First In First Out (FIFO) Materials Management Vocabulary

 

 

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FEE
In cost reimbursement contracts , an agreed upon amount beyond the initial cost estimate , usually reflecting a variety of factors, including risk and services. The fee may be fixed initially (Cost-plus-fixed-fee arrangement) or it may vary (cost-plus-incentive-fee or cost-plus-award-fee arrangement)
FIFO
First in - First out, describes the flow of inventory. It is average costing where rather than keeping track of the inventory value of individual units of the same item separately, they are averaged so that all units of the same items of inventory have the same value
Fill Rate
The percentage of requisitions filled from stock present on the shelf. The inverse of it is "Stock out rate"
Financial Lease
Financing for the full life of a piece of equipment
Finished Goods
Goods that have completed the manufacturing or assembly process and are ready for sale to external customers
Firm Bid
It's a legal offer to sell which can become a contract simply on acceptance by the buyer
Force Majeure
Major and  usually uncontrollable events, that excuse a party from the performance of its obligations. The contract provision is referred to as the "Act of God" and is kept in the contract to protect both the purchaser as well as the supplier
Forecasting
Projection of future business conditions and their impact on the organisation
Foreign Freight Forwarder
A party that acts to arrange for export and import movement of goods for shippers and consignees
Form, Fit & Function
An overall quality related term common in purchase agreements that encompasses the physical attributes of something (from), its desired outputs or performance (function) and fitness (appropriate for the application)
Forward Buying
Buying in excess of current requirements, as a strategy because of an anticipated shortages, strikes, price increase etc
Free Alongside Vessel
Under this arrangement, the supplier agrees to deliver the goods in proper condition along side the vessel. The buyer assumes all subsequent risks and expenses after delivery to the pier 
Free On Board
These are shipping terms under which title is transferred between the supplier and the purchaser at the FOB point. There are many arrangements under FOB such as:

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FOB destination : Under it the seller bears risk until the goods are transported to the buyer's dock, after which the risk will pass to the buyer.

FOB destination, Freight collect : Title passes from the supplier to the buyer at the destination point and freight charges are the responsibility of the purchaser. The supplier owns the goods in transit and is responsible for filling loss and damage claims against the carrier, but the purchaser pays and bears the freight charges and files any overcharge claims.

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FOB destination, Freight prepaid : Title passes from the supplier to the buyer at destination point and freight charges are paid by the supplier. The supplier pays and bears the freight charges, owns the goods in transit and may file claims for overcharges, loss and damage.

FOB destination, Freight prepaid and Invoiced : Title passes at the destination point, freight charges are paid by the supplier and added to the invoice. The supplier pays the freight charges, owns the goods in transit and  file claims for overcharges, loss and damage. The purchaser ultimately bears the freight charges.

FOB Origin : The seller bears the risk until it loads the goods onto an appropriate carrier after which the buyer assumes the risk of loss and must claim against the carrier for damage or loss in transit.

FOB Origin, Freight allowed : Purchaser obtains title where the shipment originates and is responsible for all claims against the carrier but the supplier pays the freight charges.

FOB Origin, Freight Collect : Title passes on to the buyer at the point of origin and the buyer must pay the freight charges. The buyer owns the goods in transit and files all claims against the carrier.

FOB Origin, Freight Prepaid and Invoiced : Title passes to the buyer at the point of origin , freight charges are paid by the supplier and then collected from the purchaser by adding them to the invoice. The supplier pays the freight charges and files claims for overcharges. The purchaser bears the freight charges , owns the goods in transit and files claims for loss and damage with the carrier.
Free Trade
The uninhibited flow of goods and services across national boundaries
Free Trade Zone
A site in which imported goods are exempted from custom duties. Countries establish it to encourage economic development such as manufacturing and distribution
Freight Bill
The carrier's invoice for transportation charges applicable to a shipment
Freight Claim
A claim against a carrier due to loss of , or damage to, goods transported by that carrier, also for erroneous rates and weights in assessment of freight charges
Freight Forwarder
A third party , licensed to make transportation arrangements
Functional Acknowledgement
A standardised EDI form that indicates the receipt of a shipment. It is automatically generated and sent back to the shipping organisation.
Futures Contracts
Contracts for the purchase or sale and delivery of commodities or currencies at a specified future date, primarily used as a hedging device against market price fluctuations or unforeseen supply shortages
Fair-share Quantity Logic
In inventory management, the process of equitably allocating available stock among field distribution centers. Fair-share quantity logic is normally used when stock available from a central inventory location is less than the cumulative requirements of the field stocking locations. The use of fair-share quantity logic involves procedures that “push” stock out to the field, instead of allowing the field to “pull” in what is needed. The objective is to maximize customer service from the limited available inventory.
Field Finished Goods
Inventory which is kept at locations outside the four walls of the manufacturing plant (i.e., distribution center or warehouse).
Field warehouse
A warehouse on the property of the owner of the goods that stores goods that are under the custody of a bonafide public warehouse manager. The public warehouse receipt is used as collateral for a loan.
Finished Goods Inventory (FG or FGI)
Products completely manufactured, packaged, stored, and ready for distribution.
Finite Forward Scheduling
An equipment scheduling technique that builds a schedule by proceeding sequentially from the initial period to the final period while observing capacity limits. A Gantt chart may be used with this technique.
First In, First Out (FIFO)
Warehouse term meaning first items stored are the first used. In accounting this tem is associated with the valuing of inventory such that the latest purchases are reflected in book inventory. Also see: Book Inventory
Fixed Costs
Costs, which do not fluctuate with business volume in the short run. Fixed costs include items such as depreciation on buildings and fixtures.
Fixed interval inventory model
A setup wherein each time an order is placed for an item, the same (fixed) quantity is ordered.
Fixed Order Quantity
A lot-sizing technique in MRP or inventory management that will always cause planned or actual orders to be generated for a predetermined fixed quantity, or multiples thereof if net requirements for the period exceed the fixed order quantity.
Fixed Reorder Cycle Inventory Model
A form of independent demand management model in which an order is placed every “n” time units. The order quantity is variable and essentially replaces the items consumed during the current time period. Let “M” be the maximum inventory desired at any time, and let x be the quantity on hand at the time the order is placed. Then, in the simplest model, the order quantity will be M – x. The quantity M must be large enough to cover the maximum expected demand during the lead time plus a review interval. The order quantity model becomes more complicated whenever the replenishment lead time exceeds the review interval, because outstanding orders then have to be factored into the equation. These reorder systems are sometimes called fixed-interval order systems, order level systems, or periodic review systems. Synonyms:
Fixed Reorder Quantity Inventory Model
A form of independent demand item management model in which an order for a fixed quantity is placed whenever stock on hand plus on order reaches a predetermined reorder level. The fixed order quantity may be determined by the economic order quantity, by a fixed order quantity (such as a carton or a truckload), or by another model yielding a fixed result. The reorder point may be deterministic or stochastic, and in either instance is large enough to cover the maximum expected demand during the replenishment lead time. Fixed reorder quantity models assume the existence of some form of a perpetual inventory record or some form of physical tracking, e.g., a two-bin system that is able to determine when the reorder point is reached.
Fixed-Location Storage
A method of storage in which a relatively permanent location is assigned for the storage of each item in a storeroom or warehouse. Although more space is needed to store parts than in a random-location storage system, fixed locations become familiar, and therefore a locator file may not be

 

 

 

 

 

 

 

 

needed. Also see: Random-Location Storage Flag of convenience: A ship owner registers a ship in a nation that offers conveniences in the areas of taxes, manning, and safety requirements; Liberia and Panama are two nations known for flags of convenience.
FOB Destination
Title passes at destination, and seller has total responsibility until shipment is delivered.
FOB Origin
Title passes at origin, and buyer has total responsibility over the goods while in shipment.
For-hire carrier
A carrier that provides transportation service to the public on a fee basis.
Forecast
An estimate of future demand. A forecast can be constructed using quantitative methods, qualitative methods, or a combination of methods, and it can be based on extrinsic (external) or intrinsic (internal) factors. Various forecasting techniques attempt to predict one or more of the four components of demand:
cyclical, random, seasonal, and trend
Forecast Cycle
Cycle time between forecast regenerations that reflect true changes in marketplace demand for shippable end products.
Forklift truck
A machine-powered device that is used to raise and lower freight and to move freight to different warehouse locations.
Fourth-Party Logistics (4PL)
Differs from third party logistics in the following ways; 1)4PL organization is often a separate entity established as a joint venture or long-term contract between a primary client and one or more partners; 2)4PL organization acts as a single interface between the client and multiple logistics service providers; 3) All aspects (ideally) of the client’s supply chain are managed by the 4PL organization; and, 4) It is possible for a major third-party logistics provider to form a 4PL organization within its existing structure (Strategic Supply Chain Alignment; John Gattorna).
Free Alongside Ship (FAS)
A term of sale indicating the seller is liable for all changes and risks until the goods sold are delivered to the port on a dock that will be used by the vessel. Title passes to the buyer when the seller has secured a clean dock or ship’s receipt of goods.
Free on Board (FOB)
Contractual terms between a buyer and a seller, that define where title transfer takes place.
Freezing inventory balances
In most cycle counting programs the term "freezing" refers to copying the current on-hand inventory balance into the cycle count file. This may also be referred to as taking a snapshot of the inventory balance. It rarely means that the inventory is actually frozen in a way that prevents transactions from occurring.
Freight-all-kinds (FAK)
An approach to rate making whereby the ante is based only upon the shipment weight and distance; widely used in TOFC service.
Freight bill
The carrier’s invoice for transportation charges applicable to a freight shipment.
Freight Consolidation
The grouping of shipments to obtain reduced costs or improved utilization of the transportation function. Consolidation can occur by market area grouping, grouping according to scheduled deliveries, or using third-party pooling services such as public warehouses and freight forwarders.
Freight Forwarder
An organization which provides logistics services as an intermediary between the shipper and the carrier, typically on international shipments. Freight forwarders provide the ability to respond quickly and efficiently to changing customer and consumer demands and international shipping (import/export) requirements.
Frozen Zone
In forecasting, this is the period in which no changes can be made to scheduled work orders based on changes in demand. Use of a frozen zone provides stability in the manufacturing schedule.

 

 

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