FE Industrial Glossary
Key terms and definitions for the Industrial and Systems Engineering exam.
Standard Deviation
A measure of the spread of data values around the mean. Calculated as the square root of the variance. In quality control, used to set control limits and measure process variability.
Expected Value
The weighted average of all possible outcomes of a random variable, where weights are the probabilities of each outcome. Represents the long-run average of repeated experiments.
Present Worth
The current value of a future sum of money or stream of cash flows given a specified rate of return. Found by discounting future values using the present worth factor (P/F, i, n).
Depreciation
The systematic allocation of the cost of a tangible asset over its useful life. Common methods include straight-line, declining balance, and Modified Accelerated Cost Recovery System (MACRS).
PERT (Program Evaluation and Review Technique)
A project scheduling method that uses probabilistic time estimates (optimistic, most likely, pessimistic) for activities. Calculates expected duration and variance for each activity on the critical path.
Critical Path
The longest sequence of dependent activities in a project network that determines the minimum project duration. Activities on the critical path have zero float.
Linear Programming
A mathematical optimization technique that finds the best outcome in a model with linear constraints and a linear objective function. Solved using the simplex method or graphical methods.
EOQ (Economic Order Quantity)
The optimal order quantity that minimizes total inventory costs, including ordering costs and holding costs. Calculated using the Wilson formula: square root of (2 times demand times order cost divided by holding cost).
Process Capability Index (Cpk)
A statistical measure comparing the output of a process to its specification limits, accounting for how centered the process is. A Cpk of 1.33 or higher is generally considered capable.
Control Chart
A statistical tool that plots process data over time with upper and lower control limits to distinguish between common-cause and special-cause variation. Types include X-bar, R, p, and c charts.
Little Law
A fundamental relationship in queuing theory: the average number of items in a system equals the average arrival rate multiplied by the average time an item spends in the system (L = lambda times W).
Poisson Distribution
A discrete probability distribution that models the number of events occurring in a fixed interval when events occur independently at a constant average rate. Used for arrival processes in queuing.
Normal Distribution
A continuous probability distribution characterized by its bell-shaped curve, defined by its mean and standard deviation. The basis for many statistical tests and quality control methods.
Benefit-Cost Ratio
The ratio of the present value of benefits to the present value of costs for a project. A ratio greater than 1 indicates the project is economically justified.
Ergonomics
The study of designing workplaces, products, and systems to fit the people who use them. Includes anthropometry, biomechanics, and work physiology to prevent musculoskeletal disorders.
Simulation
The use of a computer model to imitate the behavior of a real-world process over time. Used when analytical solutions are not feasible, especially for stochastic systems.
Acceptance Sampling
A statistical quality control procedure where a random sample from a lot is inspected to decide whether to accept or reject the entire lot. Defined by sample size and acceptance number.