KEY EQUATIONS

CHAPTER 1: Competing with Operations

1. Productivity is the ratio of output to input, or

Output
Productivity 
Input
to accompany SUPPLEMENT A: Decision Making

F
1. Break-even volume: Q  p  c
Fm  Fb
2. Evaluating process, make-or-buy indifference quantity: Q 
cb  c m

CHAPTER 2: Project Management

1. Start and finish times:

ES = max (EF times of all activities immediately preceding activity)
EF = ES + t
LS = LF – t
LF = min (LS times of all activities immediately following activity)
2. Activity slack:
S = LS – ES   or   S = LF – EF
3. Project costs:
Crash cost – Normal cost CC – NC
Cost to crash per unit of time = 
Normal time – Crash time NT – CT
4. Activity time statistics:
a  4m  b
te  (Expected activity time)
6
2
ba
2   (Variance)
 6 
5. z-transformation formula:
T  TE
z
2
where
 T = due date for the project
TE = (expected activity times on the critical path)
= mean of normal distribution
 = Σ (variances of activities on the critical path)
2

CHAPTER 3: Process Strategy

1. Euclidean distance:   d AB  ( x A  x B ) 2  ( y A  y B ) 2
2. Rectilinear distance:   d AB  x A  x B  y A  y B

CHAPTER 5: Quality and Performance

1. Mean: x i
x i 1

n
2. Standard deviation of a sample:

 x  x x  n i
2 2 ( x )2
i
 or 
n 1 n 1
3. Control limits for variable process control charts
a. R-chart, range of sample:
Upper control limit  UCL R  D4 R
Lower control limit  LCL R  D3 R
b. x-chart, sample mean:
Upper control limit  UCL x  x  A2 R
Lower control limit  LCL x  x  A2 R
c. When the standard deviation of the process distribution, , is known:
Upper control limit  UCL x  x  z x
Lower control limit  LCL x  x  z x
where

x 
n
4. Control limits for attribute process control charts
a. p-chart, proportion defective:
Upper control limit  UCL p  p  z p
Lower control limit  LCL p  p  z p
where
p  p (1  p ) n
b. c-chart, number of defects:
Upper control limit  UCL c  c  z c
Lower control limit  LCL c  c  z c
5. Process capability ratio:
Upper specification  Lower specification
Cp 
6
6. Process capability index:
 C pk  Minimum of
 x  Lower specification Upper specification  x 
 , 
 3 3 