Supply Chain and Operations Management Glossary (I)

IATA (International Air Transport Association): An association/cartel of most of the world’s passenger
airlines for coordinating such things as fares on international flights. See Icelandair was an early nonmember.

ICC (Interstate Commerce Commission): A U.S. federal transportation regulatory agency that was
legislated out of existence as part of transportation deregulation. See STB.

IFR (Increasing Failure Rate): A failure rate curve such that the probability of failing in the next instant, given that the machine has not yet failed, is increasing with time. Thus, preventive maintenance tends to be a good thing to do. Incandescent light bulbs, for example, tend to be IFR. Once they have accumulated 1000 hours, the probability of failure increases. See also DFR, MTBF.

i.i.d. (Independent, Identically, Distributed): random variables, which have the same distribution and are independent in the sense that knowledge of one variable’s value provides no information about the value of another.

Inbound: A shipment into a DC. Tends to be on larger vehicles.

Incentive compatible: A feature of a business agreement such that when the individual partner maximizes his own profits, he will also maximize the total profits of all partners to the agreement. Such an agreement typically involves some form of revenue sharing. See also: co-op advertising, transfer price. INFORMS (INstitute For Operations Research and Management Sciences)

IP (Integer programming): a generalization of linear programming that allows some variables to be restricted to integer values. It is very useful for planning models with go/no-go decision variables.

IP (internet protocol): a widely used standard format for moving data over a network based in part upon eaking a message into packets of standard size, with the first few bytes providing the destination address.

Item fill rate: fraction of items ordered that were in fact shipped. See order fill rate and line item fill rate.

Inter-modal: see multi-modal.

Internet: a large set of computers connected by a physical network that uses the IP method of communication.

Intranet: a communication network within in a firm, typically based upon IP, but physically restricted to
only users within the firm.

Inventory turns: a variation of the Little Flow equation. It states: (turns per period) = (sales or transaction per period)/(inventory level) = 1/(average time in system).

IRI (Information Resources, Inc.): A Chicago based supplier of industry sales data for consumer products (e.g., supermarkets). These data are obtained from sources such as cash register scanners. Another supplier of such data is A.C. Nielsen.

ISBN (International Standard Book Number): A ten digit product code used for book products. The first digit represents the country, the next several digits the publisher, the next several digits the product, and the final digit is a check digit = (1*d1 + 2*d2+…+9*d9) mod 11. A check digit of 10 is represented by X. The check digit will catch any single digit error or any single transposition. See also

ISO (International Standards Organization): An international organization to coordinate the setting of standards to facilitate international commerce. See

ISO 9000: a set of standards, originated in Europe, for business processes. A firm that is ISO 9000 certified has its major business processes well documented and is supposedly a more reliable business partner.

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