Supply Chain and Operations Management Glossary (D)

Data Matrix code: A two-dimensional, laser scanable code used for supply chain purposes by the pharmaceutical and consumer electronics industries. The code is made up of very small black and white squares. Other two dimensional codes include PDF 417 and MaxiCode. For more details, see www.aimglobal.org.

DC (Distribution Center): A facility that accepts inbound shipments, breaks them up and recombines them differently into outbound shipments. For example, it may accept a shipment of baby food from Gerber and a shipment of diapers from Kimberly-Clark and recombine them into one shipment of baby food plus diapers for a Jewel supermarket and another shipment of baby food plus diapers to a Safeway supermarket. A DC may also serve as a warehouse (i.e., store product for a nontrivial period until it is needed by retailers or customers). It may contain product handling equipment such as a sortation system and storage racks. A clear height of 24 feet for storage is typical. Deadhead: A positioning trip, in which the vehicle is empty (e.g., an empty return trip). A backhaul is preferred to a deadhead.

Delphi method: Forecasting method developed at Rand Corporation in 1969, mainly for technology
forecasting. A panel of experts is identified and then a forecast is developed via a series of two to four
rounds. In each round each expert is asked to provide forecasts regarding some specified product or technology. The results are then summarized and distributed back to the experts in preparation of the next round. A notable feature is the anonymity. The participants are not identified. Relative to a focus group the apparent advantages are: a) there is no need to have the experts together simultaneously, b) the anonymity helps alleviate undesirable “bandwagon” effects and the ill effects of an opinionated ignoramus with a strong personality.

Demurrage: Payment by a user of shipping to the carrier for not loading or unloading a vehicle or
returning a container in reasonable time, forcing the carrier to wait. For rail cars, a shipper or receiver
typically has 48 hours to load or unload a car.

Dense storage: See movable aisle storage.

DFR (Decreasing 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 decreasing with time. Thus, preventive replacement is not a good thing to do. Equipment that has a DFR is like good red wine. It improves with age. Some semi-conductor equipment has DFR reliability. See also DFR, MTBF.

DIME (Dual Independent Map Encoding): A digital mapping system from the U.S. Census Bureau, now
superseded by TIGER data.

DFM (Design for Manufacturing): The most important consideration in designing a product is to make it
satisfy the customer’s needs. There may, however, be alternate designs that all satisfy the customer needs, but some of which may be substantially easier to manufacture. Thus, in DFM, the product designer takes into account not only customer needs, but also the problems faced by the manufacturing ngineer who must design a production process for producing the product in the volume demanded. DFM is just one of DFX design philosophies, where X might be manufacturing, serviceability, reliability, recyclability, etc. A more serviceable design, for example, might make it easier to remove and replace a failed component, or might share components with a related product, so that spare parts inventories are easier to manage.

DISA (Data Interchange Standards Association): An association devoted to the maintenance and
dissemination of standards for e-commerce documents, such as the X12 and XML. See: http://www.disa.org.

Discriminant analysis: A methodology for computing a scoring function that can be used for classifying objects into two or more categories. For example: should a prospective customer be given credit or not;
should a current customer receive or not a certain kind of advertising brochure; should an x-ray be classified as indicative of cancer or not. It is somewhat analogous to regression but with a yes/no or categorical dependent variable. See also logit analysis, probit analysis, and neural nets. Ref: Gochet, Stam, Srinivasan, and Chen (1997), Operations Research, vol. 45, no. 2.

Discriminatory pricing: charging different prices to different customers for the same product. The
segmentation might be based on customer id (e.g., educational vs. commercial), time of purchase, quantity, location, by metering of use, etc. See: revenue management and value based pricing. Dock: door in a plant or warehouse for loading and unloading trucks. Typical additional features are: a) some kind of floor leveler ramp to compensate for difference in height of the truck floor and the warehouse floor, so that forklifts can drive onto the truck. b) Curtains that surround the truck door to provide protection from the weather for personnel loading or unloading the truck. c) A dock door that is used mainly for unloading is sometimes called a strip door.

DOT (Department Of Transportation in the U.S.): The main federal agency concerned with transportation in the U.S. Sub agencies under the DOT include: Bureau of Transportation Statistics, US Coast Guard, FAA, Federal Highway Administration, NHTSA, and STB. See http://www.dot.gov.

Double marginalization: The act of two decision makers (e.g., a supplier and a retailer) each
independently optimizing their own objective function (e.g., by choosing a volume, so that marginal cost = marginal revenue), but with the unhappy result that their total profits are not as great as they could be if they coordinated their decisions. More specifically, the supplier, in order to make a profit, will charge the retailer a little more than the supplier’s cost. Thus, the retailer will charge the customer slightly more than he would if the retailer had to pay the supplier only the supplier’s cost without a markup. Thus, the retail price will be higher than it would be if the supplier and retailer coordinated their decisions, and demand will tend to be lower.

Drayage: local trucking (e.g., at the beginning of a long trip).

Drop ship: A shipment in which the order taker (e.g., a catalog or internet merchant) asks a manufacturer to ship product directly to the order taker’s customer. DRP (Distribution Requirements Planning): A form of scheduling shipments and production analogous to MRP. Given the requirements over time of various customers of a supplier, these needs are aggregated into a single shipping, and perhaps production plan for the supplier. Dual price: In linear programming terminology, the marginal value of one more unit of a scarce resource. Sometimes also called a shadow price.

Dumping: the selling of a product from state X in a state Y at a price that is lower than some parties in state Y would like. The typical argument is that the product is being sold at a price lower than its average cost, although not necessarily below its marginal cost.

Dunnage: Filler or packing material placed between cargo on a vehicle to prevent the cargo from shifting.

Dutch auction: In the Dutch flower market, this is an open, price descending auction. As the price
descends on a large dial in the front of bidding audience, the first bidder to indicate a willingness to pay by pressing a button, wins. It gives approximately the same result as a sealed bid auction in which the highest bid wins and pays the amount bid. It may lead to inefficient outcomes in that if given the opportunity after the auction, unsuccessful bidders might be willing to pay more than the winning price if allowed to change their bid. It has the advantage of being fast. For contrast, see: Vickrey auction.

Duty: a tariff or tax on imports. It is imposed typically to either protect domestic industry or as a punishment on a political enemy.
Duty avoidance: the right of a firm to avoid paying a portion of the duty on an imported product because
the firm has previously exported a component equivalent to one contained in the imported product.

Duty drawback: a refund to a firm when it exports a product, in the amount equal to the duty the firm previously paid when importing components used in the exported product. It achieves, by accounting,
the same effect as a duty free zone.

Duty free zone: a zone in which a firm does not have to pay duty on imports, as long as the products imported, after some processing or handling, are exported.

Tagged With: