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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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