APICS CPIM Exam 1 Key Terms

ABC classification CORRECT ANSWER Process of classifying items in descending order based on annual dollar volume or some other criteria. The list is then split into 3 classes - A, B, and C. A represents 10-20% of items but 50-70% of dollar volume; B represents 20% of items and 20% of dollar volume; C represents 60-70% of items but 10-30% of dollar volume. This principle states that effort and money can be saved by applying looser controls to the low dollar volume items (C class) than the higher dollar volume items (A & B classes) and applies to inventory, purchasing, sales, etc. Advance ship notice (ASN) CORRECT ANSWER Electronic data interchange (EDI) notification of shipment of goods Andon CORRECT ANSWER Electronic board that provides visibility of floor status and gives info to help coordinate efforts linked to work centers; green light = running, red light = stop, yellow light = needs attention Anticipation inventories CORRECT ANSWER Any additional inventory above basic pipeline stock to cover projected trends of increased sales, planned promo programs, seasonal fluctuation, plant shutdowns, and vacations Assemble-2-order CORRECT ANSWER Production environment where a good or service can be assembled after receipt of a customer's order. The key components (or ingredients) used in assembly or finishing process are planned and stocked in anticipation of a customer order. Receipt of order initiates assembly of the customized product. Useful strategy when a large number of end products can be assembled from common components Assembly line CORRECT ANSWER Assembly process in which equipment and work centers are laid out to follow the sequence in where raw materials and parts are assembled