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GO TO Da, Dam, Dat, Db, Dc, Dd, De, Deb, Def, Del, Dem, Dep, Des, Df, Dg, Dh , Di, Dir, Dis, Dm Dn Do, Doe, Dou, Dp, Dr, Ds, Dt, Du, Due, Dut, Dv, Dw, Dy last entry
D Chart: Demerit Chart (qv).
d2: A shorthand calculation used in SPC.
D3: (not d3!) A shorthand calculation used in SPC.
d3: (not D3!) A shorthand calculation used in SPC.
D4: A shorthand calculation used in SPC.
DAF (followed by a named place*): Delivered at Frontier - see Incoterms (Group D "Arrival"). The seller has fulfilled his obligations when the goods are placed at the disposal of the buyer on the arriving means of transport, not unloaded, cleared for export from whence they have come, but not cleared for import at the named point and place at the frontier, but before the customs border of the adjoining country. * Because the term "frontier" could be any frontier, it is of vital importance in DAF that the frontier in question be defined precisely by always naming the point and place in the term. When delivery is by sea, the Incoterms DES or DEQ should be used.
DAMA: Design Anywhere, Manufacture Anywhere.
Damage Limitation Clause (legal): A supplier may attempt to insert into a contract a statement limiting his liability for potential non-performance of the agreed terms. It is not as easy for him to do so as he might think - see Exclusion Clause and Liquidated Damages. For a full description of these matters, visit the free on-line course on-line on purchasing, at this site (sub-section 2.2.2).
Dangling Dependency: An alarming term for an activity that has been incorrectly created or added to a project flowchart such that the activity does not link in with a next stage or later activity. Dangling dependencies can be inadvertently created when a project flowchart is being updated by reporting completed activities. (As the activities are duly reported, they are physically removed from the project flowchart to make it increasingly simpler to comprehend.) See critical path.
Date (Due): The date a manufacturing order is intended to be finally completed according to the factory's materials plan.
Date (Effectivity): See Effectivity Date.
Date (Need): The date a manufacturing order is needed so as to prevent a shortage arising in the stock of the product in question (as determined by materials planning).
Date (Start): The date a manufacturing order is planned to be started in accorance with the materials plan. With standard materials planning, the start date + the leadtime (in days) = the need date.
Dawn Raid: Stock Exchange Jargon - when Company A wishes to acquire the shares of Company B, Company A begins the vigorous, unannounced purchase of B's shares before the market gets wind of the takeover and therefore before the shares begin to rise in price.
Day Book: Synonymous with Journal (qv).
Days Cover: the number of days that stock on hand will last before running out, based on past average daily demand.
DBERR: The Department for Business, Enterprise and Regulatory Reform, a UK government department carrying out functions previously the responsibility of the now defunct DTI.
DBMS: Data Base Management System.
DC: Distribution Centre. US logistics terminology for what is usually referred to in the UK as a depot.
DCE: Distributed Computing Environment.
DCF: Discounted Cash Flow (synonymous with IRR - Internal Rate of Return). The rate of interest that would need to prevail in order for a stream of costs over time to have the same net value as a stream of benefits. The calculation of the DCF rate of return only became feasible with the advent of computers. Because the DCF is standard and does not presume a particular rate of interest, it is often preferred to Net Present Value as a means of evaluating the value of a cost/benefit stream. In the example given undrer NPV , if a rate of interest had been selected for the project whereby the net present value finally equalled zero, this rate of interest would have been the project's DCF rate of return. See cost/benefit analysis for a short critique of the use of these techniques..
DCM: see Demand Chain Management.
DCS: Distributed Control System, or Digital Cellular System.
DDT: otherwise 'dichloro diphenyl trichloroethane', being an insecticide that was/is highly effective in eradicating malaria in Europe and North America, until one Rachel Carson made a name for herself with a most unfortunate book The Silent Spring in 1962, documenting the harm excessive use of DDT caused certain wildlife, and falsely alleging that it caused cancer. It was, presumably, not Carson's fault that the American media became hysterical and succeeded in getting DDT banned for agricultural use (although exceptions were made for malarial control). DDT became almost impossible to procure. It is estimated that the virtual ban has cost the lives of some 20 million children. There are signs in 2007 that DDT is to be rehabilitated and can then be used again in ridding Africa of malaria. In the meantime, to quote the Sunday Telegraph (17/9/06), No book (The Silect Spring) ... has killed more people. It has done far more damage than DDT ever did.
DDP (followed by a named place of destination): Delivered, Duty Paid - see Incoterms (Group D "Arrival"). The seller delivers the goods to the buyer, cleared for import, and not unloaded from any arriving means of transport at the named place of destination. The seller must bear all costs and risks in bringing the goods thereto, including, where applicable, any "duty"for import in the country of destination. The term should not be used if the seller is unable to obtain the import licence. DDP is the maximum obligation of a seller, in contrast to EXW, which is the minimum obligation.
DDU (followed by a named place of destination): Delivered, Duty Unpaid - see Incoterms (Group D "Arrival"). The seller delivers the goods to the buyer at the named place of destination, not cleared for import and not unloaded from any arriving means of transport. The seller must bear the cost and risks involved in bringing the goods thereto, other than any "duty" for import into the country of destination (duty here including the responsibility for and the risks of the carrying out of customs formalities and the payment of formalities, customs duties, taxes and other charges). When delivery is to take place in the port of destination, on board a vessel, the terms DES or DEQ should be used instead.
De kit: On the abandonment of a works order, the break up of the kitted components and their individual return to stores.
Deadheading: (1) The planning of load distribution such that a vehicle is to return to its originating site empty after the delivery of its load (compare backhaul and cabotage). The verb to deadhead is used to mean to convey a vehicle with an empty load. (2) The removing of dead flowers from a rose bush after they have bloomed.
Dead Load: Jargon for manufacturing orders not yet released to the shop floor.
Debenture: A long term loan issued by a company and bearing a specified rate of interest and specified redemption date. A debenture is secured against the company's assets. Debenture holdings can be publically traded. A mortgage debenture is one in which the holder has preference over all other creditors.
Debit: A major term in financial accounting, a debit is a benefit that is received by others - ie it is the supply by us of a value to others. Examples are the supply by us of goods to our customer, or the payment by us of wages to our staff.
Debit Card: see Credit Card.
Debt: the money owed by an individual, a company or a goverment to a lender. Forms of an individual's debts are mortgages, instalment credits, bank loans and overdrafts; forms of a company's debts are debentures, loans, bills of exchange, bank loans and overdrafts; forms of a governments debts are long term loans and short term treasury bills. A debt of honour is a debt which is not legally recoverable (for example, in the UK, a gambling debt). A trade debt is one where a customer has been granted a certain period of time in which to pay for products supplied.
Decoder: see wedge.
Decoupling (of demand and supply): the building up of stock ahead of forecast demand. For example, manufacturing extra output in September in anticipation of large sales later at Christmas.
Deduct Point: The point in the manufacturing process at which it is deemed, for financial and record keeping purposes, that all of the parts used in the manufacture are used up. That is, up to the deduct point, all starting materials are assumed to continue to exist; and after the deduct point, they are all assumed to have been used. Many deduct points can be created at stages in a lengthy product route, each one intended for materials used at that stage. The designation of deduct points is especially important in backflushing. See also Lead-Time Offset.
Deep Sea: In transportation, ocean going shipping (in the US, Ocean Going.)
Defective Unit: A part which fails or is otherwise unsatisfactory in actual use. The ISO definition of a defect is the non-fulfilment of a requirement related to an intended or specified use; advice is given to avoid the term, since it may seem to give non-quality people grounds for legal action (!) See Non-Conforming Unit.
Degrees of Freedom (df): The "variance" (qv) of a group of numbers is a widely accepted way of expressing how spread out the numbers are in the group, and is denoted for n numbers by s SQUARED. The formula is s SQUARED = SUM ((x - xbar) SQUARED) / (n - 1), where xbar denotes the mean, or average, of the numbers in question. Thus since the mean of the three numbers 4, 5 and 6 is 5 (ie x bar = 5), then the variance of the three numbers is ((4 - 5) SQUARED + (5 - 5) SQUARED + (6 - 5) SQUARED) / 2, which equals 1. The term (n - 1) which makes up the denominator of the variance is the number of degrees of freedom. To illustrate degrees of freedom, consider two variables "x & y". x can be any number at all, and so can y (say, x = 7 and y = 53). In other words, there are two degrees of freedom with regard to the expression. Now consider the relationship "x + y = 9". Only one of the two variables x and y can be chosen freely. As soon as it has been chosen, the other number is fixed, since the sum of the two numbers must equal 9. For example, if x is freely chosen as 7, then y cannot be freely chosen ... it must equal 2. Now consider the formula for the variance of a group of n numbers. If you know (n - 1) of the numbers and the mean x bar, then the final number ... ie the nth number ... cannot be chosen freely. The nth number must be such that, along with the (n - 1) numbers already freely chosen, the mean of all of the numbers together equals the value x bar used in the calculation. For example, if the mean of three numbers is 15.0, and we freely choose two of the numbers as 12 and 8, then the third number cannot be freely chosen ... it must be 25, since 25 is the only number which results in a mean of 15.0 (ie (12 + 8 + 25) / 3 = 15.0). A formal definition of degrees of freedom is df = the number of observations minus the number of required relationships among these observations. (In the case of the variance, we are determining the variance of n numbers and we have 1 required relationship (ie the mean), so that the number of degrees of freedom for the n numbers is (n - 1)). The value in using degrees of freedom in the calculation of the variance is that its use corrects a tendency otherwise to understate the uncertainty in the measuremens, especially where n is small.
Delinquent Order: Sometimes used of a manufacturing order not yet received but which is past its due date.
Delivery (of Goods): The transfer of goods from a carrier to a recipient, and of no legal significance except that the recipient has a duty to take reasonable care of them. ("Reasonable care" would include keeping goods out of the rain and preventing direct physical damage, but would not extend to storing them in special conditions, such as under refrigeration.) A delivery note sent by the supplier is merely a brief record describing what has been sent in general terms (usually quoting the buyer's order number). An unpacking note is a document recording the full details of the delivery - individual items and quantities etc.. It is most important to distinguish delivery from acceptance. Also visit the free on-line course on purchasing at this site (sub-section 2.3.3, and possibly sub-section 5.3).
Delivery Note: a document describing in general terms the contents of a delivery made by a supplier to customer. Associated with the delivery note is almost always an Order Number assigned by the buyer at the time the order is raised. See Delivery of Goods.
Delivery Timeliness: A contract comprises conditions (its central points) and warranties (incidental points). In general, timeliness of the delivery of goods is generally regarded in commerce and legal convention as a warranty. If this is so, the contract cannot be terminated for late delivery, since, under the law of contract, a contract can be terminated only for breach of conditions, not for breach of warranty (*). If adherence to the date of delivery is vitally important to a buyer, he should specifically make it into a condition in the contract by saying so in the wording. (Traditionally, the phrase "time is of the essence" is inserted into the wording of the contract, in relation to the date, to draw attention to the requirement for timeliness.) If this has been done and delivery is then late, at least the buyer then has the option of terminating the deal. (* Note that a company can be sued for damages in the court for breach of warranty just as it can for breach of condition.)
Delphi Forecasting: (From the Oracle of Delphi, in Ancient Greece.) A means of preparing long-range forecasts, typically many years in the future, by canvassing and querying the opinions of experts. An organiser gathers the views of the experts, who initially submit forecasts without collusion. The experts are then brought together, and those with "extreme" views are required to defend their opinions. See also collaborative forecasting.
DEM: Dynamic Enterprise Modelling.
Demand (Consuming and Non-Consuming): As customer demand for a product is received by a company, it is necessary continually to assess whether the product's master schedule is sufficient to meet the orders received and forecast to be received in the future. (See the projected available balance.) As actual demand is received, it is, in effect, the forecast "come true". For companies which make to order, however, the assessment of the position must take into account not only forecasts in future periods, but actual demand placed in advance for future manufacture. To avoid the double counting of both the forecasts and the advanced actual orders, therefore, the technique is employed of consuming the forecast. The forecast must only be consumed, however, by incoming orders which are in fact legitimately associated with the forecast. For example, if the forecast was calculated entirely on the basis of UK demand, an order from France, while very welcome, could not be considered part of the forecast. Similarly, if orders for spares were generally small, from small stockists, a massive one-off order from the MOD to restock the entire British Army is also not legitimately associated with the forecast. Unusual demand such as the French order and the MOD order should not consume the forecast. It should be treated separately and reduce the projected available balance separately and directly. Such demand is referred to as non-consuming demand. The ordinary demand which does consume the forecast in the standard way is referred to simply as consuming demand. It may not be so easy to spot incoming demand as being non-consuming, however, if every order cannot be individually examined by order processing staff. To trap non-consuming demand, it will be necessary to institute statistical tests, such as determing the mean order size and marking as non-consuming any order more than (say) 3 standard deviations from the mean. Alternatively, Chauvenet's criterion might be used.
Demand (Dependent): The demand for a part or component, the quantity concerned being derived or calculated by reference to the plans for a part higher in the bill of materials. Thus the demand for bicycle wheels is dependent, being derived by calculation directly from the plans to manufacture bicycles.
Demand (Independent): The demand for a part (almost always a finished product or spare) which does not depend on plans elsewhere in the materials planning system. The demand for bicycles is independent, since it arises from the vagaries of the consumer market.
Demand (Latent): Inherent demand for an existing product which has not been placed by potential customers, often because of a failure in the selling company to hold stock or a failure to provide a ready means of communication. Latent demand also persists when the customer is fobbed off by the supplier with substitutes that are accepted reluctantly. In demand forecasting, especially as it concerns consumer goods, it is important to obtain a picture of the true demand, not the demand for substitutes or demand as recorded after-the-event through late invoice statistics. An example of latent demand arose many years ago regarding the sales of "Jonquil Yellow" paint, a pale shade of yellow. Since Jonquil is very similar to "Standard Pale Yellow", customers who phoned the company asking for Jonquil, which was out of stock, were persuaded by the sales girls to take Standard Pale. These sales (of Standard Pale) were recorded as demand for this product. they were not, of course: even though customers had bought the Standard Pale, what they really wanted was the Jonquil. This mistake resulted in the recording of erroneous demand data for forecasting purposes. To re-emphasise, although the sales were for Standard Pale, what should have been recorded as the demand were the (turned-away) requests for the Jonquil.
Demand (Patent): Sales demand which is made known to the selling company in the form of customer orders (contrast Demand (Latent)).
Demand (Sales): The wish and ability of a customer to buy a particular good of specified physical qualities at the price offered for sale. Demand is patent if the customer makes his wish to buy known to the seller. It is latent if the customer is unable to place his order, perhaps because of inadequacies in the sales operation or insufficient stock. The seller must be careful not to record as demand the sale to a customer of a second-choice substitute rather than his original requirement. The seller must also record the full amount asked for by the customer, even though only part of his requirement has been satisfied due to lack of stock. (It has been suggested that the difference in volume between the sale of paint and the demand for paint is 2%.) The manufacturing company must forecast demand, not sales, even though it is common to speak of sales forecasting, rather than demand forecasting.
Demand Forecasting: Demand forecasting, also commonly but erroneously called sales forecasting, is the prediction of the future demand for products that will be placed by customers. Forecasts are prepared by the application of statistics to demand data. (See Demand (Sales)). The company should employ one of the many excellent software packages on the market * - calculations are too complex to be attempted in any other way. (But see Delphi Forecasting and collaborative forecasting.) As a first step, the company must recognise that attempting to make manual demand forecasts is unacceptable. Sales staff may be "nearer the market", but clearly cannot manually detect and describe subtle trends and fluctuations, including seasonal effects etc.. Statistical demand forecasting does not pretend to produce accurate forecasts per se. What it does is to detect and mathematically describe established and emerging demand patterns. The difference, then, between the forecast obtained by extrapolating the demand pattern and the demand that eventually transpires is termed the forecast error. If forecast errors themselves are analysed, it will be found that they constitute random data (a statistical test can be applied to data to show whether or not they are "random"). Random data cannot by definition be forecast, although a buffer of safety stock can be provided to protect customer service for those times when the forecast is too low - see Safety Stock. The installation of a forecasting system and its companion safety stocks system is one of the easiest and most effective actions that a company can take - typically, immediate stock reductions of 30% will be observed. Packages vary widely in sophistication and price and include those in the list at the end of this Glossary entry. Note that since the mid 1990s, relatively inexpensive "multi model" packages have been developed. Multi model packages are those incorporating as many as 20 different forecasting models (including many otherwise identical models but each with different parameters). Each month, the multi model software makes multiple forecasts. The following month, multiple forecasts are again calculated, but the one issued for use by the system user is the one emanating from the model which proved to be most accurate the previous month. There are two basic families of forecasting techniques - see Causal Forecasting and Naive Forecasting. Packages on the market at present include Demand Solutions (known in the US as Focus Forecasting) from IBS Associates, Sutton, Surrey; Forecast Pro from Timberlake, London; Maapics DB from IBM; Mercia Links PC & Mercia Links Client Server, from Infor, Birmingham; Procast, from Cube Software, High Wycombe; DFRP, from Synchron, Sunbury, Middx; and Slim (formerly E3), from JDA Software, Herts.. Glossary users interested in further investigation might also contact the Forecasting Forum for news and a comparison of packages.
Demand Management, Demand Chain Management: The control and organisation of the planning function as it is directly affected by customer demand. Usually this is taken to mean the calculation of forecasts and safety stocks; the day to day management of the sales order processing system; the day to day management of the available-to-promise system (in make to order); and the replenishment of the distribution network by, say, DRP or DRPII. More broadly, in his book Kotler on Marketing, guru Philip Kotler writes that "Marketing's main thrust and skill is demand management, namely to influence the level, timing and composition of demand in pursuit of company objectives". A popular model of demand management shows a circle turning through a four stage never ending process: (1) demand planning (eg forecasting); (2) communicating demand (making product available); (3) influencing demand (carrying out the sales plan); and (4) prioritising demand (product allocation).
Demerit Chart: A type of attribute control chart in which the undesirable quality attributes occurring in the samples of parts are each given a "score" according to its perceived severity (eg crack = 10 points, hole = 20 points etc.). See Quality Score Chart.
The Deming Circle: a name sometimes given to the PDCA circle (qv).
Deming, W.Edwards: 1900 - 1993, born in Sioux City,Wyoming and educated at Wyoming University (Laramie), Colorado University and Yale. World famous as a statistician in the field of quality, and the founder of the Japanese quality movement in the 1950s. Deming wrote many books, in particular Out of the Crisis (1982). Deming Prize: One of a small number of prizes related to quality, the Deming Prize being originally funded by royalties made available by the late W. Edwards Deming and administered in Japan by the JUSE. The Deming Prize is thought by many as being the premier quality prize worldwide, and immense prestige is gained by those winning it. Also see the red bead experiment.
Demonstrated Capacity: The work (in hours) able to be achieved at a work centre in a given period, so called because the figure should be arrived at by observation rather than, say, by theoretical calculation or by assumption. The late Oliver Wight suggested that the demonstrated capacity figure to use for a work centre should be the recorded output from the previous week. See also "standard hours".
Demurrage: (literally, detention) When a ship arrives in port and is unable to unload because prior arrangements to do so have not been made, she must wait until a quay and facilities become free. The port authority will make a hefty charge to cover the time spent waiting in port. Demurrage is also relevant to wagons of goods held in railway sidings awaiting collection.
Department of Trade and Industry: see DTI.
Dependent Demand: See Demand (Dependent).
Depot (Logical): In a distribution network, a "node" (qv) may be established purely for the purposes of planning and calculation, without any requirement for the holding of physical stock. An example is a major customer, regarded for planning and replenishment purposes as a logical depot on a par with the real, physical depots established throughout the geographical area.
Depreciation: When an asset is originally acquired, it is entered in the balance sheet at its purchase price (ie at its price as new), and is expected to have a life in use of a certain duration. As each year passes, one might say that as a consequence the asset becomes partly "used up" and that its value has declined from its previous value. In accounting terms, one says that the asset depreciates in value; the extent by which its value has declined is termed its financial depreciation. (One advantage of showing assets' depreciated value in the balance sheet is that it gives a more realistic picture of the company's capital than if all assets appeared as if they were new.) Ways of depreciating an asset's life and value are: (1) evenly by age, assuming a likely maximum lifespan; (2) by the same percentage each year; and (3) by use, assuming a given use over its life. Examples relating to the depreciation of a £20,000 car expected to have a life of 10 years and 150,000 miles are as follows: (1) to depreciate the car's value by £2000 per year; (2) to depreciate its value by p% per annun, where p = (1 - (v2 - v1)**(-n))/100% (where v1 = the initial value, v2 = final value and n = the number of years.); and (3) to depreciate the asset by the fraction (miles this year)/150,000. Although the depreciated amount is not "paid" as if it were a cash sum, it is nevertheless considered to be a genuine accounting expense and as such is entered in the profit and loss account as an expense (under the sub-heading depreciation expenses). There are government regulations relating to depreciation. The reason for this is that because depreciation is an expense, the company's profit is therefore reduced, and with it the company's liability to tax.
DEQ (followed by a named port of destination): Delivered Ex Quay - see Incoterms (Group D "Arrival"). The seller has fulfilled his obligations when the goods are placed at the disposal of the buyer on the quay or wharf of the named port of destination but not cleared for import The seller must bear all costs and risks in bringing the goods to the named port of destination and discharging the goods on the quay. The DEQ term requires the buyer to clear the goods for import and to pay for all formalities, duties, taxes and other charges upon import (NB this latter obligation - Incoterms January 1st 2000 - is the opposite of the DEQ Incoterm issued in previous years).
Derivative: A financial entity having a value arrived at from other financial entities. An example is a share in a unit trust fund - the share's value is derived from the value of the stocks and shares owned and managed by the unit trust fund's trustees.
DES (followed by a named port of destination): Meaning 1 - Delivered Ex Ship (see Incoterms Group D "Arrival".) The seller has fulfilled his obligations when the goods are placed at the disposal of the buyer on board the ship, but not cleared for import at the named port of destination. The seller has to bear all the costs and risks in bringing the goods to the named port before discharging. If the parties wish the seller to bear the costs and risk of discharging the goods, then the Incoterm DEQ should be used.
DES: Meaning 2 - Distributed Execution System.
Descendant: from the viewpoint of the bill of materials, the descendants of a product are products at any later stages of manufacture. Thus if product A is used to make product B, product B is a descendant of A. In this case, where B is a direct descendant of A, product A is also said to be B's parent. However, if product B is later used to make product X, product X is also said to be a descendant of A. Contrast the term ancestor.
Design (of Product): see "Product Design Specification" and "Conceptual Design".
Design of Experiments: see DOE.
Design Review: Design review is an essential recurring feature of engineering design management. At the centre of the review process must be constant reference to the Product Design Specification (qv), since the PDS defines the company's product development target.
Despatching Rule: A means of calculating the order in which jobs waiting at a machine are to be loaded - ie a job priority rule. Typical rules are SPT, Critical Ratio, FCFS, FIFO and Slack Time.
Deterministic Model: In creating a simulation, mathematical or other model of a set of procedures, such as one of a production scheduling situation, various parameters must be defined. Examples are rates of production; job leadtimes; and quantities of output achieved per unit of time. The model is said to be deterministic if the assumption is made that matters will proceed exactly as specified with regard to the operation of procedures and the applicability of the parameters specified - ie that the rates of production will not be more than has been specified, or less, but will be exactly as stated. Contrast probabilistic model.
DEUCE: An early British computer developed by The English Electric Company in 1954.
DFAA: Design For Automated Assembly.
DFD: (Meaning 1) Data Flow Diagram - A flowchart of a computer system drawn in the manner devised by Chris Gane and Trish Sarson (and popularised by Ed Yourdan). The technique involves only 5 different types of symbol, one such denoting a process or procedure. The essence of a DFD is that the flowchart is "structured" - that is process symbols 1, 2, 3, 4 and 5 on one sheet of paper, are broken down to sub-processes 1.1, 1.2 ... 2.1, 2.2 ... 3.1, 3.2 ... etc. on 5 further sheets of paper. Sub-process 1.1 is broken down to yet a further depth of detail as 1.1.1, 1.1.2, 1.1.3 ... on yet another sheet of paper, and so on to any level of detail necessary. The advantages of data flow diagramming are clarity and the easy ability to communicate to others (eg potential system users). (Meaning 2) Design for Disassembly.
DFL: Demand Flow Leadership.
DFM: Demand Flow Manufacturing, or Design for Manufacturability, or Demand Flow Management.
DFR: design for realisation, where realisation is deployment in use (eg manufacture, assembly etc.).
DFS: Distributed Factory System.
DFSS: Design for Six Sigma, a methodology entailing rigorous data gathering to ensure that "the voice of the customer" is given highest prominence, and entailing also rigorous consideration of the intended process to ensure that output will be within the six sigma limits (ie that there will be a process capability index of 2.0 or better, and with non-conformancies at fewer than 3.4 per million.) In the 1998 General Electric Annual Report, the CEO Jack Welch stated that Every new GE product and service in the future will be "DFSS" - Designed for Six Sigma. These new offerings will truly take us to a new definition of "World Class". See Six Sigma.
DFT: Demand Flow Technology.
DGR: Daily Going Rate - a material's annual usage value divided by the number of working days.
DGSA: Dangerous Goods Safety Awareness.
Dial-Up Access: In relation to the Internet, connection to a service by dialling an ISP (Internet Service Provider).
Differential: In pay structures and grading, a differential is((maximum grade pay rate - minimum grade pay rate) / (minimum grade pay rate)) x 100%.
DIFPAK: A collective waste compliance scheme involving the dairy industry - see Packaging Waste.
Dimension: In the Hay System of job evaluation, a dimension is a subdivision of a Hay "factor" - see Hay Guide Chart.
Direct Cost: See Cost (Direct).
Direct Costing: Synonymous with Costing (Variable).
Directors' Report: An appraisal of a business in the form of a statement prepared yearly and submitted as part of a company's annual return. The appraisal must give a "fair" view of the company's prospects and position.
Discount: see the free on-line course on purchasing at this site (sub-section 4.3.3).
Discounted Cash Flow: See DCF.
Discrepancy: the difference between two measured values of the same quantity. Note that if the uncertainty in the first measurement is dx and the uncertainty in the second measurement is dy, the uncertainty in the discrepancy is (dx + dy).
Discrete Lot Size: Synonymous with "lot-for-lot" - that is, the manufacture of precisely the number of units needed to satisfy net requirements, rather than the manufacture of a specified lot quantity which may be greater than the net requirements.
Distribution (Gamma): A statistical distribution usually less skewed than the negative exponential distribution and which under certain circumstances can approach that of the normal distribution.
Distribution (Gaussian): See Distribution (Normal).
Distribution (Negative Exponential): A statistical distribution similar to the Poisson distribution. Sales forecast errors relating to the sale of retail goods often assume this relationship.
Distribution (Normal): Suppose that a succession of events occurs, each event capable of description by a single numeric value. One such example might be the occurrence of 48 successive forecast errors relating to a product over 4 years; another might be the recording of data relating to production output every hour over 5 days. Suppose next that we arrange the values so recorded in numerical order from the lowest to the highest. Finally, we note how many of the recorded values are at the low end of the scale, how many are at the high end, and how many are at all points in between. These event values are said to have a distribution. For example, the top 25% of the scale may account for 5% of all of the recorded values, or the middle 10% of the scale may account for 65% of all of the values, and so on. The distribution of the values can be represented on paper as a graph, or curve. If the bulk of values lay in the centre of the scale and very few values were at the low end or at the high end, the curve's appearance would be a hump. Specifically, if the curve is symmetrical and has the profile of a church bell, the distribution is said to be "normal" or "Gaussian". The shape of the normal distribution can be represented by a very complex formula discovered in the 18th century by the application of advanced statistical techniques. The phenomenon of the normal curve is met in numerous instances in manufacturing, especially in TQC, SPC and forecasting. Although a manufacturing practitioner may not care to become involved with the mathematics of the normal distribution, he should be closely familiar with the bell shape; aware of the existence of tables of values relating to it; and be aware that, while there are an infinity of normal curves - ie curves with a bell shape - the curves differ in the degrees to which they are spread out (flat bell shapes) or peaked (tall bell shapes). (One of the terms in the formula for the bell is the curve's standard deviation (traditionally denoted by the Greek letter sigma): the greater the value of the standard deviation, the more spread out the bell.)
Distribution (Poisson): A mathematical distribution of a group of variables which is not symmetrical like the normal distribution, but instead is skewed to the left. That is, with Poisson, the bulk of the variables are to the left of the median, or centre, value. A useful and unusual property of the Poisson distribution is that its standard deviation equals the square root of the mean.
Distribution Mix: The five most important factors needed to provide an effective distribution operation and provide for customer satisfaction in the distributor's service. The factors are: inventory; warehousing facilities; communications; packaging and transport.
Distribution Network: The physical storage points, transport routes and means of communication by which (1) goods are conveyed to ultimate consumers, and (2) information about activity and requirements is gathered for central analysis. In its simplest form, the network will comprise a central source location, such as a factory, a small number of major regional warehouses supplied from the centre, and a larger number of depots supplied by the regional warehouses. The data collected will include customer demand (at the depots) and stocks (at all points of storage). See also echelon.
Distribution Resource Planning: See DRP.
Division of Labour: see Manufacture of Pins.
DMAIC: The essential six-step methodology by which Six Sigma (qv) quality improvements are effected. In six sigma, the acronym is spoken as a "word" thus: Deh-MAY-ihk (*). The individual letters stand for the following: D - Define (define and select the goals and scope of a project); M - Measure (measure the performance of the current process, or procedure); A - Analyse (identify the differences between the current performance and the future required performance, applying statistical methods to prove causes and effects); I - Improve (come up with ways and means of reaching the required improved state); and C - Control (intall data tracking to ensure the changes remain permanent). The DMAIC methodolgy is very similar to the "Plan-Do-Check-Action cycle (qv). (* And this being English, in which any noun can be verbed, we can therefore use the verb "to DMAIC", meaning to subject something to the DMAIC process.) See also Six Sigma.
DNC: Direct Numerical Control.
DNS: Domain Name System - a naming/coding system used to identify computers connected to the Internet and to networks.
DOBO Docking System: a proprietory docking system from Hormann, pertinent to high speed doors used in cold stores, whereby docking takes place before opening.
Dock Leveller: a hinged bridge installed between the surface of a goods receiving or despatching dock and a vehicle to compensate for the difference in height between the two surfaces. Dock levellers automatically adjust in height as the height of the vehicle changes during the loading or unloading process. See the free on-line course on stores/warehouse operations at this site (sub-section 1.2.4)
Dock Receipt: an internal stores or warehouse transaction that may be completed when goods have been received from a supplier but not yet "put away" into their eventual storage location. The dock receipt holds the id of the material and states its location merely as the company's receiving dock. The quantity received is shown on the stock record, along with its location, but is held in a special category rather than as available stock. A second transaction must be raised and submitted when the goods are finally moved from the receiving dock to their eventual storage location.
Dodge-Romig: See Sampling Tables (Dodge-Romig).
DOE: (1) Department of Energy (US Government). (2) Design of Experiments - the name given to the methodology for examining the simultaneous effect of two or more factors on a particular system. The reaction of the system is termed its response, and is manifest in the form of a response variable. An experiment is an investigation of the behaviour of a system. Its purpose is to analyse the effect on the system of one or more factors. If it is the intention of the analyst to study only the effect of a single factor on the system ... ie to conduct an experiment with one factor ... this can be readily achieved by varying the intensity of the factor and duly recording the system's response, verifying the results with ANOVA. However, it is likely that for many systems, response will be affected by two or more factors. Not only that, but the effect of one such factor on system response may depend on the presence and intensity of a second factor. In other words, if there are two factors A and B, then the effect of Factor A on the response may depend on the presence and level of Factor B, and the effect of Factor B on the response may depend on the presence and level of Factor A. Investigation of mutually dependent factors on a response is known as design of experiments. The first step in experiments with more than one factor is to select a factorial design. Factorial design is the setting out of the combinations of factors and factor levels that are to be the subject of the experimentation. "Factor level" means the degree of intensity of the factor in the experiment. (For example, high temperature or low temperature.) For simplicity in almost all instances, it can be supposed that each factor should be tested at just two levels: high (+) and low (-). When this is assumed, the number of combinations of factor levels needed to complete an experiment involving n factors and two levels is given by 2 **n. (for example, 8 combinations for 3 factors). The four combinations for two factors is given below; the eight combinations for three factors is illustrated under Orthogonal in this Glossary.
Combination 1: A - B -
Combination 2: A + B -
Combination 3: A- B+
Combination 4: A + B+
Having decided on the factorial design, the next step in DOE is to carry out the experiments, varying the factor levels between the high and low levels in strict accordance with the design as described. The results are meticulously recorded, and the experiment may be replicated. As well, individual tests may be carried out in random order so as to reduce possible experimental bias. Finally, data from the experiments are analysed as series of paired combinations, one factor pair at a time. The results of these factor analyses can be illustrated as a set of response diagrams. A given response diagram relates to a specific, chosen factor - say, Factor A - and is a plot of degree of response on the vertical axis and the two factor levels for A (ie low - and high +) on the horizontal axis. What is sketched on the plot is a straight line joining the response value at the low level - and the response value at the high level +. However, what is of interest in the response diagram is that there are in fact two straight lines, not just one. The first joins the low and high reponse points when a second Factor B is at a low level, and the second straight line joins the low and high response points when the second Factor B is at a high level. It is very frequently the case that only two factors ever have a mutual interaction as described. The set of response diagrams able to be drawn through Design of Experiments will identify these two factors and indicate how they might be mutually set so as to optimise their effect on the system response.
Dogs: A humorous marketing term for products on the selling range with low market share and low market growth (see also Cash Cows).
Double Entry Bookkeeping: A formal accounting method following the principles of the Accounting Equation (qv).
Double Exponential Smoothing: See Linear Exponential Smoothing.
Double Sampling: The inspection of a first sample of size n1 and then the taking of one of three courses of action: (1) accepting the incoming lot at once if the number of non conforming items is less than or equal to the acceptance plan number c1; (2) rejecting the incoming lot at once if the number of non conforming items is greater than the acceptance number c2; (3) taking a second sample n2 and accepting the incoming lot if the total number of non conformancies in the two samples combined is less than or equal to c2.
Downdate: a jocular term that is a play on the verb update, and meaning to change a numeric value to a lower value (eg to downdate the proposed manufacturing quantity of 100 units to 60 units). The verb is principally used in closed-loop MRP when the production expected from a scheduled receipt is reported as having been achieved - the stock quantity is updated and the outstanding scheduled receipt itself is downdated. Also in closed-loop MRP, the planner might talk of downdating certain planned orders and simultaneously updating the number of firm planned orders.
Downtime: The period of time a machine is not being used. (The implication is usually that the shop floor would wish to have used the machine, but was unable to do so because of its malfunction.)
DPMO: Defects Per Million Opportunities (also referred to as ppm). A measure of achieved quality. For example, if a manufacturing process produced 100,000 parts, and 90 of them were defective, or non-conforming, the quality rate would be 900 DPMO (*). Similarly, if 156 invoices were in errors out of 10,000 invoices produced, the DPMO rate would be 15,600 DPMO (*). The measure is often usefully used as a shorthand to estimate the "sigma rating" of a process. The following DPMO /sigma ratings relate to the area under the Normal (bell) curve, depending on how far the capability of the process is from the upper and lower specifications required:
one sigma : 691,500 DPMO; two sigma : 308,500 DPMO; three sigma : 66,800 DPMO; four sigma: 6,200 DPMO; five sigma: 230 DPMO; six sigma: 3.4 DPMO.
The manufacturing process and invoicing system cited above would be approximately 4.6 sigma and 2.5 sigma processes respectively (a full table is needed to find the sigma values accurately). (* In practice, the DPMO rates quoted might be adjusted to allow for the actual number of physical opportunities for a defect as the parts were actually made or as the invoices were actually prepared - say 20 opportunities for making a defect in one manufacturing operation, or 5 opportunities for a mistake per individual invoice. If this were done, the number of production defects equals 90 per 2,000,000 opportunities (= 45 DPMO), and the invoice errors equal 156 per 50,000 opportunities (= 3120 DPMO). Consequently, the calculated sigma ratings would be far higher, namely 5.4 and 4.25 respectively. )
DPU: Defects per Unit. See u-chart.
Dr: Debit or debtor (qv) - the left hand side of an account (UK, not US).
Draft: There are numerous alternative meanings of this term. One of them is "an instrument signed by a drawer to a drawee requesting payment at a future time either by a third party or by the drawee". Hence sight draft = a draft payable on demand, time draft = a draft payable at a specified time in the future and date draft = a draft that matures a certain number of days after its issue.
DRAM: Dynamic Random Access Memory.
DRP (Distribution Resource Planning): A formal means of calculating the replenishment requirements of a distribution network. The system works in a way that is wholly analogous to the planning of materials requirements by MRP. That is, starting at the distribution echelon most distant from the centre of the network, planned replenishment needs are calculated based on forecasts, stocks on hand and distribution lot sizes. The replenishment lot sizes at the next lower echelon are calculated based on the MRP principal of covering net requirements (ie gross requirements less stock) with a further lower level planned replenishment shipment. Terms in DRP include planned replenishment orders, firm planned orders and open orders. Major problems in DRP include the difficulty of scheduling plans to transport schedules, and the inability of the system to react to the flexibility required in distribution. DRP has not been generally successful, except in a few instances involving infrequent large shipments carried over long distances. See DRPII however.
DRPII (Fair Shares, or Lean DRP): A procedure devised by R. G. Brown for the replenishment of a distribution network. The steps involved are: (1) determining which SKUs in the network will shortly reach critical levels of stock; (2) notionally allocating stock held at the centre to fulfil the potential shortages; and (3) authorising actual despatches of allocated stock in a convenient way and in convenient quantities. The procedure is somewhat involved.
Drum, Buffer, Rope: The often extravagent, or at least picturesque, language of OPT (qv) invokes the analogy of drum, buffer, rope as follows. If a supply chain or manufacturing route has a point which is bottlenecked, the output from the bottleneck determines the output from the supply chain itself. The bottleneck is the drum beat of the system. The bottleneck must be kept working at its maximum rate, so that a buffer of stock is placed in front of it to ensure it is never starved of material (and advantage can be taken of any temporary increases in its capacity). The "rope" is the supply chain / manufacturing route itself.
DSEAR: Dangerous Substances And Exposives Regulations (2002).
DSIR: Department of Scientific and Industrial Research, a UK government body.
DSO: Days Sales Outstanding (or Distinguished Service Order, a UK military decoration).
DSOM: Distributed System Object Module.
DTI: the Department of Trade and Industry, a former* UK government department of state with many diverse responsibilities relating to industry, such as energy policy, employment, industrial competiveness and economic growth, productivity, mergers and acquisitions, health & safety law, and so on. Many of the responsibilities of the DTI overlapped with other Whitehall departments, especially the Treasury's; * in June 2007, the DTI was replaced by two new organisations, (1) the Department of Business Enterprise and Regulatory Reform, and (2) the Department of Innovation, Universities and Skills.
DTP: Desk Top Publishing (eg through the Quark Express Software), or Distributed Transaction Processing.
Due Date: See Date (Due).
Dummy Variables: In the forecasting of a product's sales, dummy variables can be employed to represent the occurrences of a specific event by setting up a time-series for the event in question. The data recorded for each month in the time-series is simply either the value 0 or the value 1. If "1" is recorded, the event to which the dummy variable refers has occurred; if "0" is recorded, the event has not occurred. For example, in the year 2002, the occurrence of four major specified national sporting events may have been be at April, May, August and December. If so, the occurrence of the events would then be represented by the following time-series, in which a "1" has been recorded for April, May, August and December: 000110010001. Regression mathematics can now be applied to determine if there is any correlation between the sales levels in these four months and the presence of the dummy variable in the months. Having established the degree of correlation, if any, between better (or worse) sales in each of the months, it is now possible to set up a further time-series of dummy variables for the same national sporting events in the year 2003, to forecast the extent to which future sales in these months will be affected.
Dunnage: any material such as boards, blocks, metal or cardboard supports used externally to support or secure products and packages in storage or under transportation in order to protect them from physical damage or to assist in their handling. The term 'dunnage' is also used to refer to purely filler material used as loose packaging, such as foam, bubble wrap and air pillows. Originally, 'dunnage' was used in shipping parlance to denote brushwood or mats stowed beneath the cargo of a vessel to protect it against damage.
Durability: the degree or length of use of an object until its replacement becomes preferable to its repair.
Dusseldorfer: A type of pallet with a footprint (ie dimensions) of 800mm x 600mm. The smaller Dusseldorfer is being increasingly used in pharmaceticals distribution due to its ease of handling when being off-loaded from delivery vehicles.
Duty: A tax levied by a government, especially in relation to exports; imports; the sale of alcohol and tobacco; the issue of licences; and on the estates of deceased persons. Import duty is a complex area of taxation (itself a complex subject) and, as well as taxation policy, involves foreign relations and treaties.
Duty of Care: In common law, the precept that one should take reasonable care to avoid acts or omissions which can reasonably be foreseen as being likely to injure his neighbour. One's neighbour is anyone closely and directly affected by what he does or fails to do. Note that the duty of care is a civic one, not a requirement imposed by statute law. If the citizen fails in his duty and this failure leads to another's injury, he may be guilty of a tort and may be able to be sued in the courts for damages. Note that the duty of care does not necessarily require the employer to have done everything possible. Risk and consequence must be assessed. The standard the court will apply to determine whether reasonable care was taken is whether the employee was (1) 'reasonable and prudent', (2) whether he adopted a positive attitude or not to safety and (3) whether he took into account what was known of the risks and consequences (or what he ought to have known). Note that it is not enough for the employer to accept traditional practice as regards the provision of a safe working environment. Although risk must be accepted, it must be accepted in a posive way - things must not be allowed to drift along; management must take a lead. Consider Morris v. West Hartlepool Steam Navigation Co. [1956, AC552]. Morris, a seaman, fell into the hold of a ship. At the time, the hold was unfenced and it was argued that this was normal and accepted practice. The court pointed out that the action and expense needed to fence the hold were trivial and the risk and seriousness of an accident great. The company was found liable. In the words of L.J.Asquith A computation must be made in which the quantum of risk is placed on one scale, and the sacrifice involved in the measures necessary for averting the risk is placed on the other.
Duty Stamp: A 25mm diameter circular label, either self-adhesive (freestanding labels - type A) or incorporated into a bottle label itself (type B), to be afixed to packages and goods containing alcohol and stored in the UK, or (from January 2007) offered for sale in retail outlets. Companies required to register with the Duty Stamp scheme, through HM Revenue & Customs, are those licensed to hold dutiable (alcohol) goods or which bottle spirits or which import them. A registered company can obtain the stamps it requires by request to HMR&C. So far, the stamps are free, but we can be sure with this rapacious government that there will eventually be a charge. The purpose of the scheme is to put a stop to the widespread evasion of alcohol duty in the UK. Further information is obtainable from HMR&C or by phone on 0845-010-9000.
DVD: Digital Versatile Disk. In the consumer market, machines capable of playing DVDs - ie DVD players. DVD players are either "non-recordable" or, far more desirably, "recordable", these being capable of also recording TV programmes, not merely playing pre-recorded material.
Dynamic Despatching Rule: A despatching rule (qv) whereby a job's priority is calculated in accordance with its timeliness and progress through the shop at the moment the calculation is made. The application of a dynamic despatching rule seems to presuppose the existence of a shop floor data feedback system to obtain data on timeliness and progress to be obtained. See also static despatching rule.
Dynamic Market (The): An acknowledgement that buyers and sellers in the marketplace are forever seeking to improve their positions by taking new and alternative courses of action. The company that does not move on is liable to find itself bypassed by events.
Dynamic Programming: See Mathematical Programming.
