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Supply Chain and Operations Management Glossary (N)

NAFTA (North American Free Trade Agreement): An agreement among Canada, the U.S., and Mexico, taking effect 1 January 1994, to gradually eliminate all tariffs among the three countries over a 15 year period. It is expected that truck carriers from any one of the nations will be able to transport goods between any origin-destination in the three countries. It also sets standards for each country on related issues such as pollution, and tariffs with nonmember countries. See: http://www.nafta-sec-alena.org.

NAPM (National Association of Purchasing Management): An association dedicated to the education and advancement of purchasing and supply management professionals, see http://www.napm.org. Effective 1 January 2002, its name was changed to the Institute for Supply Management.

Nash equilibrium: a situation in which no player (e.g., supply chain partner) can improve his utility unilaterally. It need not be Pareto optimum. See Stackelberg equilibrium.

nautical mile: 6076 feet=1852 meters, as opposed to 5280 feet in a regular mile.

Nesting:
 in two-dimensional cutting stock problems, the process of deciding how to fit required finished good shapes into (typically rectangular) sheets of raw material, so as to make most efficient use of the raw material. It occurs in textiles when cutting things like pant legs and pockets from raw fabric; in woodworking, and in the manufacture of products from sheet metal.

Network effect: See Metcalfe’s Law.

Newsvendor Problem: Historically also known as the newsboy problem, it is the simplest inventory planning problem under uncertainty. Nevertheless, the essence of the solution to this problem is widely used in such areas as yield management in the air lines, and inventory setting by catalog merchants. The setting is a one period problem in which one must choose how much inventory to stock of a single product in the face of uncertain demand. If c = purchase cost/unit, v = revenue per unit sold, h = holding charge/unit left over, and p = explicit penalty/unit of unsatisfied demand, then the newsvendor ratio is R = ( p + v – c)/[(p + v – c) + (h + c)]. The stock level, S, should be chosen, so that the probability of not stocking is R.

nexus: Essentially, a firm is said to have nexus in a state if the firm has an office or physical presence in the state. States that have a sales tax require that a firm that has nexus in the state, collect sales tax (and remit to the state) on all sales to customers in the state. See also: use tax.

NHTSA (National Highway Traffic Safety Administration): A division of the DOT in the USA. One of its duties is to administer fuel economy (CAFE) standards.

NIST (National Institute of Standards and Technology): An agency, http://www.nist.gov, of the U.S. Department of Commerce. It administers four major programs: 1) Measurement and Standards, 2) Advanced Technology, 3) Manufacturing Extension Partnership, and 4) Baldrige National Quality Award.

Nonconstant sum game:
 A situation involving two players (or firms) in which they can increase their total profits if they cooperate. This is in contrast to a zero or constant sum game. In either case, there is still the sometimes vexing problem of how to split the profits.

Normal distribution: a distribution that tends to be a good representation of the sum of a lot of independent random variables. It has two parameters, a mean M, and a standard deviation, s. If you define z = (x-M)/s, then its p.d.f. is: exp(-z*z/2)/2.506628275. In the LINGO modeling language, the c.d.f. is given by @PSN( z).

NP-hard: A class of problems is NP-hard if there is no known method for solving a problem from this class such that solution time increases at worst as a polynomial in the problem size. Typically, solution time may grow exponentially with problem size.

NVOCC (Non-Vessel-Owning Common Carrier): In ocean transportation, an NVOCC is an intermediary who arranges shipping for small or inland shippers. The NVOCC buys transportation from carriers at bulk rates and then resells it to small shippers. The NVOCC gets a standard Bill of Lading from the carrier. The NVOCC gives a “House Bill of Lading” to the shipper. At the destination, the NVOCC reclaims the bulk shipment with the regular Bill of Lading. After deconsolidation, the shipper or his customer claims his portion of the shipment with the House Bill of Lading.

About the Author: AJ Amjad Khanmohamed

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