Equation

Economic Order Quantity (EOQ) Model and Other Related Equations:
𝐷
Annual Ordering Cost: 𝐴𝑛𝑛𝑢𝑎𝑙 𝑂𝑟𝑑𝑒𝑟𝑖𝑛𝑔 𝐶𝑜𝑠𝑡 = 𝐶
𝑄 𝑜
𝑄
Annual Holding Cost: 𝐴𝑛𝑛𝑢𝑎𝑙 𝐻𝑜𝑙𝑑𝑖𝑛𝑔 𝐶𝑜𝑠𝑡 = 𝐶
2 ℎ
2𝐷𝐶𝑜
Economic Order Quantity: 𝐸𝑂𝑄 = 𝑄 ∗ = √ 𝐶ℎ
𝑄
Average Inventory Level: 𝐴𝑣𝑒𝑟𝑎𝑔𝑒 𝐼𝑛𝑣𝑒𝑛𝑡𝑜𝑟𝑦 𝐿𝑒𝑣𝑒𝑙 = 2
Reorder Point when daily demand and lead time are known: 𝑅 = 𝑑𝐿
Reorder Point when daily demand is normally distributed, but the lead time is known: 𝑅 = 𝑑̅𝐿 + 𝑍𝜎𝑑 √𝐿
Reorder Point when daily demand is known, but the lead time is normally distributed: 𝑅 = 𝑑𝐿̅ + 𝑍(𝑑𝜎𝐿 )
Reorder Point when both daily demand and the lead time are normally distributed:
𝑅 = 𝑑̅𝐿̅ + 𝑍 (√𝐿̅𝜎𝑑2 + 𝑑̅2 𝜎𝐿2 )
𝑋−𝜇
How to find Z: 𝑍 = 𝜎
𝑄
Total Annual Holding Cost with Safety Stock: 𝑇𝐻𝐶 = 𝐶
2 ℎ
+ (𝑆𝑆)𝐶ℎ
Production Run Model and Other Related Equations

𝑄 𝑑
Annual Holding Cost: 𝐴𝑛𝑛𝑢𝑎𝑙 𝐻𝑜𝑙𝑑𝑖𝑛𝑔 𝐶𝑜𝑠𝑡 = 2
(1 − 𝑝) 𝐶ℎ
𝐷
Annual Setup Cost: 𝐴𝑛𝑛𝑢𝑎𝑙 𝑆𝑒𝑡𝑢𝑝 𝐶𝑜𝑠𝑡 = 𝐶
𝑄 𝑆
2𝐷𝐶𝑆
Optimal Production Quantity: 𝑄 ∗ = √ 𝑑
𝐶 ℎ (1−𝑝)
Quantity Discount Model (Equations needed)
2𝐷𝐶𝑜
EOQ that includes the price (C): 𝐸𝑂𝑄 = √
𝐼𝐶
𝐷 𝑄
Total Cost: 𝑇𝐶 = 𝐷𝐶 + 𝐶𝑜 + 𝐶ℎ
𝐶 2
Marginal Analysis with Discrete Distributions

𝑀𝐿
Decision Rule: 𝑃 ≥ 𝑀𝑃+𝑀𝐿
Equations Related to Design of Goods and Services

𝑀𝑇𝐵𝐹 ≡ 𝑀𝑒𝑎𝑛 𝑇𝑖𝑚𝑒 𝐵𝑒𝑡𝑤𝑒𝑒𝑛 𝐹𝑎𝑖𝑙𝑢𝑟𝑒𝑠
𝑀𝑇𝑇𝑅 ≡ 𝑀𝑒𝑎𝑛 𝑇𝑖𝑚𝑒 𝑡𝑜 𝑅𝑒𝑝𝑎𝑖𝑟
𝑀𝑇𝐵𝐹
System Availability: 𝑆𝐴 = 𝑀𝑇𝐵𝐹+𝑀𝑇𝑇𝑅
Waiting Line Analysis Equations:

𝜆 ≡ 𝑀𝑒𝑎𝑛 𝐴𝑟𝑟𝑖𝑣𝑎𝑙 𝑅𝑎𝑡𝑒
𝜇 ≡ 𝑀𝑒𝑎𝑛 𝑆𝑒𝑟𝑣𝑖𝑐𝑒 𝑅𝑎𝑡𝑒
The probability that no customers are in the queuing system (either in the queue or being served):
𝜆
𝑃0 = (1 − 𝜇)
𝜆 𝑛
The probability of exactly n customers in the queuing system: 𝑃𝑛 = (𝜇) ∙ 𝑃0
The average number of customers in the queuing system (i.e., the customers being serviced and in the
𝜆
waiting line): 𝐿 =
𝜇−𝜆
𝜆2
The average number of customers in the waiting line: 𝐿𝑞 = 𝜇(𝜇−𝜆)
1
The average time a customer spends in the queuing system (i.e., waiting and being served): 𝑊 =
𝜇−𝜆
𝜆
The average time a customer spends waiting in line to be served: 𝑊𝑞 =
𝜇(𝜇−𝜆)
𝜆
The probability that the server is busy and a customer has to wait, known as the utilization factor: 𝜌 =
𝜇
The probability that the server is idle and a customer can be served: 𝐼 = 1 − 𝜌
Equations Related to Sales and Operations Planning
𝐶𝑢
Optimal Probability of Demand or No-Shows=
𝐶𝑢 +𝐶𝑜
Where 𝐶𝑜𝑠𝑡 𝑜𝑓 𝑈𝑛𝑑𝑒𝑟𝑏𝑜𝑜𝑘𝑖𝑛𝑔 𝑜𝑟 𝑈𝑛𝑑𝑒𝑟𝑒𝑠𝑡𝑖𝑚𝑎𝑡𝑖𝑛𝑔 𝑑𝑒𝑚𝑎𝑛𝑑 ≡ 𝐶𝑢 and

𝐶𝑜𝑠𝑡 𝑜𝑓 𝑂𝑣𝑒𝑟𝑏𝑜𝑜𝑘𝑖𝑛𝑔 𝑜𝑟 𝑂𝑣𝑒𝑟𝑒𝑠𝑡𝑖𝑚𝑎𝑡𝑖𝑛𝑔 𝐷𝑒𝑚𝑎𝑛𝑑 ≡ 𝐶𝑂
Equations Related to Project Management
𝑎+4𝑚+𝑏
Expected Activity Time: 𝑡 = 6
𝑏−𝑎 2
Variance of Activity Completion Time: 𝑉𝑎𝑟𝑖𝑎𝑛𝑐𝑒 = ( )
6
Earliest Finish Time: 𝐸𝐹 = 𝐸𝑆 + 𝑡

Latest Start Time: 𝐿𝑆 = 𝐿𝐹 − 𝑡
Slack: 𝑆𝑙𝑎𝑐𝑘 = 𝐿𝑆 − 𝐸𝑆 𝑜𝑟 𝑆𝑙𝑎𝑐𝑘 = 𝐿𝐹 − 𝐸𝐹
Project Variance: 𝑃𝑟𝑜𝑗𝑒𝑐𝑡 𝑉𝑎𝑟𝑖𝑎𝑛𝑐𝑒 = ∑ 𝑉𝑎𝑟𝑖𝑎𝑛𝑐𝑒 𝑜𝑓 𝐴𝑐𝑡𝑖𝑣𝑖𝑡𝑖𝑒𝑠 𝑜𝑛 𝑡ℎ𝑒 𝐶𝑟𝑖𝑡𝑖𝑐𝑎𝑙 𝑃𝑎𝑡ℎ
Project Standard Deviation: 𝑃𝑟𝑜𝑗𝑒𝑐𝑡 𝑆𝑡𝑎𝑛𝑑𝑎𝑟𝑑 𝐷𝑒𝑣𝑖𝑎𝑡𝑖𝑜𝑛 = √𝑃𝑟𝑜𝑗𝑒𝑐𝑡 𝑉𝑎𝑟𝑖𝑎𝑛𝑐𝑒

Value of Work Completed:
𝑉𝑎𝑙𝑢𝑒 𝑜𝑓 𝑊𝑜𝑟𝑘 𝐶𝑜𝑚𝑝𝑙𝑒𝑡𝑒𝑑 = (𝑃𝑒𝑟𝑐𝑒𝑛𝑡 𝑜𝑓 𝑤𝑜𝑟𝑘 𝑐𝑜𝑚𝑝𝑙𝑒𝑡𝑒𝑑) ∗ (𝑇𝑜𝑡𝑎𝑙 𝐴𝑐𝑡𝑖𝑣𝑖𝑡𝑦 𝐵𝑢𝑑𝑔𝑒𝑡𝑒𝑑)
Activity Difference: 𝐴𝑐𝑡𝑖𝑣𝑖𝑡𝑦 𝐷𝑖𝑓𝑓𝑒𝑟𝑒𝑛𝑐𝑒 = 𝐴𝑐𝑡𝑢𝑎𝑙 𝐶𝑜𝑠𝑡 − 𝑉𝑎𝑙𝑢𝑒 𝑜𝑓 𝑊𝑜𝑟𝑘 𝐶𝑜𝑚𝑝𝑙𝑒𝑡𝑒𝑑
𝐶𝑟𝑎𝑠ℎ 𝐶𝑜𝑠𝑡−𝑁𝑜𝑟𝑚𝑎𝑙 𝐶𝑜𝑠𝑡
Crash Cost per Time Period: 𝐶𝑟𝑎𝑠ℎ 𝐶𝑜𝑠𝑡 𝑝𝑒𝑟 𝑇𝑖𝑚𝑒 𝑃𝑒𝑟𝑖𝑜𝑑 = 𝑁𝑜𝑟𝑚𝑎𝑙 𝑇𝑖𝑚𝑒−𝐶𝑟𝑎𝑠ℎ 𝑇𝑖𝑚𝑒

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Economic Order Quantity (EOQ) Model and Other Related Equations:

𝑅 = 𝑑̅𝐿̅ + 𝑍 (√𝐿̅𝜎𝑑2 + 𝑑̅2 𝜎𝐿2 )

Production Run Model and Other Related Equations

Quantity Discount Model (Equations needed)

Marginal Analysis with Discrete Distributions

Equations Related to Design of Goods and Services

Waiting Line Analysis Equations:

Where 𝐶𝑜𝑠𝑡 𝑜𝑓 𝑈𝑛𝑑𝑒𝑟𝑏𝑜𝑜𝑘𝑖𝑛𝑔 𝑜𝑟 𝑈𝑛𝑑𝑒𝑟𝑒𝑠𝑡𝑖𝑚𝑎𝑡𝑖𝑛𝑔 𝑑𝑒𝑚𝑎𝑛𝑑 ≡ 𝐶𝑢 and

Earliest Finish Time: 𝐸𝐹 = 𝐸𝑆 + 𝑡

Project Standard Deviation: 𝑃𝑟𝑜𝑗𝑒𝑐𝑡 𝑆𝑡𝑎𝑛𝑑𝑎𝑟𝑑 𝐷𝑒𝑣𝑖𝑎𝑡𝑖𝑜𝑛 = √𝑃𝑟𝑜𝑗𝑒𝑐𝑡 𝑉𝑎𝑟𝑖𝑎𝑛𝑐𝑒

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