Inventory & Material Mangement Formulas
Two period Moving Average
Y_{t} = forecasted demand for period t
Y_{ti}=actual demand in period ti
Y_{ti} n= number of period included in moving average
Y_{t}= 
n
Regression Analysis
Slope Intercept formula: y=ax+b
where: y=Y intercept
t_{i}Y_{i}  ( t_{i})( Y_{i})
b= 
nt^{2}  (t_{i})^{2}
Y_{i}  b t_{i}
a= 
n
[nt_{i}Y_{i}  (t_{i}) (Y_{i})]^{2}
Correlation Coefficient = 
[ n t^{2}  (t_{i})^{2}][ n Y^{2}  (Y_{i})^{2}]
Economic Order Quantity
 Where: Q = Economic Order Quantity
/ 2CR C = Cost of order
Q= \ /  R = Annual demand in units
\ / H H = PF = Annual holding cost
P = Purchase cost of an item
F = Annual holding cost as a fraction of unit cost
R
m =  = expected Number of Orders / year
Q

1 Q / 2C
T =  =  = \ /  = Average order interval
m R V RH
RL RL
B =  = Reorder point B = 
12 52
Where: L = Lead time in months Where: L = Lead time in weeks
TC = RP + HQ Where TC = Minimum Annual Cost
Economic Order Quantity with Backordering
  Where: Q = Economic Order Quantity
/ 2CR / H + K C = Cost of order
Q = \ /  \ /  R = Annual demand in units
\ / H \ / K H = PF = Annual holding cost
P = Purchase cost of an item
F = Annual holding cost as a fraction of unit cost
K = Backordering cost per unit per year
V = Maximum inventory level in units
 
/ 2CR / K
V = \ /  \ / 
\ / H \ / H + K
RL
R =   (Q  V) Where: N = Number of operating days in a year
N L = Lead time in days
Q  V
D =  = Where: D = Longest dalay time
R
R
CR HV^{2} K(Q  V)^{2} Where:  = Number of orders per year
TC = RP +  +  +  = Total Cost Q
Q 2Q 2Q
References:
 Principles of Inventory and Material Management
Richard J. Tersine
 An Introduction to Management Science Quantitative Approaches to Decision Making
David R. Anderson, Dennis J. Sweeney, Thomas A. Williams

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