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Abc Classification
Classification of the items in an inventory in decreasing order of annual dollar volume. This array is then split into three classes, called A, B, and C. Class A contains the items with the highest annual dollar volume and receives the most attention. The medium Class B receives less attention, and Class C, which contains the low-dollar volume items, is controlled routinely. The ABC classification is the practical application of Pareto s Principle or the 80/20 rule indicating that it is more effective to expend greater inventory and purchasing management effort on the higher value (A Class) items and less on the low value (C Class) items.
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Active item
For provisioning purposes at holding stores and bulk stores an active item is one which has had recent movement and for which a stock level is set, or for which there are outstanding dues in or, dues out .
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Active inventory
A term used to describe inventory that has had recent use or is expected to have regular usage.
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Act of God
A term used to denote an occurrence beyond the control of or avoidance by human power; any accident produced by a physical cause such as a fire, flood, earthquake, etc. Its occurrence will generally not terminate a contract or discharge the parties thereto, unless provided for in the agreement. Force Majeure clauses generally incorporate reference to this provision.
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Advice of Shipment
A notice sent to a purchaser advising him that shipment has been made. It usually contains details of packing, routing, etc.
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Airway Bill
Means a formal document acknowledging the receipt of the goods on board an aircraft for carriage by air. The airway bill states the terms of carriage and constitutes title to the goods.
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Alongside Date
Date of readiness for loading alonside a wharf, of a vessel operating under a charter party agreement.
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Alternative Item
An item that whilst not directly equivalent to another, may be used to do the same job. May also be called in lieu item .
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Annual Orders
An agreement subject to specified terms and conditions whereby the purchaser agrees to purchase their requirements of a specified number of items, during a specified time period from the supplier at agreed prices or on an agreed price basis. Normally no obligation to purchase a specified quantity exists although estimates for the guidance of the supplier may be given. Sometimes called period contracts or annual orders , but not to be confused with blanket orders or systems contracts .
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Anticipation
An amount taken off a bill when an invoice is paid in advance of the discount or net due date. Granted in addition to any discounts, it is calculated at the stated percentage rate for the number of days between that of actual payment and the due date.
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Application
Information relating to the plant, or equipment on which an item is used or with which an item is associated.
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Approved Item Name (AIN)
The name selected for an item of supply form an approved item name directory. It may consist of a basic name only, but usually comprises a basic name plus those modifiers necessary to differentiate between concepts of items each having the same basic name.
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Arbitrage
Buying in one market and selling simultaneously in another in order to profit from price variances.
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As Is Where Is
In current condition and at their current location on. The purchaser is responsible for all handling, transport and insurance to remove goods from their current location
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Assembly
A collection of parts and/or sub-assemblies which when fitted together form a complete machine, structure or unit of a machine.
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Assigned Currency
The currency assigned to a supplier on the creditor s listing. The currency is normally that of the country in which the supplier is situated.
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Actual Costs
Those labour and material costs which are charged against a job as it moves through the maintenance process. It would generally exclude overhead type costs.
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Administrative Lead Time
The time taken by the purchasing organisation to place an order for an item with the supplier after the order point has been reached or an authorised purchase requisition has been received. Administrative lead time is usually recorded as a separate figure in inventory control algorithms in order to produce purchasing performance reports. Also termed internal lead time or purchasing lead time .
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Aeu
Annual estimated Usage of Stock Item (Also refer AUE).
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Agent
A person or body who by express or implied agreement, acts for another party and within authorised limits, has powers to commit the first party to a contract. The person or organisation who appoints an agent is known as the principal. The principal may review the limits of the agent s authority during the agency period.
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Alphabetic Index
A listing of items which directs users to catalogue groups and classes by use of the alphabetical character.
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Apparent Good Order and Condition
The statement relative to the condition of the goods which have been shipped and so described on the bill of lading.
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Application Package
A computer program or set of programs designed for a specific application (e.g. inventory control, linear, programming, etc.) In many cases the programs in the application packages are constructed in a way which permits users to adapt the system to their particular needs by the use of code files and table files.
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Application Parts List (APL)
1. A term used to describe a listing of parts for a particular maintenance activity or a listing of replenishment stores. 2. A listing of replacement parts and materials which: (a) Comprise the replaceable parts of an item of equipment of an assembly or component of that equipment. or (b) Has been compiled as the parts and materials most likely to be required to - assemble or - maintain or - repair or - recondition or - service an item of equipment or an assembly or component thereof. (See also bill of Material). An A.P.L. provides a cross reference between an item of equipment/component/assembly and catalogued item associated therewith as well as to the items of equipment, etc associated with any catalogued item.
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As Is
A term indicating that goods are offered for sale in their current condition and are without warranty or guarantee. The purchaser has no recourse on the vendor or supplier for quality or condition of the goods.
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Assignment
Transference of some property right or title to an other party. This term is frequently used in connection with bills of lading which are endorsed (assigned) over to another party (the assignee) by the owner of the bill (assignor). Such endorsement gives to the party named the title to the property covered by the bill of lading.
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Audit
External Audit : An independent examination and appraisal of accounting, financial and related operations by auditors who are not part of the business unit being audited. Internal Audit : An independent examination and appraisal by auditors employed as part of a business unit.
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Auslang
A catalogue system derived from the NATO System used in Australian industry.
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Auslang Dictionary of item Names
A dictionary of names, classifications, definitions, and cross-references for item being identified in Australia, for all industry sectors except mining. See also Mining item Name Directory.
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Authority
Name, appointment or code which restricts or authorises transactions to delegated level.
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Automatic Data Processing
The use of computers and other information - handling machines to stores, organise and perform calculations or large quantities of numerical data with the minimum of human intervention.
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Available Stock
A term usually interpreted to mean material available for planning and thus including not only the on hand inventory but also inventory on order, minus dues-out or stock already committed. Material available for use would, of course, be only the material on hand which has not been assigned.
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Allocation
1. In a computerised application parts list or bill of materials system, an allocated item is one for which a picking slip has been released to the warehouse. Items have been allocated to a job. 2. The term can also refer to the share of goods with limited a availability provided by a supplier to a purchaser.
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Application for New Stock Item (ANSI)
A form of computer screen used to enable users/sponsors to provide details of items they propose should be added to the catalogue or to both the catalogue and active inventory. Sometimes called a new stock request or new item request .
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Automatic Identification
The use of electronic and optical identifying systems to allow computers immediate access to information. See also Bar Coding, Magnetic Stripe, Optical Character Recognition and Radio Frequency Identification.
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Australian Industry Participation (AIP)
A Government policy whereby departments and authorities are required to seek in respect of all major purchases from overseas sources, the opportunity for Australian industry to participate in the production of goods or services by overseas suppliers.
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Acceptance Quality Level
A term used in inspection by the statistical sampling method to denote the highest acceptable ration between the number of faulty parts and total parts in a batch or delivery.
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Acceptance of Order
The agreement of the seller to transfer the property in goods ordered to the buyer for the price. See also Acknowledgement.
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Acquisition Cost
When used in calculating economic order quantities, it refers to the costs which increase as the number of orders placed increases. Includes costs related to the clerical work of preparing, issuing, following and receiving orders, the physical handling of goods, inspections, and machine set-up costs. Often treated as the marginal cost of an additional batch of orders. Ideally, acquisition cost should be calculated on an incremental basis. When this occurs it is termed incremental acquisition cost .
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Acronym
A word formed from the first letter or letters of the words in a term or phrase, for example: RADAR, SCUBA, NATO.
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Availability
Generally a term used to question a supplier s ability to supply an item needed by the operator. Often requested as price and availability. The term is also used in the context of mechanical availability which refers to the proportion of the total time during which an item of equipment may be required to operate that the equipment is in fact available for operation.
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Average Forecast error
The arithmetic mean of the forecast errors, or the exponentially smoothed forecast error. Usually associated with demand forecasting techniques.
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Average Price
Average Price is calculated by dividing the total value of stock of a given item by the total quantity. It is necessary calculate it every time a delivery is received or an invoice variation is approved.
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Acceptance of Offer
The Agreement to accept on offer. An acceptance must be an unconditional assent to the offer or else it is a counter offer.
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Accessory
A choice or feature offered to a customer for customising the end product. In many cases, this term means that the choice does not have to be specified prior to shipment but could in fact be added at a later date. In other cases, however, this choice must be made prior to shipment. Often referred to as attachments.
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Accumulation Bin
This is usually a physical location used to accumulate all of the spares and materials that go to fill an order before sending the assembled requisition or order out to the end user or customer.
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Accuracy Level
A term used to indicate the extent physical and book or life balances agree in an inventory usually in conjunction with a stocktake programme. It is commonly expressed as a percentage that is: Item Where Accounts Agree 100 ----------------------------------------- x -------- Total Items Counted 1
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Acknowledgement of Order
A communication by a Vender or Supplier to confirm to a purchaser that a purchase order has been received. It usually implies acceptance of the order by the supplier subject to the terms of the acknowledgement document. Such terms and conditions may vary and conflict with those stated on the purchase order and thus constitute a counter offer. See also Acceptance of Order .
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Accuracy
The degree of freedom from error, that is, the degree of conformity to some standard. Accuracy is contrasted with precision. For example: four place numbers are less precise that six place numbers, however, a properly computed four place number might be more accurate than an improperly computed six place number.
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Abc Inventory Control
An inventory control approach based on the ABC classification.
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