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KEY EQUATIONS

CHAPTER 1: Competing with Operations

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


Output
Productivi ty =
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 t ime)
6
2
b −a 
σ2 =  (Variance)
 6 
5. z-transformation formula:
T − TE
z=
σ2
where
T = due date for the project
TE = (expected activity times on the critical path)
= mean of normal distribution
σ = 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:
( ∑ xi ) 2

σ =
∑ ( xi − x ) 2 or σ =
∑ x 2
− n

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, σ , is known:
Upper control limit = UCL x = x + zσ x
Lower control limit = LCL x = x − zσ x
where
σ
σx =
n
4. Control limits for attribute process control charts
a. p-chart, proportion defective:
Upper control limit = UCL p = p + zσ p
Lower control limit = LCL p = p − zσ p
where
σp = 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 specificat ion − Lower specificat ion
Cp =

6. Process capability index:
C pk = Minimum of
 x − Lower specificat ion Upper specificat ion − x 
 , 
 3σ 3σ 