MRO Inventory and Purchasing: Maintenance Strategy Series, Volume 2

Glossary

A-B

ABC classification
Method used to categorize inventory into groups based upon certain activity and pricing characteristics.
Activity based costing
Usually refers to costing method that breaks down overhead costs into specific activities (cost drivers) in order to more accurately distribute the costs in product costing.
Actual cost
An inventory costing method used in manufacturing environments; it uses the actual materials costs, machine costs, and labor costs reported against a specific work order to calcu late the cost of the finished item.
Advanced shipment notification
Advanced shipment notifications (ASNs) are used to notify a customer of a shipment. ASNs will often include PO numbers; SKU numbers; lot numbers; quantity, pallet, or container numbers; carton numbers.
Aisle
Any passageway within a storage area.
Allocations
Allocations in inventory management refer to actual demand created by sales orders or work orders against a specific spare part. The terminology and the actual processing that controls allocations will vary from one software system to another.
  • A soft allocation is an aggregate quantity of demand against a specific item in a specific facility. I have heard standard allocations referred to as normal allocations, soft allocations, soft commitments, regular allocations. Standard allocations do not specify that specific units will go to specific orders.

  • A hard allocation is an allocation against specific equipment or assets within a facility, such as an allocation against a specific location, lot, or serial number. Firm allocations are also referred to as specific allocations, frozen allocations, hard allocations, hard commitments,...

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