Supply Chain and Operations Management Glossary (F)
Failure rate curve: A curve that plots a machine’s probability of failure in the next small interval of time, given that the machine has not yet failed. If the time to failure has an exponential distribution, then the failure rate curve is constant. See also: MTBF, IFR, DFR, and bathtub curve.
FASB (Financial Accounting Standards Board): An independent board for setting standards for reporting financial information by firms. These standards specify such things as what and when items can be claimed as income or expense. Tel: 203-847-0700. These standards are officially recognized by the SEC and the ICPA.
FEA (Finite Element Analysis): A method for analyzing or modeling a wide variety of physical systems, such as structures, weather, etc. A key feature is that the system is viewed as a large collection of
discrete points. The state (e.g., temperature, pressure, tension) of each point is related to the state of its neighbor points by a set of equations appropriate for the application. A computer program (one of the earliest was called NASTRAN) is then used to solve this large set of equations. FEA is usually a crucial component of CAD.
FEM (Finite Element Method/Modeling): See FEA.
FICA (Federal Insurance Contributions Act): Law describing Social Security tax/payouts.
FIFO (First In First OUT): Inventory policy in which product is used in the order in which received. See also LIFO. In times of rising prices, a firm can manipulate its apparent COGS by switching between
LIFO and FIFO.
Fill rate: the fraction of demand that is satisfied immediately from inventory. See also line item fill rate, order fill rate, and linear loss function.
Flat car: A rail car without top or sides. Typically used for hauling heavy machinery or piggy back trailers. In contrast, see box, hopper, or tank car.
Flow rack: A warehouse storage rack inclined to the front with a lip at the front, so that when a picker removes a box from the front, boxes from the rear slide forward.
Flow through warehouse: Cross docking with the additional feature that the product is modified in some way (e.g., a brand name label is added).
FMS (Flexible Manufacturing System): A production system with machines that can be quickly changed to produce a different product. The machines are typically software controlled and can change tools automatically (e.g., replace a 10 mm drill bit by a 12 mm drill bit). See also cellular manufacturing.
Forklift: a powered (e.g., by battery or by a low exhaust emission propane fueled engine) vehicle, typically with a fork-like pair of tines in front for lifting product, typically on a pallet, and moving it, (e.g., on or off a truck), out of or into rack storage.
Forward buying: The process of buying several periods worth of supply when a supplier does a “price promotion”, that is, temporarily lowers the price. If all buyers forward buy, then the supplier might as
well use EDLP. The seller would have the same total revenue but in a steadier stream and the buyers
would have lower average inventory.
FOB (Free On Board/Freight On Board/From Our Base): An FOB price is the price for a product picked up at he seller’s site. The buyer must supply, or at least pay for, transportation. See in contrast, COD.
FTL (Full Truck Load): An FTL shipment is one in which an empty vehicle picks up material at a supplier and then drops off the entire contents at a single destination. The carrier typically charges an amount based on the distance traveled rather than on the weight or volume of the contents. The cost per unit shipped is usually less than that under LTL shipping.
Franchise: the right to sell a product at a given location. For example, the right might be given by an automobile manufacturer to an automobile dealer, or by a fast food brand owner to a restaurant owner. Free rider problem: When two or more players (people in a firm, firms in a supply chain) share revenue from an enterprise that depends upon both of their inputs, the free rider problem arises if additional effort by one player results in increased revenue that is shared by all players. Thus, a player that is selfish and does not expend any additional effort may nevertheless get a “free ride” (i.e., increased reward), because of the increased effort of other players in the enterprise. The obvious way of avoiding the problem is to set up incentives, so that the individual player’s increased reward is equal to the cost of his increased effort. This may imply that one must have a monitoring system to measure the effort of each player.