Viva-Voce – Operations Management Terms for Job Interviews | BBA & MBA Review of Basic Terms


Operations Management Glossary for Job Interview


Activity – Pieces of work within a project that consumes time.

Activity-system map – A diagram that shows how a company’s strategy is delivered through a set of supporting activities.

Aggregate Operations Plan – Translating Annual and quarterly business plans into labor and production output plans for the intermediate term.

Arrival Rate – The expected number of customers that arrive each period.

Assembly Line – A process structure designed to make discrete parts where parts are moved through a set of specially designed workstations at a controlled rate.

Assembly-Line Balancing – The problem of assigning all the tasks to a series of workstations so that each workstation has no more than can be done in the workstation cycle time, and so that idle time across all workstations is minimized.

Assignment Method – A special case of the transportation method of linear programming that is used to allocate a specific number of jobs to the same number of machines.

Available to Promise – A feature of MPR systems that identifies the differences between the number of units currently included in the master schedule and actual customer orders.

Average Aggregate Inventory Value – The total value of all items held in inventory for the firm valued at cost.


Backflush – Calculating how many of each part were used in production and using these calculations to adjust actual on-hand inventory balances.

Backward Scheduling – Stars from some date in the future and schedules the required operations in reverse sequence.

Batch Shop – A process structure that produces a variety of standard products at relatively low volume.

Best Operating Level – The level of capacity for which the process was designed and the volume of output at which average unit cost is minimized.

Bill of Materials (BOM) – A computer file that contains the complete product description, listing the materials, parts, and component and the sequence in which the product is created.

Bottleneck – A resource that limits the capacity or maximum output of the process.

Blocking – The activities in the stage must stop because there is no place to deposit the item just completed.

Buffering – A storage area between stages where the output of a stage is placed prior to being used in downstream stage.

Bullwhip Effect – The variability in demand is magnified as we move from the customer to the producer in the supply chain.


Capacity – The amount of output that a system is capable of achieving over a specific period of time.

Capacity Constrained Resource (CCR) – A resource whose utilization is close to capacity and could be a bottleneck if not scheduled carefully.

Capacity Cushion – Capacity in excess of expected demand.

Capacity Focus – Can be operationalized through the plants-within-plants concept, where a plant has several sub-organizations specialized for different products – even though they are under the same roof. This permits finding the best operating level for each sub-organization.

Capacity Requirement Planning – Allocation of production resource capacity to specific orders.

Capacity Utilization Rate – Measures how close a firm is to its best operating level.

Causal Relationship – A situation in which one event causes another.

Centroid Method – A technique for locating single facilities that considers the existing facilities, the distances between tem, and the volume of goods to be shipped.

Closed-loop MRP – The use of actual data from the production system to continually update the MRP system.

Cost of Goods Sold – The annual cost for a company to produce the goods or services provided to customers.

Collaborate Planning, Forecasting, and Replenishment (CPFR) – An Internal tool to coordinate forecasting, production, and purchasing in a firm’s supply chain.

Concurrent Engineering – Emphasizes cross-functional integration and concurrent development of a product and its associated processes.

Conformance Quality – The degree to which the product or service design specifications are met.

Contract Manufacturer – An organization capable of manufacturing and/or purchasing all the components needed to products a finished product or device.

Continuous Improvement – The philosophy of continually seeking improvements in processes through the use of team efforts.

Continuous Flow — An often automated process structure that converts raw materials into finished product in one continuous process.

Core Capabilities (or Competencies) – The skills that differentiate the service or manufacturing firm from its competitors.

Core Services – The basic things that customers want from products they purchase.

Cost of quality – expenditures related to achieving product or service quality, such as the costs of prevention, appraisal, internal failure, and external failure.

Critical Path – The sequence of activities in a project that forms the longest chain in terms of their time to complete.

CRAFT (Computerized Relative Allocation of facilities Technique) – A method to help devise good process layouts.

Cycle Time – The average time between completions of successive units in a process.

Cycle Counting – A physical inventory-taking technique in which inventory is counted on a frequent basis rather that once or twice a year.


Dependent Demand Requirements for a product or service caused by the demand for other products or services.

Design Quality The inherent value of the product in the marketplace.

Design for Logistics – This concept involves consideration of material procurement and distribution costs during the product design phase.

Dimensions of Quality Criteria by which quality is measured.

Dispatching – The activity of initiating scheduled work.

DMPO (defects per million opportunities) – A metric used to describe the variability of a process.


Early Start Schedule – A project schedule that lists all activities by their early start time.

Economies of scope – Exist when multiple products can be produced at a lower cost in combination than they can separately.

Electronic Commerce – The use of the Internet as an essential element of business activity.

Elemental Data – Used to derive a job time by summing times from a database of similar combinations of movements.

Ergonomics – study of the physical arrangement of the work space together with the tools used to perform a task.

Exponential Distribution – A probability distribution often associated with inter-arrival times.

Exponential Smoothing – A time series forecasting technique in which each increment of past demand data is decreased by (1-alpha).

External Benchmarking – Looking outside the company to examine what excellent performers inside and outside the company’s industry are doing in the way of quality.

e-SERVICE QUALITY –A version of SERVQUAL designed to evaluate service on the Internet.


Facility-based Services – Customers must go to the place of business.

Factor Rating System – An approach for selecting a facility location by combining a diverse set of factors.

Field Based Services – Production and consumption take place in the customer’s environment.

Finite Loading – Each resource is scheduled in detail using the setup and run time required for each other.

Fixed Position Layout – The product remains at one location and equipment is moved to the product.

Fixed-order Quantity Model – An inventory control model where the amount requisitioned is fixed and the actual ordering is triggered by inventory dropping to a specified level of inventory.

Fixed-time Period Model – An inventory control model that specifies inventory is ordered at the end of a predetermined time period.

Flow Manufacturing – Hybrid production planning systems that combine the information integration and planning capabilities of MRP with the response of a JIT Kanban system.

Focus Forecasting – An approach to forecasting in which several different techniques are tried in a computer simulation and the best technique or combination of techniques is used to make the actual forecast.

Forward Scheduling – Schedules from now into the future to tell the earliest that an order can be completed.

Free Trade Zone – A closed facility under the supervision of government customs officials into which foreign goods can be brought without being subject to the payment of normal import duties.

Freeze Window – The period of time during which the schedule is fixed and no further changes are possible.

Functional Project – A structure where team members are assigned from the functional units of the organization.

Functional Products – Staples that people buy in a wide range of retail outlets, such as grocery stores and gas stations.



Gantt Charts – A chart in which a series of horizontal lines shows the amount of work done or production completed in a certain period of time in relation to the amount planned for those period.

Graphic linear programming – Provides a quick insight into the nature of linear programming.

Group Technology (Cellular) Layout – Groups dissimilar machines into work centers (or cells) to work on products that have similar shapes and processing requirements.


High and Low Degree of Customer Contact – The physical presence of the customer in the system and the percentage of time the customer must be in the system relative to the total time it takes to perform the service.

House of Quality – A matrix that help’s product design team translate customer requirement into operating and engineering goals.

Hybrid Process – Combines the features of both make-to-order and make-to-stock.


Independent Demand – Demand that cannot be directly derived from the demand for other products.

Individual Learning – Improvement that results when people repeat a process and gain skill or efficiency from their own experience.

Infinite Loading – Work is assigned to work center based on what is needed over time.

Intermediate-Range Planning – Activity that usually covers a period from 3 to 18 months with weekly, monthly, or quarterly time increments.

Innovative Products – Products such as fashionable clothes and personal computers that typically have a life cycle of just a few months.

Inventory – The Stock of any item or resource used in an organization.

Inventory Position – The amount on-hand plus on-order minus backordered quantities.

Inventory On Hand – Unused inventory carried from a previous period.

Inventory Turnover and Weeks of Supply — Measures of supply chain efficiency that are mathematically the inverse of one another.

ISO 9000 – Formal standards used for quality certification, developed by the International Organization for Standardization.


Job Design – The function of specifying the work activities of an individual or group in an organizational setting.

Job Enrichment – Specialized work is made more interesting by giving the worker a greater variety of tasks or by getting a worker involved in planning, organization and inspection.

Job Shop – A process structure suited for low- volume production of a great variety of nonstandard products.

Johnson’s Rule – A sequencing rule used for scheduling any number of jobs on two machines.

Just in Time (JIT) – A highly coordinated processing system in which goods move through the system and services are performed, just as they are needed.


Kanban and the Kanban Pull System – An inventory or production control system that uses a signaling device to regulate flows.


Labor Limited Process – People are the key resource that is scheduled.

Late Start Schedule – A project Schedule that lists all activities by their late start time.

Learning Curve – A line displaying the relationship between unit production time and the cumulative number of units produced.

Level Schedule – A schedule that pulls material into final assembly at a constant rate.

Linear programming – Refers to several related mathematical techniques use to allocate limited resources among competing demands in an optimal way.

Linear Regression Forecasting — A forecasting technique that assumes that past data and future projections fall around a straight line.

Lean Production – Integrated activities designed to achieve high-volume, high-quality production using minimal inventories of raw materials, work-in-process and finished goods.

Little’s Law – States a mathematical relationship between throughput rate, throughput time and amount of work.

Lot – A quantity of items that are processed together.

Long-Range Planning – Activity typically done annually and focusing on a horizon of a year or more.


Mass Customization — The ability of a company to deliver highly customized products and services to different customers around the world.

Make-to-order – A process that is activated only in response to an actual order.

Make-to-stock – a process that produces standard products that are stored in finished good inventory.

Manufacturing Resource Planning – An expanded version of MPR that integrates finance, accounting, accounts payable, and other business processes into the production scheduling and inventory control functions that are part of a basis MRP system.

Material Requirement Planning – A procedure that generates specific schedules for component parts and subassemblies.

Master Production Schedule – A schedule of the amount and times when specific items will be manufactured, typically using weekly increments of time.

Matrix Project – A structure that blends the functional and pure project structure.

Mean Absolute Deviation (MAD) – The average forecast error using absolute values of the error of each past forecast.

Mixed Strategy – A plan that combines option available for meeting demand.

Machine Limited Process – Equipment is the critical resource that is scheduled.


Non-bottleneck – Any resource whose capacity is greater than the demand placed on it.

Net Change System – An MPR system that calculates the impact of a change in the MRP data (the inventory status, BOM, or master schedule) immediately.

Normal Time – The time that a normal operator would be expected to take to complete a job without the consideration of allowances.


Operating Expenses – All the money that the system spends to turn inventory into throughput.

Operation – The action of functioning or the fact of being active or in effect.

Operations Management – The design, operation, and improvement of the systems that create and deliver the firm’s primary products and services.

Operations Strategy – Setting broad policies and plans for using the resources of a firm to best support its long term competitive strategy.

Operation Time – The sum of the setup time and run time for a batch of parts that are run on a machine.

Operation Consulting – Assisting clients in developing operations strategies and improving production processes.

Order Qualifier – The basic criteria that permit the firm’s products to be considered as candidates for purchase by customers.

A brand name can be an “order qualifier.”

Order winner – The criteria that differentiate the products and services of one firm from another.

Repair services can be “order winner.”

Order Scheduling – Final planning of the use of specific machines, production lines, or work centers to produce orders.

Organizational Learning – Improvement that comes both from experience and from change in administration, equipment, and product design.

Outsourcing – Moving some of a firm’s internal activities and decision responsibility to outside providers.


Pacing – Refers to the fixed timing of the movement of items through the process.

PDCA Cycle – Refers to the plan-to-do-check-act cycle of continuous improvement.

Plant-within-a-plant – A concept in which different locations within the facility are allocated to different product lines, each with their own operations strategy.

Poka-yokes – Procedures that prevent mistakes from beginning defects.

Predetermined Motion-Time Data Systems – Systems for deriving a time for a job by summing data from tables of generic movement times developed in the laboratory.

Preventive Maintenance – Periodic inspection and repair designed to keep equipment reliable.

Priority Rules – The logic used to determine the sequence of jobs in a queue.

Process – Any part of an organization that takes inputs and transforms them into outputs that, it is hoped, are of greater value to the organization than the original inputs.

Process Layout – A format in which equipment or functions are grouped together.

Process Postponement – Delay of the process step that differentiates a product to as late in the supply chain as possible.

Process Velocity or Throughput ratio – The ratio of the total throughput time to the value added time.

Product – A good, idea, method, information, object or services created as a result of a process and serves a need or satisfies a want.

Productivity – A measure of how well resources are used.

Product Layout – Equipment or work processes are arranged according to the progressive steps by which the product is made.

Product-Process Matrix – Shows the relationship between process structures and product volume and variety characteristics.

Production Planning Strategies – Plans that involves trade-offs among workforce size, work hours, inventory, and backlogs.

Production Rate – The number of units completed per unit of time.

Project – a series of related jobs usually directed toward some major output and requiring a significant period of time to perform.

Project Management – Planning, directing, and controlling resources (people, equipment, material) to meet the technical, cost and time constraints of a project.

Precedence Relationship – The order in which tasks must be performed in the assembly process.

Pure Project – A structure for organizing a project where a self- contained team works full time on the on the project.

Project Milestone – A specific event in a project.

Pure Strategy – A plan that uses just one of the options available for meeting demand.


Quality at the Source – Philosophy of making factory workers personally responsible for the quality of their output.

Quality Function Deployment – A process that helps a company determine the product characteristics important to the consumer and to evaluate its own product in relation to others.

Queue – A line of waiting persons, jobs, things, or the like.


Reengineering (or Business Process Reengineering) – The fundamental rethinking and radical redesign of business processes to achieve dramatic improvements in cost, quality, service and speed.

Rough-cut Capacity Planning – Verification that sufficient capacity exists to meet a master production schedule.

Run Time – The time required to produce a batch of parts


Safety Stock – The amount of inventory carried in addition to the expected demand.

Sales and operation Planning – A term that refers to the process that helps companies keep demand and supply in balance.

Sociotechnical Systems – A philosophy that focuses more on the interaction between technology and the work group.

Setup Time – The time required to prepare a machine to make a particular item.

Service Blueprint – The flowchart of a service process, emphasizing what is visible and what is not visible to the customer.

Service Guarantee – A promise of service satisfaction backed up by a set of actions that must be taken to fulfill the promise.

Service Rate – The capacity of a server measured in number of units that can be processed over a given time period.

Setup – The group of activities needed to change or readjust a process between successive lots of items.

SERVQUAL — A service quality questionnaire that measures the gap between customer expectations and perceptions of performance after a service encounter.

Short-range Planning – Planning that covers a period less than six months with either daily or weekly increments of time.

Six Sigma – A statistical term to describe the quality goal of no more than four defects out of every million units.

Slack Time – The time that an activity can be delayed.

Small Lots – Mean less average inventory and shorten manufacturing lead time.

Single-digit setup – The goal of having a setup time of less than 10 minutes.

Smoothing Constant Alpha – The parameter in the exponential smoothing equation that controls the speed of reaction to differences between forecasts and actual demand.

Smoothing Constant Delta – An additional parameter used in an exponential smoothing equation that includes an adjustment for trend.

Specialization Labor — Simple, repetitive jobs are assigned to each worker.

Standard Time – Calculated by taking the normal time and adding allowances for personal needs, unavoidable work delays, and worker fatigue.

Starving – The activities in a stage must stop because there is no work.

Straddling – Occurs when a company seeks to match what a competitor is doing by adding new features, services, or technologies to existing activities.

Strategic Capacity Planning – Determining the overall capacity level of capital-intensive resources that best supports the company’s long-range competitive strategy.

Stock-keeping Unit – A common term used to identify an inventory item.

Supply Chain – How organizations are linked together as viewed from a particular company.

Supply Chain Management – A total system approach to managing the flow of information, materials and services from raw material suppliers through factories and warehouses to the end consumer.

Systematic Layout Planning (SPL) – A technique for solving process layout problems when the use of numerical flow data between departments is not practical.

Sequencing – The process of determining which job to start first on a machine or work center.

Shop Floor (production activity) Control – A system for utilizing data from the shop floor to maintain and communicate status information on shop orders and work center.


Total Quality Management – Managing the entire organization so that it excels on all dimensions of products and services that are important to the customer.

Total Quality Control – The practice of building quality into the process and not identifying quality by inspection.

Takt Time – A German word for musical meter. It refers to pacing work according to customer demand.

Time Study – Separation of a job into measurable parts, with each element timed individually.

Time Series Analysis — A type of forecast in which data relating to past demand are used to predict future demand.

Tracking Signal – A measure that indicates whether the forecast average is keeping pace with any genuine upward or downward changes in demand.

Trading Block – A group of countries that agree on a set of special arrangements governing the trading of goods between member countries.

Transformation Process – A process of using resources to transform inputs into some desired outputs.

Transportation Method – A special linear programming method that is useful for solving problems involving transporting products from several sources to several destinations.

Transportation Mode – How an item is shipped.

Throughput Time – The average time that it takes a unit to move through an entire process.

Throughput Rate – The output rate that the process is expected to produce over a period of time.


Uniform Plant Loading – Smoothing the production flow to dampen schedule variation.

Utilization – The ratio of the time that a resource is actually activated relative to the time it is available for use.


Value Added Services – Differentiate the organization from competitors and build relationships that bind customers to the firm in a positive way.

Value Added Time – The time in which useful work is actually being done on the unit.

Value analysis/ Value Engineering – Analysis with the purpose of simplifying products and processes by achieving equivalent or better performance at a lower cost.

Value density – The value of an item per pound of weight.

Workforce Level – The number of production workers needed each period.

Value Stream Mapping – A graphical way to analyze where value is or isn’t being added as material flows through a process.


Work Physiology – Considers the physical demands of a job.

Work Measurement – Job analysis for the purpose of setting time standards.

Work Sampling – Analyzing a work activity by observing an activity at random times.

Work Center – An area in a business in which productive resources are organized and work is completed.


Yield Management – allocating the right type of capacity to the right type of customer at the right price and time to maximize revenue or yield.

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