Activity-based costing: Developed in the late 1980s by Robert Kaplan and Robin Cooper of
Harvard Business School. It is primarily concerned with the cost of indirect activities
within a company and their relationships to the manufacturing of specic products. The
basic technique of activity-based costing is to analyze the indirect costs within an organi-
zation and to discover the activities that cause those costs.
Afnity diagram: One of the seven management tools to assist general planning. It organizes dis-
parate language information by placing it on cards and grouping the cards that go together
in some creative way. Header cards are used to summarize each group of cards. It orga-
nizes information and data.
Allocation: An MRP term where a work order has been released to the stockroom but the parts have
not been picked for production. The system allocates (assigns) those parts to the work order
so they are no longer available for new work orders.
Andon: Andon means management by sight—visual management. Japanese translation means light.
A ashing light or display in an area to communicate a given condition. Could be an elec-
tronic board or signal light. Visual indicator can be accompanied by unique sound as well.
Assembly: A group of parts, raw material, subassemblies, or a combination of both, put together
by labor to construct a nished product. It could be an end item (nished good) or a higher
level assembly determined by the levels in the bill of material.
Backlog: All customer orders received but not yet shipped.
Balance on hand (BOH): The inventory levels between component parts.
Balancing operations: This is the equal distribution of labor time among the number of workers on
the line. If there are 4 workers and 4 min of labor time in one unit then each worker should
have 1 min of work.
Batch manufacturing: A production strategy that is commonly employed in job shops and other
instances where there is discrete manufacturing of a nonrepetitive nature. In batch manufac-
turing, order lots are maintained throughout the production process to minimize changeovers
and achieve economies of scale. In batch manufacturing environments, resources are usually
departmentalized by specialty and very seldom dedicated to any particular product family.
Benchmarking: Method of establishing internal expectations for excellence based upon direct
comparison to the very best at what they do. It is not necessarily comparison with a direct
BIN: A storage container used to hold parts. Bins range in various sizes from small to very large
containers. They can be plastic, wood, metal, cardboard, etc.
BIN location le: An electronic listing of storage locations for each bin. Generally, locations are
designated to the work area, rack, and shelf, and location on the shelf, that is, 1 – A – 2
denes assembly area #1, rack A, shelf #2 position on the shelf.
Block diagram: A diagram where the processes are represented in order of assembly by blocks
denoting the process name, cycle time, utilities required, standard WIP, etc.
Bottleneck: Generally referred to as the slowest person or machine. However, only machines can
be true bottlenecks as we can always add labor. A true bottleneck runs 24 h a day and still
cannot keep up with customer demand.
Breadman: Centralized oor stock systems where the suppliers normally own and manage the
material until it is used.
Budget: A plan that represents an estimate of future costs against the expected revenue or allocated
funds to spend.
Buffer: Any material in storage waiting further processing.