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Production Management Formulas

This document contains formulas and definitions for production management, forecasting, availability measures, productivity measures, cost volume analysis, capacity measures, center of gravity, reliability measures, order cycle length, and economic order quantity. Some key points include: 1. Forecasting methods include naive, simple moving average, weighted average, and exponential smoothing. 2. Availability is defined as MTBF / (MTBF + MTR) where MTBF is mean time between failures and MTR is mean time to repair. 3. Productivity can be measured in various ways including output per input, output per single input, and output per all inputs. 4. Cost volume analysis looks at variables like fixed costs

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Anthony Royupa
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Download as DOC, PDF, TXT or read online on Scribd
671 views

Production Management Formulas

This document contains formulas and definitions for production management, forecasting, availability measures, productivity measures, cost volume analysis, capacity measures, center of gravity, reliability measures, order cycle length, and economic order quantity. Some key points include: 1. Forecasting methods include naive, simple moving average, weighted average, and exponential smoothing. 2. Availability is defined as MTBF / (MTBF + MTR) where MTBF is mean time between failures and MTR is mean time to repair. 3. Productivity can be measured in various ways including output per input, output per single input, and output per all inputs. 4. Cost volume analysis looks at variables like fixed costs

Uploaded by

Anthony Royupa
Copyright
© Attribution Non-Commercial (BY-NC)
Available Formats
Download as DOC, PDF, TXT or read online on Scribd
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RSEL 2012

PRODUCTION MANAGEMENT FORMULAS FORECASTING


1. Nave Approach Forecast for a certain period is equal to the actual demand/sale of the previous. Example: Actual Forecast June 55 July 60 55 Or 60-55 = 5 therefore forecast for July is 65 (60 +5).

the previous period.

5. Linear Equation

Y = b 0 + b1 X
Where:

b0 = y - b1 x n b1 = n(xy) -

xy nx - (x)
2. Simple Moving Average

Ft =

At- n At- = actual value (e.g


demand per

Where:

Where:

Y = Forecast for a period x = Period (1, 2, 3) y = demand/sales amount per


period n = no. of period

period)

n Ft

= no. of period = forecast for a

b0 = vertical axis intercept of


the line b1 = slope of the line

period

6. Linear Trend Equation


3. Weighted Average

Ft = a + bt
Where:

Ft = (Weight)(At1) + (Weight)(At2) + (Weight)(At3) +

b = nty - ty nt - (t) a = y bt n
Method Advantage Disadvantage Nave - No cost - inability to provide highly -Quick and accurate forecast easy to prepare -Easily understandable SMA values are - Easy to compute - all

4. Exponential Smoothing

Ft = Ft-1 + (At-1 - Ft-1)


Where:
period

Ft Ft-1
=

= forecast for a

forecast of the period


= smoothing = actual

previous

constant

and understand - Most reflective of - choice of

weighted equally WMA weights

At-1 demand/sales for

RSEL 2012
most recent occu arbitrary and involves trial and to find ble scheme. Exp. Smoothing - Easy to calculate - Ease with which weighted scheme can be altered simply by changing the value of . is -rence error suita

AVAILABILITY MEASURES
Availability = MTBF___ MTBF + MTR

Where: MTBF = Mean Time Before Failures MTR = Mean Time Repair

Tool Required Time Needed per Machine

Processing

Time Capacity

PRODUCTIVITY MEASURES
1. Productivity Productivity Output_____ X hrs of work 2. Partial Measures Productivity = Output___ Single Input = Input Output Input

COST VOLUME ANALYSIS


Total Cost = FC + VC Variable Cost = Q x v Total Revenue = Rev x Q 1. Breakeven

QBEP =

FC___ Rev - VC

3. Multi-factor Measures Productivity = Output___ Multiple Input

2. Profit (loss) P = Q (Rev v) FC 3. Quantity Q= 4. Price P + FC Rev - v

4. Total Measures Productivity = Output_ All Input

CAPACITY MEASURES
Efficiency = 100 Actual Output X

P = Q ( R v ) FC

CENTER OF GRAVITY
1. Draw a Map 2. Find the average of the x-coordinates and coordinates

Effective Capacity Utilization = 100 Actual Output X

y-

Design Capacity ***Increase capacity through increasing capacity. utilization effective

X = X n

Y = Y n

3. If no. of units to be shipped is not the same for all

RSEL 2012

destinations, which is always the case:

Length of an Order Cycle

Q0 D

workdays

X = XQ XQ Q

X = Q

Number of order per year = D


order

RELIABILITY MEASURES
Rule 1: if both will be used PSUCCESS = P1 x P2 Rule 2: if only one will be used and probability of success is equal PSUCCESS = P1 + (1 - P1) x P2 Rule 3: three or more PSUCCESS = 1 - [(1 - P1) x (1P2) x ((1- Pn)

Q0

ECONOMIC QUANTITY (EOQ)

ORDER

Used to identify fixed order size that will minimize the sum of the annual costs of holding inventory and ordering inventory. Q = order quantity in units H = Holding/ Carrying costs per unit S = Ordering Cost D= Demand Q0= EOQ Annual Carrying Cost = Q

2
Annual Ordering Cost = D S

Q
Total Annual Cost =

Q H + 2

DS Q
EOQ = Q0 =

2DS H

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