Integrated Tactical Planning

Glossary of Terms

ABC Classification 

A method of categorizing items based on dollar value, volume, or other criteria. The A items are those with the greatest dollar impact and hence receive the most attention in terms of control. B items have less dollar impact and receive less control effort, and the C items have the least impact of all. See Pareto Principle.

Abnormal Demand 

A demand that is not part of the forecast. Typically, an abnormal demand is a large, one‐time order.

Above the Line 

Aggregate planning.

Accountability 

Refers to the role that owns a metric or KPI. See also Policy and Procedures.

Action Messages 

Outputs of an MRP system that identify the need for and the type of actions to be taken to correct a current or a potential demand‐supply‐inventory imbalance. Examples of action messages are “Release Order,” “Reschedule Out,” and “Cancel.” Also known as Exception Messages and Alerts.

Activity‐Based Costing (ABC) 

A method of cost accounting in which overhead is applied to products by means of “cost drivers,” which are those elements that directly cause costs. This is in contrast to traditional methods of product costing, which often allocate overhead via a relatively unrelated factor such as direct labor hours. For example, product engineering overhead may be more accurately allocated to products based on the number of design changes per product, rather than via direct labor hours.

Aggregate Business Planning 

The process of comparing the sales forecast to ...