Glossary Terms Archive

Carrying Costs: Formula, Benchmarks, and How Lean Six Sigma Reduces Them

Carrying costs — also called inventory holding costs — are the total annual expenses a business incurs for keeping inventory on hand. They cover the capital tied up in stock, the physical cost of storing it, insurance and taxes, and the risk that products will become...

Arrow Diagram Guide: AOA vs AON Network Methods

Project managers worldwide rely on visual tools to transform complex schedules into clear, actionable roadmaps. Among these essential tools, the arrow diagram stands as one of the most powerful techniques for mapping project activities, dependencies, and critical...

Six Sigma Executive Committee: How to Build One That Works

A Six Sigma executive committee is the senior leadership body responsible for governing a Lean Six Sigma deployment. It approves the improvement portfolio, allocates budget and staff, removes cross-functional barriers, and reviews project results against strategic...

Economic Order Quantity (EOQ): Formula, Example, and Lean Fit

Economic Order Quantity (EOQ) is the order size that minimises a company’s total inventory cost by balancing two competing costs: the cost of placing orders and the cost of holding inventory. Order too often, and ordering costs pile up; order too much at once,...

Deming Cycle: History, PDSA vs. PDCA, and the Real Story

The Deming Cycle (also called the Deming Wheel or Shewhart Cycle) is a four-step, iterative approach to solving problems and improving processes, most commonly known by the acronym PDCA (Plan-Do-Check-Act). Its roots trace to physicist Walter Shewhart, who described a...