Operations Management: An Integrated Approach, 5th Edition

Formula Review

1. Calculating average transportation inventory (ATI):

   

   where t = transit time in days and D = annual demand in units.

2. Calculating inventory turnover and periods of supply:

   

3. Calculating target inventory (TI):

   TI = d(RP + L) + SS

   where d = average daily demand, RP = review period in days, and SS = safety stock.

4. Calculating safety stock in a periodic review model:

   

   Standard deviation of demand during review period and lead time:

   

5. Calculating reorder point without safety stock:

   R = dL

   where d = average daily demand and L = lead time in days.

6. Calculating the economic order quantity (EOQ):

   

   where D = annual demand, S = ordering cost, and H = holding cost.

7. Calculating total costs:

   

8. Calculating the economic production quantity (EPQ)

   

9. Calculating total costs:

   where I_Max is the maximum ...