FORMULA SHEET

Variables Continued
Total Annual Cost for an Order Q q = quantity to be ordered
P = Number of time units between reviews
D Q R = Reorder point
TC  S H
Q 2 Ip = Inventory position

H = KC
Queuing:
D = Annual Demand  = average customer arrival rate
Q = Order Quantity  = average service rate
S = Setup or Ordering Cost  = utilization = 
H = Holding Cost W = average waiting time in system
K = Holding Cost Rate Wq = average waiting time in line
C = Unit Cost L = average number in the system
Lq = average number of customer in line

Economic Order Quantity: W  Wq  1 / 

2 DS LW
Q
H Lq   Wq


Wq 
Reorder Point Model (Continuous  (   )
Review Model)

R = dL + SS
SS = z d L

Periodic Review Model

q = d ( P  L )  z  d P  L - Ip
SS = z d P  L
P = Q/d

Variables
L = Lead time for replenishment
d = Average demand per unit time
sd = Standard deviation of demand
SS = Safety inventory
Z = Safety factor (number of standard
deviations for a specified service
probability)

1
 Formula Summary

Statistical Process Control (X-bar / R Charts)

Control Chart Factors k = number of samples, n = sample size

n A2 D3 D4 X 
 xi
n
2 1.880 0.000 3.267 X 
X
k
3 1.023 0.000 2.575
R
R
4 0.729 0.000 2.282 k
5 0.577 0.000 2.115 UCLR  D 4 R
LCLR  D 3 R
6 0.483 0.000 2.004
UCLX  X  A2 R
7 0.419 0.076 1.924
LCLX  X  A2 R
8 0.373 0.136 1.884
9 0.337 0.184 1.816 Statistical Process Control (P Chart)
10 0.308 0.223 1.777
p
p
k
p 1  p 
p 
n
UCLp  p  zp
LCLp  p  zp

Process Capability Index

 USL  X X  LSL 
CPk  min  , 
 3 3 