Glossary 357

purchasing, a purchase or sale transaction having as its purpose the elimination
of the negative aspects of price fluctuations.
INDEPENDENT DEMAND Demand for an item is considered independent
when unrelated to the demand for other items. Demand for finished goods
and service parts are examples of independent demand.
INFINITE LOADING See Capacity Requirements Planning.
INPUT-OUTPUT CONTROL A technique for capacity control where actual
output from a work center is compared with the planned output (as developed
by CRP and approved by manufacturing). The input is also monitored
to see if it corresponds with plans so that work centers will not be
expected to generate output when jobs are not available to work on.
INTERPLANT DEMAND Material to be shipped to another plant or division
within the corporation. Although it is not a customer order, it is usually
handled by the master scheduling system in a similar manner.
INVENTORY TURNOVER The number of times that an inventory turns
over during the year. One way to compute inventory turnover is to divide
the average inventory level into the annual cost of sales. For example, if
average inventory were three million dollars and cost of sales were thirty
million, the inventory would be considered to turn ten times per year.
Turnover can also be calculated on a forward-looking basis, using the
forecast rather than historic sales data.
JOB SHOP A functional organization whose departments or work centers
are organized around particular types of equipment or operation, such as
drilling, blending, spinning, or assembly. Products move through departments
by individual production orders. See Flow Shop.
JUST-IN-TIME In the broad sense, Just-in-Time is an approach to achieving
excellence in manufacturing. In the narrow (and less correct) sense,
Just-in-Time is considered by some as a production and logistics method
designed to result in minimum inventory by having material arrive at
each operation just in time to be used. See Lean Manufacturing.
KANBAN A method for Just-in-Time production in which consuming
(downstream) operations pull from feeding (upstream) operations. Feeding
operations are authorized to produce only after receiving a kanban
card (or other trigger) from the consuming operation. Kanban in Japanese
loosely translates to “card.” Syn: demand pull.
LEAD TIME A span of time required to perform an activity. In a logistics
context, the activity in question is normally the procurement of materials
and/or products either from an outside supplier or from one’s own manufacturing
facility. The individual components of any given lead time can
include some or all of the following: order preparation time, queue time,
move or transportation time, receiving and inspection time.