Formulas_Final_70371_December_2008_1

# Formulas_Final_70371_December_2008_1 - Formula Sheet 1...

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Formula Sheet 1. Productivity Productivity = Output/Input 2. Process Analysis Little's Law: I= T * R, where I inventory, R the throughput rate and T the flow time. 3. Inventory Management Notation: D= average annual demand; S = average cost of processing an order (or making a production setup) H = average cost of holding an item in inventory a year a) Economic Order Quantity H DS 2 * Q = b) Fixed Order Quantity Models Safety Stock Service level = 1- Probability of Stockout Safety stock computations for continuous distribution of demand L = lead time L µ = mean demand over the lead time; L σ = standard deviation of demand over the lead time Reorder point = ROP = L + L z Safety Stock = SS = L z , where z = number of standard deviations from the mean demand required to achieve the desired service level. Case 1: Variable demand rate N( d , d σ ), constant lead time L d L z L d ROP × × + × = value inventory aggregate Average sold goods of Cost turnover Inventory =

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Let d be the demand and d σ the standard deviation of demand over unit time, then we can determine the mean demand over the lead time as L d L × = µ
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Formulas_Final_70371_December_2008_1 - Formula Sheet 1...

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