to which an employee or group applies skill and effort to an operation
or task as measured against an established standard.
Performance appraisal
Supervisory or peer analysis of work performance. May be made in connection
with wage and salary review, promotion, transfer, or employee training.
Performance benchmarking
Syn: competitive benchmarking. See: benchmarking, process benchmarking.
Performance criterion
The characteristic to be measured (e.g., parts per million defective, business
profit). See: performance measure, performance measurement system, performance
standard.
Performance efficiency
A ratio, usually expressed as a percentage, of the standard processing time
for a part divided by its actual processing time. Setups are excluded from this
calculation to prevent distortion. A traditional definition includes setup time
as part of operation time, but significant distortions can occur as a result
of dependent setups.
Performance measure
In a performance measurement system, the actual value measured for the criterion.
Syn: performance measurement. See: performance criterion, performance measurement
system, performance standard.
Performance measurement
Syn: performance measure.
Performance measurement system
A system for collecting, measuring, and comparing a measure to a standard for
a specific criterion for an operation, item, good, service, business, etc. A
performance measurement system consists of a criterion, a standard, and a measure.
Syn: metrics. See: performance criterion, performance measure, performance standard.
Performance rating
Observation of worker performance to rate the productivity of the workers as
a percentage in terms of the standard or normal worker performance.
Performance standard
In a performance measurement system, the accepted, targeted, or expected value
for the criterion. See: performance criterion, performance measure, performance
measurement system.
Period capacity
The number of standard hours of work that can be performed at a facility or
work center in a given time period.
Period costs
All costs related to a period of time rather than a unit of product, e.g., marketing
costs, property taxes.
Periodic inventory
A physical inventory taken at some recurring interval, e.g., monthly, quarterly,
or annual physical inventory. See: physical inventory.
Periodic replenishment
A method of aggregating requirements to place deliveries of varying quantities
at evenly spaced time intervals, rather than variably spaced deliveries of equal
quantities.
Periodic review system
Syn: fixed reorder cycle inventory model.
Period order quantity
A lot-sizing technique under which the lot size is equal to the net requirements for a given number of periods, e.g., weeks into the future. The number of periods to order is variable, each order size equalizing the holding costs and the ordering costs for the interval. See: discrete order quantity, dynamic lot sizing.
Perpetual inventory
An inventory recordkeeping system where each transaction in and out is recorded
and a new balance is computed.
Perpetual inventory record
A computer record or manual document on which each inventory transaction is
posted so that a current record of the inventory is maintained.
Personal Computer (PC)
A microcomputer usually consisting of a CPU, primary storage, and input/output
circuitry on one or more boards, plus a variety of secondary storage devices.
Personnel class
A means to describe a grouping of people with similar characteristics for purposes
of scheduling and planning.
PERT
Acronym for program evaluation and review technique.
Phantom bill of material
A bill-of-material coding and structuring technique used primarily for transient
(nonstocked) subassemblies. For the transient item, lead time is set to zero
and the order quantity to lot-for-lot. A phantom bill of material represents
an item that is physically built, but rarely stocked, before being used in the
next step or level of manufacturing. This permits MRP logic to drive requirements
straight through the phantom item to its components, but the MRP system usually
retains its ability to net against any occasional inventories of the item. This
technique also facilitates the use of common bills of material for engineering
and manufacturing. Syn: blowthrough, transient bill of material. See: pseudo
bill of material.
Physical distribution
Syn: distribution.
Physical inventory
1) The actual inventory itself. 2) The determination of inventory quantity by actual count. Physical inventories can be taken on a continuous, periodic, or annual basis. Syn: annual inventory count, annual physical inventory. See: periodic inventory.
Pick date
The start date of picking components for a production order. On or before this
date, the system produces a list of orders due to be picked, pick lists, tags,
and turnaround cards.
Picking
The process of withdrawing from stock the components to make assemblies or finished goods. In distribution, the process of withdrawing goods from stock to ship to a distribution warehouse or to a customer.
Picking list
A document that lists the material to be picked for manufacturing or shipping
orders. Syn: disbursement list, material list, stores issue order, stores requisition.
Piece parts
Individual items in inventory at the simplest level in manufacturing, e.g.,
bolts and washers.
Piece rate
The amount of money paid for a unit of production. It serves as the basis for
determining the total pay for an employee working in a piecework system.
Piece rate pay system
A compensation system based upon volume of output of an individual worker.
Piecework
Work done on a piece rate.
Piggyback
Syn: trailer on a flatcar.
Pilot lot
A relatively small preliminary order for a product. The purpose of this small
lot is to correlate the product design with the development of an efficient
manufacturing process.
Pilot order
Syn: experimental order.
Pilot plant
A small-scale production facility used to develop production processes and to
manufacture small quantities of new products for field testing, etc. Syn: semiworks.
Pilot test
1) In computer systems, a test before final acceptance of a new business system
using a subset of data with engineered cases and documented results. 2) Generally,
production of a quantity to verify manufacturability, customer acceptance, or
other management requirements before implementation of ongoing production. Syn:
pilot, walkthrough.
Pipeline inventory
Syn: pipeline stock.
Pipeline stock
Inventory in the transportation network and the distribution system, including
the flow through intermediate stocking points. The flow time through the pipeline
has a major effect on the amount of inventory required in the pipeline. Time
factors involve order transmission, order processing, scheduling, shipping,
transportation, receiving, stocking, review time, etc. Syn: pipeline inventory.
See: distribution system, transportation inventory.
Place
One of the four P’s (product, price, place, and promotion) that constitute the
set of tools used to direct the business offering to the customer. Place is
the distribution tactic used to provide the product to the customer. Distribution
answers the questions of where, when, and how the product is made available.
See: four P’s.
Plan
A predetermined course of action over a specified period of time that represents
a projected response to an anticipated environment to accomplish a specific
set of adaptive objectives.
Plan-do-check-act cycle
Syn: plan-do-check-action.
Plan-do-check-action (PDCA)
A four-step process for quality improvement. In the first step (plan), a plan
to effect improvement is developed. In the second step (do), the plan is carried
out, preferably on a small scale. In the third step (check), the effects of
the plan are observed. In the last step (action), the results are studied to
determine what was learned and what can be predicted. The plan-do-check-act
cycle is sometimes referred to as the Shewhart cycle (because Walter A. Shewhart
discussed the concept in his book Statistical Method from the Viewpoint of Quality
Control) and as the Deming circle (because W. Edwards Deming introduced the
concept in Japan; the Japanese subsequently called it the Deming circle). Syn:
plan-do-check-act cycle, Shewhart circle of quality, Shewhart cycle. See: Deming
circle.
Planned finish date
Syn: scheduled finish date.
Planned issue
A disbursement of an item predicted by MRP through the creation of a gross requirement
or allocation. Syn: controlled issue.
Planned issue receipt
A transaction that updates the on-hand balance and the related allocation or
open order.
Planned load
The standard hours of work required by the planned production orders.
Planned order
A suggested order quantity, release date, and due date created by the planning
system’s logic when it encounters net requirements in processing MRP. In some
cases, it can also be created by a master scheduling module. Planned orders
are created by the computer, exist only within the computer, and may be changed
or deleted by the computer during subsequent processing if conditions change.
Planned orders at one level will be exploded into gross requirements for components
at the next level. Planned orders, along with released orders, serve as input
to capacity requirements planning to show the total capacity requirements by
work center in future time periods. See: planning time fence.
Planned order receipt
The quantity planned to be received at a future date as a result of a planned
order release. Planned order receipts differ from scheduled receipts in that
they have not been released. Syn: planned receipt.
Planned order release
A row on an MRP table that is derived from planned order receipts by taking the planned receipt quantity and offsetting to the left by the appropriate lead time. See: order release.
Planned receipt
1) An anticipated receipt against an open purchase order or open production order. 2) Syn: planned order receipt.
Planned start date
Syn: scheduled start date.
Planner
Syn: material planner.
Planner/buyer
Syn: supplier scheduler.
Planner intervention
Syn: manual rescheduling.
Planning
The process of setting goals for the organization and choosing various ways
to use the organization’s resources to achieve the goals.
Planning and control process
A process consisting of the following steps: plan, execute, measure, and control.
Planning bill
Syn: planning bill of material.
Planning bill of material
An artificial grouping of items or events in bill-of-material format used to
facilitate master scheduling and material planning. It may include the historical
average of demand expressed as a percentage of total demand for all options
within a feature or for a specific end item within a product family and is used
as the quantity per in the planning bill of material. Syn: planning bill. See:
hedge, option overplanning, production forecast, pseudo bill of material.
Planning board
Syn: control board.
Planning calendar
Syn: manufacturing calendar.
Planning fence
Syn: planning time fence.
Planning horizon
The amount of time a plan extends into the future. For a master schedule, this is normally set to cover a minimum of cumulative lead time plus time for lot sizing low-level components and for capacity changes of primary work centers or of key suppliers. For longer term plans the planning horizon must be long enough to permit any needed additions to capacity. See: cumulative lead time, planning time fence.
Planning time fence
A point in time denoted in the planning horizon of the master scheduling process that marks a boundary inside of which changes to the schedule may adversely affect component schedules, capacity plans, customer deliveries, and cost. Outside the planning time fence, customer orders may be booked and changes to the master schedule can be made within the constraints of the production plan. Changes inside the planning time fence must be made manually by the master scheduler. Syn: planning fence. See: cumulative lead time, demand time fence, firm planned order, planned order, planning horizon, time fence.
Plant layout
Configuration of the plant site with lines, buildings, major facilities, work
areas, aisles, and other pertinent data, such as department boundaries.
Plant within a plant
Syn: factory within a factory.
Platform products
A grouping of products to share common parts, components, and characteristics
(a common platform), so that design and production resources can be used to
reduce cost and time to market.
PLC
Abbreviation for programmable logic controller.
Pledging of accounts receivable
The act of securing a loan by pledging a company’s accounts receivable.
Point-of-purchase (POP) display
A sales promotion tool located at a checkout counter.
Point of sale (POS)
The relief of inventory and computation of sales data at the time and place
of sale, generally through the use of bar coding or magnetic media and equipment.
Point-of-use delivery
Direct delivery of material to a specified location on a plant floor near the
operation where it is to be used.
Point-of-use inventory
Inventory placed in the production process near where it is used. See: dock-to-stock
inventory.
Point-of-use storage
Keeping inventory in specified locations on a plant floor near the operation
where it is to be used.
Point reporting
The recording and reporting of milestone manufacturing order occurrences, typically
done at checkpoint locations rather than operations and easily controlled from
a reporting standpoint.
Poka-yoke (mistake-proof)
Mistake-proofing techniques, such as manufacturing or setup activity designed
in a way to prevent an error from resulting in a product defect. For example,
in an assembly operation, if each correct part is not used, a sensing device
detects that a part was unused and shuts down the operation, thereby preventing
the assembler from moving the incomplete part to the next station or beginning
another operation. Sometimes spelled poke-yoke. Syn: failsafe techniques, failsafe
work methods, mistake-proofing.
Policies
Definitive statements of what should be done in the business.
Policy constraint
In the theory of constraints, a constraint which is not physical in nature.
This category includes the entire system of measures and methods and even the
mindset that governs the strategic, tactical, and operations (day-to-day) decisions
of the organization.
Political environment
External factors related to the political process, including laws and regulations,
taxation codes, and others, at the local, state, federal, and international
levels of government.
POP
Acronym for point of purchase.
Population
The entire set of items from which a sample is drawn.
POS
Abbreviation for point of sale.
Post-deduct inventory
transaction processing
Syn: backflush.
Postponement
A product design strategy that shifts product differentiation closer to the
consumer by postponing identity changes, such as assembly or packaging, to the
last possible supply chain location.
Post-release
The period after the product design has been released to manufacturing when the product has ongoing support and product enhancement.
Potency
The measurement of active material in a specific lot, normally expressed in
terms of an active unit. Typically used for such materials as solutions.
PPAP
Abbreviation for production part approval process.
PPB
Abbreviation for part period balancing.
Precedence diagram method
Syn: activity-on-node network
Precedence relationship
In the critical path method of project management, a logical relationship that one node has to the succeeding node. The terms precedence relationship, logical relationship, and dependency are used somewhat interchangeably.
Predatory pricing
Lowering prices below cost to drive out competition and then raising prices
again. In the United States, this is a violation of Article 2 of the Sherman
Act.
Predecessor activity
1) In project management, in an activity-on-arrow network, the activity that
enters a node. 2) In project management, in an activity-on-node network, the
node at the tail of the arrow.
Pre-deduct inventory
transaction processing
A method of inventory bookkeeping where the book (computer) inventory of components
is reduced before issue, at the time a scheduled receipt for their parents or
assemblies is created via a bill-of-material explosion. This approach has the
disadvantage of a built-in differential between the book record and what is
physically in stock. See: backflush.
Predetermined motion time
An organized body of information, procedures, techniques, and motion times employed
in the study and evaluation of manual work elements. It is useful in categorizing
and analyzing all motions into elements whose unit times are computed according
to such factors as length, degree of muscle control, and precision. The element
times provide the basis for calculating a time standard for the operations.
Syn: synthetic time standard.
Predictable maintenance
Syn: predictive maintenance.
Prediction
An intuitive estimate of demand taking into account changes and new factors
influencing the market, as opposed to a forecast, which is an objective projection
of the past into the future.
Predictive maintenance
A type of preventive maintenance based on nondestructive testing and statistical
analysis, used to predict when required maintenance should be scheduled. Syn:
predictable maintenance.
Pre-expediting
The function of following up on open orders before the scheduled delivery date,
to ensure the timely delivery of materials in the specified quantity.
Preferred stock
A type of stock entitling the owner to dividends before common stockholders
are entitled to them.
Preferred supplier
The supplier of choice.
Prepaid
A term denoting that transportation charges have been or are to be paid at the
point of shipment by the sender.
Prerelease
The period of product specification, design, and design review.
Prerequisite tree (PRT)
In the theory of constraints, a logic-based tool for determining the obstacles
that block implementation of a problem solution or idea. Once obstacles have
been identified, objectives for overcoming obstacles can be determined.
Present value
The value today of future cash flows. For example, the promise of $10 a year
from now is worth something less than $10 in hand today.
Prevention costs
The costs caused by improvement activities that focus on the reduction of failure
and appraisal costs. Typical costs include education, quality training, and
supplier certification. Prevention costs are one of four categories of quality
costs.
Prevention vs. detection
A term used to contrast two types of quality activities. Prevention refers to
those activities designed to prevent nonconformances in goods and services.
Detection refers to those activities designed to detect nonconformances already
in goods and services. Syn: designing in quality vs. inspecting in quality.
Preventive maintenance
The activities, including adjustments, replacements, and basic cleanliness,
that forestall machine breakdowns. The purpose is to ensure that production
quality is maintained and that delivery schedules are met. In addition, a machine
that is well cared for will last longer and cause fewer problems.
Price
One of the four P’s (product, price, place, and promotion) that constitute the
set of tools used to direct the business offering to the customer. Price is
the amount charged for the product offering. The price set must take into account
competition, substitute products, and internal business costs to return a desirable
product margin. See: four P’s.
Price Analysis
The examination of a seller's price proposal or bid by comparison with price benchmarks, without examination and evaluation of all of the separate elements of the cost and profit making up the price in the bid.
Price break
A discount given for paying early, buying in quantity, etc. See: discount.
Price discrimination
Selling the same products to different buyers at different prices.
Price elasticity
The degree of change in buyer demand in response to changes in product price.
It is calculated by dividing the percentage of change in quantity bought by
the percentage of change of price. Prices are considered elastic if demand varies
with changes in price. If demand changes only slightly when the price changes,
demand is said to be inelastic. For example, demand for most medical services
is relatively inelastic, but demand for automobiles is generally elastic.
Price fixing
Sellers illegally conspiring to raise, lower, or stabilize prices.
Price point
The relative price position at which the product will enter the market compared
to direct and indirect competitors’ prices. It is considered within the context
of the price-range options available: high, medium, or low.
Price prevailing at date
of shipment
An agreement between a purchaser and a supplier that the price of the goods
ordered is subject to change at the supplier’s discretion between the date the
order is placed and the date the supplier makes shipment and that the then-established
price is the contract price.
Price protection
An agreement by a supplier with a purchaser to grant the purchaser any reduction
in price that the supplier may establish on its goods before shipment of the
purchaser’s order or to grant the purchaser the lower price should the price
increase before shipment. Price protection is sometimes extended for an additional
period beyond the date of shipment.
Price schedule
The list of prices applying to varying quantities or kinds of goods.
Price skimming
Introducing a product above its long-run price to maximize product margin before
others can enter the market.
Price to earnings (PE) ratio
The current price of a stock relative to its earnings per share.
Prima facie
Latin for at first sight or on the face of it. Something is presumed to be true.
Primary demand
The demand for a category of products rather than for a specific brand.
Primary location
The designation of a certain storage location as the standard, preferred location
for an item.
Primary operation
A manufacturing step normally performed as part of a manufacturing part’s routing.
Ant: alternate operation.
Primary workcenter
The work center where an operation on a manufactured part is normally scheduled
to be performed. Ant: alternate work center.
Prime costs
Direct costs of material and labor. Prime costs do not include general, sales,
and administrative costs.
Prime operations
Critical or most significant operations whose production rates must be closely
planned.
Prime rate
The interest rate charged by banks to their most preferred customers.
Principal
The party authorizing an agent to act on his or her behalf.
Principle of postponement
Syn: order penetration point.
Prioritization matrix
A special type of matrix chart used to show the priorities of items by applying
criteria and weighting factors to each item.
Priority
In a general sense, the relative importance of jobs, i.e., the sequence in which
jobs should be worked on. It is a separate concept from capacity.
Priority control
The process of communicating start and completion dates to manufacturing departments
in order to execute a plan. The dispatch list is the tool normally used to provide
these dates and priorities based on the current plan and status of all open
orders.
Priority planning
The function of determining what material is needed and when. Master production
scheduling and material requirements planning are the elements used for the
planning and replanning process to maintain proper due dates on required materials.
Private brand
A brand applied by a distributor rather than a manufacturer.
Private carrier
A group that provides transportation exclusively within an organization. Ant:
common carrier.
Private key
In information systems, an encryption key that is known only by the sender and
receiver of the message. See: public key.
Private ownership
A form of business ownership in which the business is either owned by a single
person (i.e., proprietorship) or organized under law as a separate legal entity
but in which the company stock is not publicly traded. See: partnership, public
ownership.
Private warehouse
A company-owned warehouse.
Probabilistic demand models
Statistical procedures that represent the uncertainty of demand by a set of
possible outcomes (i.e., a probability distribution) and that suggest inventory
management strategies under probabilistic demands.
Probability
Mathematically, a number between 0 and 1 that estimates the fraction of experiments
(if the same experiment were being repeated many times) in which a particular
result would occur. This number can be either subjective or based upon the empirical
results of experimentation. It can also be derived for a process to give the
probable outcome of experimentation.
Probability distribution
A table of numbers or a mathematical expression that indicates the frequency
with which each of all possible results of an experiment should occur.
Probability tree
A graphic display of all possible outcomes of an event based on the possible
occurrences and their associated probabilities.
Problem-solving storyboard
A technique based on the plan/do/check/action problem-solving process. The steps
being taken and the progress toward the resolution of a problem are continuously
planned and updated.
Procedure manual
A formal organization and indexing of a firm’s procedures. Manuals are usually
printed and distributed to the appropriate functional areas.
Process
1) A planned series of actions or operations (e.g., mechanical, electrical,
chemical, inspection, test) that advances a material or procedure from one stage
of completion to another. 2) A planned and controlled treatment that subjects
materials or procedures to the influence of one or more types of energy (e.g.,
human, mechanical, electrical, chemical, thermal) for the time required to bring
about the desired reactions or results.
Process average
Expected value of the percentage defective of a given manufacturing process.
Process batch
The number of units made between sequential setups at a work center. See: batch,
exchange unit, overlap quantity.
Process benchmarking
Benchmarking a process (such as the pick, pack, and ship process) against organizations
known to be the best in class in this process. Process benchmarking is usually
conducted on firms outside of the organization’s industry. See: benchmarking,
best-in-class, competitive benchmarking.
Process Capability
Refers to the ability of the process to produce parts that conform to (engineering) specifications. Process capability relates to the inherent variability of a process that is in a state of statistical control. See: Cp, Cpk, process capability analysis.
Process Capability Analysis
A procedure to estimate the parameters defining a process. The mean and standard
deviation of the process are estimated and compared to the specifications, if
known. This comparison is the basis for calculating capability indexes. In addition,
the form of the relative frequency distribution of the characteristic of interest
may be estimated. Syn: capability study. See: process capability.
Process Capability Index
The value of the tolerance specified for the characteristic divided by the process
capability. There are several types of process capability indices, including
the widely used Cpk and Cp.
Process Chart
A chart that represents the sequence of work or the nature of events in process.
It serves as a basis for examining and possibly improving the way the work is
carried out. See: flow process chart, process flow.
Process Control
1) The function of maintaining a process within a given range of capability
by feedback, correction, etc. 2) The monitoring of instrumentation attached
to equipment (valves, meters, mixers, liquid, temperature, time, etc.) from
a control room to ensure that a high-quality product is being produced to specification.
Process Control Chart
Syn: control chart.
Process Controllers
Computers designed to monitor the manufacturing cycle during production, often
with the capability to modify conditions, to bring the production back to within
prescribed ranges.
Process Costing
A cost accounting system in which the costs are collected by time period and
averaged over all the units produced during the period. This system can be used
with either actual or standard costs in the manufacture of a large number of
identical units.
Process Decision Program Chart
A technique used to show alternate paths to achieving given goals. Applications
include preparing contingency plans and maintaining project schedules.
Process Design
The design of the manufacturing method.
Process Engineering
The discipline of designing and improving the manufacturing equipment and production
process to support the manufacture of a product line. See: manufacturing engineering.
Process Flexibility
The speed and ease with which the manufacturing transformation tasks can respond
to internal or external changes.
Process Flow
The sequence of activities that when followed results in a product or service
deliverable. See flow process chart, process chart.
Process Flow Analysis
A procedure to evaluate the effectiveness of a sequence of business activities.
The analysis determines which elements of the flow are value-added and eliminates
those that are not, determines which parts of the process can be automated,
evaluates activities as to whether they contribute to the core competencies
of the business or are candidates for outsourcing, and designs a structure for
the activities of the process that remain to improve productivity.
Process Flow Chart
Syn: flow process chart.
Process Flow Production
A production approach with minimal interruptions in the actual processing in
any one production run or between production runs of similar products. Queue
time is virtually eliminated by integrating the movement of the product into
the actual operation of the resource performing the work.
Process Flow Scheduling
A generalized method for planning equipment usage and material requirements
that uses the process structure to guide scheduling calculations. It is used
in flow environments common in process industries.
Process Focused
A type of manufacturing organization in which both plant and staff management
responsibilities are delineated by production process. A highly centralized
staff coordinates plant activities and intracompany material movements. This
type of organization is best suited to companies whose dominant orientation
is to a technology or a material and whose manufacturing processes tend to be
complex and capital intensive. See: product focused, process-focused organization.
Process-Focused Organization
An organization that is oriented toward executing linked activities that constitute
a given end-to-end business process with a given set of resources. Responsibilities
of the members of the organization are oriented toward the performance of the
process that creates the product or service and not toward a product or functional
silo. See process focused, product focused.
Process Hours
The time required at any specific operation or task to process the product.
Process Improvement
The activities designed to identify and eliminate causes of poor quality, process
variation, and non-value-added activities.
Process Industries
The group of manufacturers that produce products by mixing, separating, forming,
and/or performing chemical reactions. Paint manufacturers, refineries, and breweries
are examples of process industries.
Process Layout
Syn: functional layout.
Process List
A list of operations and procedures in the manufacture of a product. It may
also include a statement of material requirements.
Process Manufacturing
Production that adds value by mixing, separating, forming, and/or performing
chemical reactions. It may be done in either batch or continuous mode. See:
project manufacturing.
Process map
A form of documentation used to show the details of a process. Depending of the objective for the map, the level of detail will vary. The process map can take many forms including flowchart; relationship map; cross-functional map; and supplier, input, process, output, customer (SIPOC) diagram.
Processor-Dominated Scheduling
A technique that schedules equipment (processor) before materials. This technique
facilitates scheduling equipment in economic run lengths and the use of low-cost
production sequences. This scheduling method is used in some process ¬industries.
See: material-dominated scheduling.
Process Organization Structure
An organizational structure in which people are removed from their functional
departments and placed into a group that works as a single unit to perform the
entire linked process. This is in contrast to a functional organization in which
the activities that make up the process are performed by people in multiple
functionally oriented departments.
Process Oriented
A characteristic in which the focus is on the interrelated processes in a business
environment. It includes the activities to transform inputs into outputs that
have value.
Process Sheet
Detailed manufacturing instructions issued to the plant. The instructions may
include specifications on speeds, feed, temperatures, tools, fixtures, and machines
and sketches of setups and semifinished dimensions.
Process Steps
The operations or stages within the manufacturing cycle required to transform
components into intermediates or finished goods. From a larger perspective,
the operations or stages within any business required to turn inputs into outputs.
Process Stocks
Raw ingredients or intermediates available for further processing into marketable
products.
Process Time
The time during which the material is being changed, whether it is a machining
operation or an assembly. Syn: residence time.
Process Train
A representation of the flow of materials through a process industry manufacturing
system that shows equipment and inventories. Equipment that performs a basic
manufacturing step, such as mixing or packaging, is called a process unit. Process
units are combined into stages, and stages are combined into process trains.
Inventories decouple the scheduling of sequential stages within a process train.
Procurement
The business functions of procurement planning, purchasing, inventory control,
traffic, receiving, incoming inspection, and salvage operations.
Procurement Cycle
Syn: procurement lead time.
Procurement Lead Time
The time required to design a product, modify or design equipment, conduct market
research, and obtain all necessary materials. Lead time begins when a decision
has been made to accept an order to produce a new product and ends when production
commences. Syn: procurement cycle, total procurement lead time. See: time-to-market.
Producer
One who creates a good or service.
Producer market
Syn: industrial market.
Producer’s Risk (α)
For a given sampling plan, the probability of not accepting a lot, the quality
of which has a designated numerical value representing a level that is generally
desired to accept. Usually the designated value will be the acceptable quality
level (AQL). See: type I error.
Producibility
The characteristics of a design that enable the item to be produced and inspected
in the quantity required at least cost and minimum time.
Product
1) Any good or service produced for sale, barter, or internal use. 2) One of
the four P’s (product, price, place, and promotion) that constitute the set
of tools to direct the business offering to the customer. The product can be
promoted as a distinctive item. See: four P’s.
Product Audit
The reinspection of any product to verify the adequacy of acceptance or rejection
decisions made by inspection and testing personnel.
Product Configuration Catalog
A listing of all upper level configurations contained in an end-item product
family. Its application is most useful when there are multiple end-item configurations
in the same product family. It is used to provide a transition linkage between
the end-item level and a two-level master production schedule. It also provides
a correlation between the various units of upper level product definition.
Product Configurator
A system, generally rule-based, to be used in design-to-order, engineer-to-order,
or make-to-order environments where numerous product variations exist. Product
configurators perform intelligent modeling of the part or product attributes
and often create solid models, drawings, bills of material, and cost estimates
that can be integrated into CAD/CAM and MRP II systems as well as sales order
entry systems.
Product cost
Cost allocated by some method to the products being produced. Initially recorded
in asset (inventory) accounts, product costs become an expense (cost of sales)
when the product is sold.
Product Data Management (PDM)
A system that tracks the configurations of parts and bills of material and also
the revisions and history of product designs. It facilities the design release,
distributes the design data to multiple manufacturing sites, and manages changes
to the design in a closed-loop fashion. It provides the infrastructure that
controls the design cycle and manages change.
Product Differentiation
A strategy of making a product distinct from the competition on a nonprice basis
such as availability, durability, quality, or reliability.
Product Diversification
A marketing strategy that seeks to develop new products to supply current markets.
Product Engineering
The discipline of designing a product or product line to take advantage of process
technology and improve quality, reliability, etc.
Product Family
A group of products with similar characteristics, often used in production planning
(or sales and operations planning). Syn: product line.
Product Flexibility
The ease with which current designs can be modified in response to changing
market demands.
Product Focused
A type of manufacturing organization in which both plant and staff responsibilities
are delineated by product, product line, or market segment. Management authority
is highly decentralized, which tends to make the company more responsive to
market needs and more flexible when introducing new products. This type of organization
is best suited to companies whose dominant orientation is to a market or consumer
group and where flexibility and innovation are more important than coordinated
planning and tight control. See: process focused, process-focused organization.
Product Genealogy
A record, usually on a computer file, of the history of a product from its introduction
into the production process through its termination. The record includes lot
or batch sizes used, operations performed, inspection history, options, and
where-used information.
Product Grade
The categorization of goods based upon the range of specifications met during
the manufacturing process.
Product Group
Syn: product line.
Product Group Forecast
A forecast for a number of similar products. See: aggregate forecast, product
group.
Production
The conversion of inputs into finished products.
Production Activity Control
(PAC)
The function of routing and dispatching the work to be accomplished through
the production facility and of performing supplier control. PAC encompasses
the principles, approaches, and techniques needed to schedule, control, measure,
and evaluate the effectiveness of production operations. See: shop floor control.
Production and Inventory
Management
General term referring to the body of knowledge and activities concerned with
planning and controlling rates of purchasing, production, distribution, and
related capacity resources to achieve target levels of customer service, backlogs,
operating costs, inventory investment, manufacturing efficiency, and ultimately,
profit and return on investment.
Production Calendar
Syn: manufacturing calendar.
Production Capability
1) The highest sustainable output rate that could be achieved for a given product
mix, raw materials, worker effort, plant, and equipment. 2) The collection of
personnel, equipment, material, and process segment capabilities. 3) The total
of the current committed, available, and unattainable capability of the production
facility. The capability includes the capacity of the resource.
Production Card
In a Just-in-Time context, a card or other signal for indicating that items
should be made for use or to replace some items removed from pipeline stock.
See: kanban.
Production Control
The function of directing or regulating the movement of goods through the entire
manufacturing cycle from the requisitioning of raw material to the delivery
of the finished products.
Production Cycle
Syn: manufacturing lead time.
Production Cycle Elements
Elements of manufacturing strategy that define the span of an operation by addressing
the following areas: (1) the established boundaries for the firm’s activities,
(2) the construction of relationships outside the firm’s boundaries (i.e., suppliers,
distributors, and customers), (3) circumstances under which changes in established
boundaries or relationships are necessary, (4) the effect of such boundary or
relationship changes on the firm’s competitive position. The production cycle
elements must explicitly address the strategic implications of vertical integration
in regard to (a) the direction of such expansion, (b) the extent of the process
span desired, and (c) the balance among the resulting vertically linked activities.
Production Environment
Syn: manufacturing environment.
Production Forecast
A projected level of customer demand for a feature (option, accessory, etc.)
of a make-to-order or an assemble-to-order product. Used in two-level master
scheduling, it is calculated by netting customer backlog against an overall
family or product line master production schedule and then factoring this product’s
available-to-promise by the option percentage in a planning bill of material.
See: assemble-to-order, planning bill of material, two-level master schedule.
Production Lead Time
Syn: manufacturing lead time.
Production Level
Syn: production rate.
Production Leveling
Syn: level production method.
Production Line
A series of pieces of equipment dedicated to the manufacture of a specific number
of products or families.
Production Management
1) The planning, scheduling, execution, and control of the process of converting
inputs into finished goods. 2) A field of study that focuses on the effective
planning, scheduling, use, and control of a manufacturing organization through
the study of concepts from design engineering, industrial engineering, management
information systems, quality management, inventory management, accounting, and
other functions as they affect the transformation process.
Production Material
Any material used in the manufacturing process.
Production Materials Requisition
Syn: materials requisition.
Production Network
The complete set of all work centers, processes, and inventory points, from
raw materials sequentially to finished products and product families. It represents
the logical system that provides the framework to attain the strategic objectives
of the firm based on its resources and the products’ volumes and processes.
It provides the general sequential flow and capacity requirement relationships
among raw materials, parts, resources, and product families.
Production Order
Syn: manufacturing order.
Production Part Approval
Process (PPAP)
A Big Three automotive process outlining requirements for approval of production
parts. Its purpose is to measure whether a supplier can, with regularity, fulfill
these requirements.
Production Plan
The agreed-upon plan that comes from the production planning (sales and operations
planning) process, specifically the overall level of manufacturing output planned
to be produced, usually stated as a monthly rate for each product family (group
of products, items, options, features, and so on). Various units of measurement
can be used to express the plan: units, tonnage, standard hours, number of workers,
and so on. The production plan is management’s authorization for the master
scheduler to convert it into a more detailed plan, that is, the master production
schedule. See: sales and operations planning, sales plan.
Production Planning
A process to develop tactical plans based on setting the overall level of manufacturing
output (production plan) and other activities to best satisfy the current planned
levels of sales (sales plan or forecasts), while meeting general business objectives
of profitability, productivity, competitive customer lead times, and so on,
as expressed in the overall business plan. The sales and production capabilities
are compared, and a business strategy that includes a sales plan, a production
plan, budgets, pro forma financial statements, and supporting plans for materials
and workforce requirements, and so on, is developed. One of its primary purposes
is to establish production rates that will achieve management’s objective of
satisfying customer demand by maintaining, raising, or lowering inventories
or backlogs, while usually attempting to keep the workforce relatively stable.
Because this plan affects many company functions, it is normally prepared with
information from marketing and coordinated with the functions of manufacturing,
sales, engineering, finance, materials, and so on. See: aggregate planning,
production plan, sales and operations planning, sales plan.
Production Planning
and Control Strategies
An element of manufacturing strategy that includes the design and development
of manufacturing planning and control systems in relation to the following considerations:
(1) market-related criteria—the required level of delivery speed and reliability
in a given market segment, (2) process requirement criteria—consistency between
process type (job shop, repetitive, continuous, etc.) and the production planning
and control system, (3) organization control levels—systems capable of providing
long-term planning and short-term control capabilities for strategic and operational
considerations by management. Production planning and control strategies help
firms develop systems that enable them to exploit market opportunities while
satisfying manufacturing process requirements.
Production Planning Methods
The approach taken in setting the overall manufacturing output to meet customer
demand by setting production levels, inventory levels, and backlog. Companies
can use a chase, level, or hybrid production planning method. See: chase production
method, hybrid production method, level production method.
Production Process
The activities involved in converting inputs into finished goods. See: manufacturing
process, transformation process.
Production Rate
The rate of production usually expressed in units, cases, or some other broad
measure, expressed by a period of time, e.g., per hour, shift, day, or week.
Syn: production level.
Production Release
Syn: manufacturing order.
Production Report
A statement of the output of a production facility for a specified period. The
information normally includes the type and quantity of output; workers’ efficiencies;
departmental efficiencies; costs of direct labor, direct material, and the like;
overtime worked; and machine downtime.
Production Reporting
and Status Control
A vehicle to provide feedback to the production schedule and allow for corrective
action and maintenance of valid on-hand and on-order balances. Production reporting
and status control normally include manufacturing order authorization, release,
acceptance, operation start, delay reporting, move reporting, scrap and rework
reporting, order close-out, and payroll interface. Syn: manufacturing order
reporting, shop order reporting.
Production Schedule
A plan that authorizes the factory to manufacture a certain quantity of a specific
item. It is usually initiated by the production planning department.
Production Scheduling
The process of developing the production schedule.
Production Standard
A time standard to produce piece parts and assemblies.
Production Time
Setup time plus total processing time, where total processing time is processing
time per piece multiplied by the number of pieces.
Productive Capacity
In the theory of constraints: The maximum of the output capabilities of a resource
(or series of resources) or the market demand for that output for a given time
period. See: excess capacity, idle capacity, protective capacity.
Productive Inventory
In the theory of constraints: The inventory required to meet production requirements
without allowance for unplanned delays. See: idle inventory, protective inventory.
Productivity
1) An overall measure of the ability to produce a good or a service. It is the
actual output of production compared to the actual input of resources. Productivity
is a relative measure across time or against common entities (labor, capital,
etc.). In the production literature, attempts have been made to define total
productivity where the effects of labor and capital are combined and divided
into the output. One example is a ratio that is calculated by adding the dollar
value of labor, capital equipment, energy, and material, etc., and dividing
it into the dollar value of output in a given time period. This is one measure
of total factor productivity. See: efficiency, labor productivity, machine productivity,
utilization. 2) In economics, the ratio of output in terms of dollars of sales
to an input such as direct labor in terms of the total wages. This is called
single factor productivity or partial factor productivity.
Product Layout
Layout of resources arranged sequentially based on the product’s routing.
Product Life Cycle
1) The stages a new product goes through from beginning to end, i.e., the stages
that a product passes through from introduction through growth, maturity, and
decline. 2) The time from initial research and development to the time at which
sales and support of the product to customers are withdrawn. 3) The period of
time during which a product can be produced and marketed profitably.
Product Line
A group of products whose similarity in manufacturing procedures, marketing
characteristics, or specifications enables them to be aggregated for planning,
marketing, or, occasionally, costing. Syn: product family, product group.
Product Load Profile
A listing of the required capacity and key resources needed to manufacture one
unit of a selected item or family. The resource requirements are further defined
by a lead-time offset to predict the impact of the product on the load of the
key resources by specific time period. The product load profile can be used
for rough-cut capacity planning to calculate the approximate capacity requirements
of the master production schedule. See: bill of resources, resource profile,
rough-cut capacity planning.
Product Manager
Syn: brand manager.
Product Manager Concept
A marketing method in which a manager is given complete responsibility for managing
the introduction, stocking policy, marketing, and sales of a specific product.
Product-Market-Focused
Organization
A firm in which individual plants are dedicated to manufacturing a specific
product or product group.
Product Mix
The proportion of individual products that make up the total production or sales
volume. Changes in the product mix can mean drastic changes in the manufacturing
requirements for certain types of labor and material.
Product-Mix Flexibility
The ability to change over quickly to other products produced in a facility,
as required by demand shifts in mix.
Product Number
Syn: item number.
Product or Service Liability
The obligation of a company to make restitution for loss related to personal
injury, property damage, or other harm caused by its goods or services.
Product Plan
Syn: market plan.
Product-Positioned Warehouse
The warehouse located close to the manufacturing plants that acts as a consolidation
point for products.
Product Positioning
The marketing effort involved in placing a product in a market to serve a particular
niche or function. Syn: service positioning.
Product Profiling
1) A graphical device used to ascertain the level of fit between a manufacturing
process and the order-winning criteria of its products. Product profiling can
be used at the process or company level to compare the manufacturing capabilities
with the market requirements to determine areas of mismatch and identify steps
needed for realignment. 2) Removing material around a predetermined boundary
by means of numerically controlled machining. The numerically controlled tool
path is automatically generated on the system.
Product Quality
Attribute that reflects the capability of a product to satisfy customers’ needs.
Product Segments
The shared information between a plan-of-resources and a production-rule for
a specific product. It is a logical grouping of personnel resources, equipment
resources, and material specifications required to carry out the production
step.
Product/Service Hierarchy
In sales and operations planning, a general approach to dividing products or
services into families, brands, and subfamilies for various planning levels.
This ensures that a correct top-down or bottom-up approach is taken to grouping
(or aggregating) demand at each subsequent level. Forecasts are more accurate
the higher up the product hierarchy they are developed; consequently, forecasts
should usually be driven down from the top.
Product Specification
A statement of acceptable physical, electrical, and/or chemical properties or
an acceptable range of properties that distinguish one product or grade from
another.
Product Structure
The sequence of operations that components follow during their manufacture into
a product. A typical product structure would show raw material converted into
fabricated components, components put together to make subassemblies, subassemblies
going into assemblies, etc.
Product Structure Record
A computer record defining the relationship of one component to its immediate
parent and containing fields for quantity required, engineering effectivity,
scrap factor, application selection switches, etc.
Product Tree
A graphical (or tree) representation of the bill of material such as is shown
below:
Profit
1) Gross profit-earnings from an ongoing business after direct costs of goods sold have been deducted from sales revenue for a given period. 2) Operating profit-earnings or income after all expenses (selling, administrative, depreciation) have been deducted from gross profit. 3) Net profit-earnings or income after adjusting for miscellaneous income and expenses (patent royalties, interest, capital gains) and tax from operating profit. Syn: income.
Profitability
A measure of the excess income over expenditure during a given period of time.
Profitability Analysis
In activity-based cost accounting, the examination of profit received from cost
objects to attempt to optimize profitability. A variety of views may be examined
including customer, distribution channel, product, and regions.
Profitability Index
In financial management, the net present value of a projected stream of income
from a project (potential investment) divided by the investment in the project.
It is used to select among competing potential investments.
Profitability Ratio
An indicator of whether or not a company is generating profits at an acceptable
rate. It includes such measurements as return on total assets, return on equity,
and profit margin.
Profit Center
An assigned responsibility center that has authority to affect both the revenues
earned and the costs incurred by and allocated to the center. Operational effectiveness
is evaluated in terms of the amount of profit generated.
Profit Margin
1) The difference between the sales and cost of goods sold for an organization,
sometimes expressed as a percentage of sales. 2) In traditional accounting,
the product profit margin being the product selling price minus the direct material,
direct labor, and allocated overhead for the product, sometimes expressed as
a percentage of selling price.
Profit Sharing
A plan by which employees receive compensation, above their normal wages, based on company profitability. The purpose is to motivate employees and recognize their efforts.
Pro forma Financial Statements
Financial statements that are based on an assumed scenario rather than an actual
experience.
Program
In project management, a coordinated set of related projects usually including
ongoing work.
Program directive
A report by the program manager to inform supporting departments concerning an active or planned program or project.
Program Evaluation
and Review Technique (PERT)
In project management, a network analysis technique in which each activity is
assigned a pessimistic, most likely, and optimistic estimate of its duration.
The critical path method is then applied using a weighted average of these times
for each node. PERT computes a standard deviation of the estimate of project
duration. See: critical path method, graphical evaluation and review technique,
and network analysis.
Programmable Logic Controller
(PLC)
An electronic device that is programmed to test the state of input process data
and to set output lines in accordance with the input state, thus providing control
instructions or branching to another set of tests. Programmable controllers
provide factory floor operations with the ability to monitor and rapidly control
hundreds of parameters, such as temperature and pressure.
Program Management
The activities involved in the realization of a product or service offered to
customers. The responsibilities include planning, directing, and controlling
one or more projects of a new or continuing nature; initiating any acquisition
processes necessary to get the project work under way; and monitoring performance.
See: program manager.
Program Manager
A person assigned program management responsibilities for the implementation
activities associated with a new or ongoing product or service offering to customers.
See: program management.
Progress Payments
Payments arranged in connection with purchase transactions requiring periodic
payments in advance of delivery for certain amounts or for certain percentages
of the purchase price.
Project
An endeavor with a specific objective to be met within predetermined time and
dollar limitations and that has been assigned for definition or execution. See:
project manufacturing, project management.
Project Costing
An accounting method of assigning valuations that is generally used in industries
where services are performed on a project basis. Each assignment is unique and
costed without regard to other assignments. Examples are shipbuilding, construction
projects, and public accounting firms. Project costing is opposed to process
costing, where products to be valued are homogeneous.
Project Duration
The elapsed duration from project start date through project finish date.
Projected Available Balance
An inventory balance projected into the future. It is the running sum of on-hand
inventory minus requirements plus scheduled receipts and planned orders. Syn:
projected available inventory.
Projected Available Inventory
Syn: projected available balance.
Projected Finish Date
The current estimate of the date when an activity will be completed.
Projected On Hand
Projected available balance, excluding planned orders.
Projected Start Date
The current estimate of the date when an activity will begin.
Projection
Syn: extrapolation.
Project Life Cycle
In project management, a set of project phases (objectives definition, requirements
definition, external and internal design, construction, system test, and implementation
and maintenance), whose definition is determined by the needs of those controlling
the project.
Project Management
The use of skills and knowledge in coordinating the organizing, planning, scheduling,
directing, controlling, monitoring, and evaluating of prescribed activities
to ensure that the stated objectives of a project, manufactured good, or service
are achieved. See: project.
Project Management Team
In project management, the personnel assigned to a project who are directly
involved in management activities.
Project Manufacturing
A type of manufacturing process used for large, often unique, items or structures
that require a custom design capability (engineer-to-order). This type of process
is highly flexible and can cope with a broad range of product designs and design
changes. Product manufacturing usually uses a fixed-position type layout. See:
batch (fourth definition), continuous production, job shop (second definition),
process manufacturing, project, repetitive manufacturing.
Project Model
A time-phased project planning and control tool that itemizes major milestones
and points of user approval.
Project Network
A diagram showing the technological relationships among activities in a project.
Project Phase
In project management, a set of related project activities that usually go together
to define a project deliverable.
Project Plan
In project management, a document that has been approved by upper management
that is to be used in executing and controlling a project. It documents assumptions,
facilitates communication, and documents the approved budget and schedule. It
may exist at a summary or a detailed level.
Project Production
Production in which each unit or small group of units is managed by a project
team created especially for that purpose.
Project Risk Management
In project management, a systematic process of controlling project risk. It
includes maximizing the likelihood and effect of positive events and minimizing
the likelihood and effect of negative events.
Project Schedule
In project management, a list of activities and their planned completion dates
that collectively achieve project milestones.
Project Scope
In project management, the work required to create a product with given features
and options.
Promissory Note
An agreement to pay a stipulated amount during an agreed time period.
Promotion
One of the four P’s (product, price, place, and promotion) that constitute the
set of tools used to direct the business offering to the customer. Promotion
is the mechanism whereby information about the product offering is communicated
to the customer and includes public relations, advertising, sales promotions,
and other tools to persuade customers to purchase the product offering. See:
four P’s.
Promotional Product
A product that is subject to wide fluctuations in sales because it is usually
sold at a reduced price or with some other sales incentive.
Proprietary Assembly
An assembly designed by a manufacturer that may be serviced only with component
parts supplied by the manufacturer and whose design is owned or licensed by
its manufacturer.
Proprietary Data
Any financial, technical, or other information developed at the expense of the
person or other entity submitting it, deemed to be of strategic or tactical
importance to the company. It may be offered to customers on a restricted-use
basis.
Protection Time
Syn: safety lead time.
Protective Capacity
In the theory of constraints: A given amount of extra capacity at nonconstraints
above the system constraint’s capacity, used to protect against statistical
fluctuation (breakdowns, late receipts of materials, quality problems, etc.).
Protective capacity provides nonconstraints with the ability to catch up to
“protect” throughput and due date performance. See: excess capacity, idle capacity,
limiting operation, productive capacity, safety capacity.
Protective Inventory
In the theory of constraints: The amount of inventory required relative to the
protective capacity in the system to achieve a specific throughput rate at the
constraint. See: limiting operation.
Protocol
In information systems, a set of rules for defining the format and relationships
for sharing information between devices. These rules govern the transmission
of data across a network and serve as the grammar of data communication languages.
Prototype
1) A product model constructed for testing and evaluation to see how the product
performs before releasing the product to manufacture. 2) Model consisting of
all files and programs needed for a business application.
Prototyping
1) A specialized product design and development process for developing a working
model of a product. 2) A specialized system development process for performing
a determination where user needs are extracted, presented, and developed by
building a working model of the system. Generally, these tools make it possible
to create all files and processing programs needed for a business application
in a matter of days or hours for evaluation purposes.
Provisioning
The process of identifying and purchasing the support items and determining
the quantity of each support item necessary to operate and maintain a system.
Proxy
1) A written document authorizing an agent to vote a shareholder’s stock at
a shareholder meeting. 2) The agent designated in 1).
PRT
Abbreviation for prerequisite tree.
Pseudo bill of material
An artificial grouping of items that facilitates planning. See: modular bill
of material, phantom bill of material, planning bill of material, super bill
of material.
Psychographics
The grouping of consumers according to their behavior patterns and lifestyles.
Public Key
In information systems, a system where one person holds a private key (an encryption
code defining access rights) but shares another key with a set of people with
whom that person will communicate. See: private key.
Publicly Traded Corporation
A corporation whose stock is available on a national exchange.
Public Ownership
A business formed under law as a separate legal entity and where stock is publicly
traded. See: partnership, private ownership.
Public Relations
The function that oversees a program to earn public understanding and acceptance.
Public warehouse
The warehouse space that is rented or leased by an independent business providing a variety of services for a fee or on a contract basis.
Pull Signal
Any signal that indicates when to produce or transport items in a pull replenishment system. For example, in Just-in-Time production control systems, a kanban
card is used as the pull signal to replenish parts to the using operation.
See: pull system.
Pull System
1) In production, the production of items only as demanded for use or to replace
those taken for use. See: pull signal. 2) In material control, the withdrawal
of inventory as demanded by the using operations. Material is not issued until
a signal comes from the user. 3) In distribution, a system for replenishing
field warehouse inventories where replenishment decisions are made at the field
warehouse itself, not at the central warehouse or plant.
Punitive Damages
The money awarded a plaintiff, not as payment for the plaintiff’s losses, but
as punishment for the defendant’s conduct.
Purchased Part
An item sourced from a supplier.
Purchase Order
The purchaser's authorization used to formalize a purchase transaction with a supplier. A purchase order, when given to a supplier, should contain statements of the name, part number, quantity, description, and price of the goods or services ordered; agreed-to terms as to payment, discounts, date of performance, and transportation; and all other agreements pertinent to the purchase and its execution by the supplier.
Purchase Price Variance
The difference in price between the amount paid to the supplier and the planned
or standard cost of that item.
Purchase Requisition
An authorization to the purchasing department to purchase specified
materials in specified quantities within a specified time. See: parts
requisition.
Purchasing
The term used in industry and management to denote the function of and the responsibility
for procuring materials, supplies, and services.
Purchasing Agent
A person authorized by the company to purchase goods and services for the company.
Purchasing Capacity
The act of buying capacity or machine time from a supplier. A company can then
schedule and use the capacity of the machine or a part of the capacity of the
machine as if it were in its own plant.
Purchasing Lead Time
The total lead time required to obtain a purchased item. Included here are order
preparation and release time; supplier lead time; transportation time; and receiving,
inspection, and put-away time. See: lead time, supplier lead time, time-to-product.
Purchasing Performance
Measurement
Syn: supplier measurement.
Purchasing Unit of Measure
Syn: unit of measure (purchasing).
Pure Competition
A market in which many competitors offer undifferentiated products or services
within a given geographical area. Competitors are forced to accept the market
price for their product. See: industry structure types.
Pure Monopoly
A market in which only one firm provides a particular product or service within
a given area. The monopoly may be regulated or unregulated. See: industry structure
types.
Pure Oligopoly
A market in which a few companies produce essentially the same product or service
and market it within a given area. A company is forced to price its product
at the going rate unless it can differentiate its product. See: industry structure
types.
Push System
1) In production, the production of items at times required by a given schedule
planned in advance. 2) In material control, the issuing of material according
to a given schedule or issuing material to a job order at its start time. 3)
In distribution, a system for replenishing field warehouse inventories where
replenishment decision making is centralized, usually at the manufacturing site
or central supply facility. See: pull system.
Put-Away
Removing the material from the dock (or other location of receipt), transporting
the material to a storage area, placing that material in a staging area and
then moving it to a specific location, and recording the movement and identification
of the location where the material has been placed.
Pyramid Forecasting
A forecasting technique that enables management to review and adjust forecasts
made at an aggregate level and to keep lower level forecasts in balance. The
procedure begins with the roll up (aggregation) of item forecasts into forecasts
by product group. The management team establishes a (new) forecast for the product
group. The value is then forced down (disaggregation) to individual item forecasts
so that they are consistent with the aggregate plan. The approach combines the
stability of aggregate forecasts and the application of management judgment
with the need to forecast many end items within the constraints of an aggregate
forecast or sales plan. See: management estimation, planning bill of material,
product group forecast.