ADMS 3351 Formula Sheet Page |1

ADMS 3351
Formula Sheet
&
Tables
ADMS 3351 Formula Sheet Page |2

Cash Conversion Cycle = Days Sales Outstanding + Days Inventory - Payable Period

Annual credit sales

Receivables turnover 
Average account receivable

Cost of goods sales

Inventory turnover 
Average inventory value

Revenue (or sales)

Asset turn over 
Total Assets

Outputs
Productivity 
Inputs

Output Output Output Output

Partial measure  or or or
Labor Capital Materials Energy

Output Output
Multifactor measure  or
Labor  Capital  Energy Labor  Capital  Materials

Output Goods and services produced

Total measure  or
Inputs All resources used

Purchase cost of process or equipment

Break - even Demand 
Price per unit - Cost per unit

Or

Total fixed costs of process or equipment


Unit price to customer - Variable costs per unit
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Expected time (ET):
a  4m  b
ET 
6

Variance of the activity times:

2
ba
2  
 6 

Z Transformation:

D T
Z
 2
cp

Maximum time activity may be shortened OR Allowable crash time = Normal time – Crash time

Crash Cost - Normal Cost

Crash Cost per time period (slope) 
Allowable crash time

Inventory = Throughput rate x Flow time

Production time per day

C
Required output per day (in units)

Sum of all task times (T)

Nt 
Cycle time (C)

Sum of all task time s (T)

Efficiency =
Actual number of workstati ons (N a ) x Worksta tion cycle time (C)
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Waiting Line Analysis

(T ) n T
Poisson Process density function P(n)  e
n!
Exponential Service Time: density function 𝑓(𝑡) = 𝜇𝑒

Model 1 Model 2 Model 3

1 
= 
s 

P0  (1  )

 
Pn  (1  )( ) n
 
  
Ls = Ls = Lq  Ls = Lq 
 -  
2 2
Lq =
 ( -  ) Lq =
2 (  -  )
Ls Ls Ls
Ws = Ws = Ws =
  
Lq Lq
Wq = Wq =
 

Pw  s
 Pw = Lq( - 1)

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Managing Quality

Defects per million opportunities: DPMO 

Number of Defects
 1000000
Number of opportunit ies for error per unit  Number of units
é X  LSL USL  X ù
C pk  min ê , ú
êë 3 3 úû

Total numbers of defects from all samples

p
Number of samples  Sample size

p(1  p)
Sp 
n

UCL  p  zS p and LCL  p  zS p

_ _ _ _ _
Sc = c , UCL = c z c LCL = c z c

If standard deviation of the process distribution is known as , then UCLX  X  zSX and LCLX  X  zS X
, 𝑤ℎ𝑒𝑟𝑒 𝑆 =
√
n m m

 Xi X
j 1
j R
j 1
j
X  i 1
, X  , R
n m m

If standard deviation of the process distribution is not known, then

Upper control limit for X  X  A2 R

Lower control limit for X  X  A2 R
Upper control limit for R  D 4 R
Lower control limit for R  D3 R
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Factor for Determining the Three-Sigma Process Control Limits for X-bar and R Charts
(from Exhibit 10.13)

Number of Observations Factor for X Chart Factors for R-Chart

In Subgroup A2 Lower control Limit (D3) Upper control Limit(D4)
n
2 1.88 0 3.27
3 1.02 0 2.57
4 0.73 0 2.28
5 0.58 0 2.11
6 0.48 0 2.00
7 0.42 0.08 1.92
8 0.37 0.14 1.86
9 0.34 0.18 1.82
10 0.31 0.22 1.78
11 0.29 0.26 1.74
12 0.27 0.28 1.72
13 0.25 0.31 1.69
14 0.24 0.33 1.67
15 0.22 0.35 1.65
16 0.21 0.36 1.64
17 0.20 0.38 1.62
18 0.19 0.39 1.61
19 0.19 0.40 1.60
20 0.18 0.41 1.59
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Forecasting

At 1  At  2  At 3  ...  At  n
Ft 
n
Managing Quality
Ft  w1 At 1  w2 At  2  ...  wn At  n
Excerpt from a Sample Plan Table for α = 0.05, β=0.10
Exponential smoothing:
Ft  Ft 1   ( At 1  Ft 1 ) c LTPD / AQL n x AQL
0 44.890 0.052
Forecasting including trend: 1 10.946 0.355
2 6.509 0.818
FITt  Ft  Tt 3 4.890 1.366
4 4.057 1.970
Ft  FITt 1   ( At 1  FITt 1 ) 5 3.549 2.613
6 3.206 3.286
7 2.957 3.981
Tt  Tt 1   ( Ft  FITt 1 ) 8 2.768 4.695
9 2.618 5.426

Aggregate Planning

Total production over planning horizon = (Total forecast demand in planning horizon) + (Planned inventory
at end of planning horizon) – (Opening inventory)

Material Requirements Planning:

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Inventory Management

Deterministic Demand Models

Inventory position = On hand + On Order – Backorder

D Q 2 DS _
TC  DC  S  H EOQ = Qopt  RdL
Q 2 H

Variable Demand Models

_
Reorder point: R  d L  z L


n
(d i  d ) 2
 d
 i 1

L
 L    2d  L d   d L
2

d1


q  d (T  L)  z  T  L  I

T L

 T L  
2
d
d 1

 Cost of goods sold 

Inventory turnover   
 Average aggregate inventory value 

D
Average Inventory value = (Q/2 + SS)C Inventory turn 
(Q / 2  SS )

Newsvendor Model:

Cu = Cost of Understocking, Co = Cost of Overstocking, Q* = Optimal Order Quantity

Optimal Q* is the smallest Q value for which

Cu
Pr(Demand £ Q* ) ³
Cu  Co
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