APICS CPIM PART 1 V7 MODULE 5 2023 NEW EXAM SOLUTION
ABC classification - The classification of a group of items in decreasing order of annual
dollar volume (price multiplied by projected volume) or other criteria. This array is then
split into three classes [...]. The [first] group usually represents 10 percent to 20 percent
by number of items and 50 percent to 70 percent by projected dollar volume. The next
grouping [...] usually represents about 20 percent of the items and about 20 percent of
the dollar volume. The [third] class contains 60 percent to 70 percent of the items and
represents about 10 percent to 30 percent of the dollar volume. The ABC principle
states that effort and money can be saved through applying looser controls to the low-
dollar-volume class items than to the high-dollar-volume class items. The ABC principle
is applicable to inventories, purchasing, and sales. Syn: ABC analysis, distribution by
value. See: 80-20, Pareto analysis, Pareto's law.
anticipation inventories - Additional inventory above basic pipeline stock to cover
projected trends of increasing sales, planned sales promotion programs, seasonal
fluctuations, plant shutdowns, and vacations.
average inventory - One-half the average lot size plus the safety stock, when demand
and lot sizes are expected to be relatively uniform over time. The average can be
calculated as an average of several inventory observations taken over several
historical time periods; for example, 12-month ending inventories may be averaged.
When demand and lot sizes are not uniform, the stock level versus time can be
graphed to determine the average.
backhauling - The process of a transportation vehicle returning from the original
destination point to the point of origin. The 1980 Motor Carrier Act deregulated
interstate commercial trucking and thereby allowed carriers to contract for the return
trip. [This] can be with a full, partial, or empty load. [If empty, this] is called
deadheading. See: deadhead.
balance sheet - A financial statement showing the resources owned, the debts owed,
and the owner's share of a company at a given point in time. See: funds flow
statement, income statement.
bar code - A series of alternating bars and spaces printed or stamped on parts,
containers, labels, or other media, representing encoded information that can be
read by electronic readers. [This] is used to facilitate timely and accurate input of
data to a computer system.
batch picking - A method of picking orders in which order requirements are
aggregated by product across orders to reduce movement to and from product
locations. The aggregated quantities of each product are then transported to a
common area where the individual orders are constructed. See: discrete order picking,
order picking, zone picking.
, blockchain - A continuously growing list of records, called blocks, which are linked and
secured using cryptography. Each block typically contains a cryptographic hash of the
previous block, a timestamp and transaction data. The data in any given block cannot
be altered retroactively without the alteration of all subsequent blocks, inherently making
it resistant to modification. See: cryptocurrency.
break-bulk - 1) Dividing truckloads, railcars, or containers of homogeneous items into
smaller, more appropriate quantities for use. 2) A distribution center that specializes
in [these types of] activities. 3) Unitized cargo in bales, boxes, or crates that is placed
directly in a ship's holds rather than in containers.
capacity-related costs - Costs generally related to increasing (or decreasing) capacity in
the medium- to long-range time horizon. Personnel costs include hiring and training of
direct laborers, supervisors, and support personnel in the areas related to the capacity
increase. Equipment purchases to increase capacity are also considered. In contrast,
costs related to decreasing capacity include layoffs, the fixed overhead spread over
fewer units, the impact of low morale, and the inefficiencies of lower production levels
carrying cost - The cost of holding inventory, usually defined as a percentage of the
dollar value of inventory per unit of time (generally one year). [This] depends mainly
on the cost of capital invested as well as costs of maintaining the inventory such as
taxes and insurance, obsolescence, spoilage, and space occupied. Such costs vary
from 10 percent to 35 percent annually, depending on type of industry. [It] is ultimately
a policy variable reflecting the opportunity cost of alternative uses for funds invested in
inventory. Syn: holding costs.
cash flow - The net flow of dollars into or out of the proposed project. The algebraic
sum, in any time period, of all cash receipts, expenses, and investments. Also called
cash proceeds or cash generated.
centralized inventory control - Inventory decision making for all stock keeping units
exercised from one office or department for an entire company.
cold chain - A term referring to the storage, transfer, and supply chain of
temperature-controlled products. Industries in the cold chain include food and
agriculture, pharmaceuticals, and chemicals.
common carrier - Transportation available to the public that does not provide special
treatment to any one party and is regulated as to the rates charged, the liability
assumed, and the service provided. [It] must obtain a certificate of public convenience
and necessity from the Federal Trade Commission for interstate traffic. Ant: private
carrier.
contract carrier - A carrier that does not serve the general public, but provides
transportation for hire for one or a limited number of shippers under a specific contract.
ABC classification - The classification of a group of items in decreasing order of annual
dollar volume (price multiplied by projected volume) or other criteria. This array is then
split into three classes [...]. The [first] group usually represents 10 percent to 20 percent
by number of items and 50 percent to 70 percent by projected dollar volume. The next
grouping [...] usually represents about 20 percent of the items and about 20 percent of
the dollar volume. The [third] class contains 60 percent to 70 percent of the items and
represents about 10 percent to 30 percent of the dollar volume. The ABC principle
states that effort and money can be saved through applying looser controls to the low-
dollar-volume class items than to the high-dollar-volume class items. The ABC principle
is applicable to inventories, purchasing, and sales. Syn: ABC analysis, distribution by
value. See: 80-20, Pareto analysis, Pareto's law.
anticipation inventories - Additional inventory above basic pipeline stock to cover
projected trends of increasing sales, planned sales promotion programs, seasonal
fluctuations, plant shutdowns, and vacations.
average inventory - One-half the average lot size plus the safety stock, when demand
and lot sizes are expected to be relatively uniform over time. The average can be
calculated as an average of several inventory observations taken over several
historical time periods; for example, 12-month ending inventories may be averaged.
When demand and lot sizes are not uniform, the stock level versus time can be
graphed to determine the average.
backhauling - The process of a transportation vehicle returning from the original
destination point to the point of origin. The 1980 Motor Carrier Act deregulated
interstate commercial trucking and thereby allowed carriers to contract for the return
trip. [This] can be with a full, partial, or empty load. [If empty, this] is called
deadheading. See: deadhead.
balance sheet - A financial statement showing the resources owned, the debts owed,
and the owner's share of a company at a given point in time. See: funds flow
statement, income statement.
bar code - A series of alternating bars and spaces printed or stamped on parts,
containers, labels, or other media, representing encoded information that can be
read by electronic readers. [This] is used to facilitate timely and accurate input of
data to a computer system.
batch picking - A method of picking orders in which order requirements are
aggregated by product across orders to reduce movement to and from product
locations. The aggregated quantities of each product are then transported to a
common area where the individual orders are constructed. See: discrete order picking,
order picking, zone picking.
, blockchain - A continuously growing list of records, called blocks, which are linked and
secured using cryptography. Each block typically contains a cryptographic hash of the
previous block, a timestamp and transaction data. The data in any given block cannot
be altered retroactively without the alteration of all subsequent blocks, inherently making
it resistant to modification. See: cryptocurrency.
break-bulk - 1) Dividing truckloads, railcars, or containers of homogeneous items into
smaller, more appropriate quantities for use. 2) A distribution center that specializes
in [these types of] activities. 3) Unitized cargo in bales, boxes, or crates that is placed
directly in a ship's holds rather than in containers.
capacity-related costs - Costs generally related to increasing (or decreasing) capacity in
the medium- to long-range time horizon. Personnel costs include hiring and training of
direct laborers, supervisors, and support personnel in the areas related to the capacity
increase. Equipment purchases to increase capacity are also considered. In contrast,
costs related to decreasing capacity include layoffs, the fixed overhead spread over
fewer units, the impact of low morale, and the inefficiencies of lower production levels
carrying cost - The cost of holding inventory, usually defined as a percentage of the
dollar value of inventory per unit of time (generally one year). [This] depends mainly
on the cost of capital invested as well as costs of maintaining the inventory such as
taxes and insurance, obsolescence, spoilage, and space occupied. Such costs vary
from 10 percent to 35 percent annually, depending on type of industry. [It] is ultimately
a policy variable reflecting the opportunity cost of alternative uses for funds invested in
inventory. Syn: holding costs.
cash flow - The net flow of dollars into or out of the proposed project. The algebraic
sum, in any time period, of all cash receipts, expenses, and investments. Also called
cash proceeds or cash generated.
centralized inventory control - Inventory decision making for all stock keeping units
exercised from one office or department for an entire company.
cold chain - A term referring to the storage, transfer, and supply chain of
temperature-controlled products. Industries in the cold chain include food and
agriculture, pharmaceuticals, and chemicals.
common carrier - Transportation available to the public that does not provide special
treatment to any one party and is regulated as to the rates charged, the liability
assumed, and the service provided. [It] must obtain a certificate of public convenience
and necessity from the Federal Trade Commission for interstate traffic. Ant: private
carrier.
contract carrier - A carrier that does not serve the general public, but provides
transportation for hire for one or a limited number of shippers under a specific contract.
