Appendix A

Areas for the

Cumulative Standard
Normal Distribution
Entries in the table give the area under the standard normal distribution
less than z. For example, for z = -1.25, the area below z is 0.10565.
The first half of the table applies to negative values of z.
—` z 0

z 0 0.01 0.02 0.03 0.04 0.05 0.06 0.07 0.08 0.09

-3.9 0.00005 0.00005 0.00004 0.00004 0.00004 0.00004 0.00004 0.00004 0.00003 0.00003
-3.8 0.00007 0.00007 0.00007 0.00006 0.00006 0.00006 0.00006 0.00005 0.00005 0.00005
-3.7 0.00011 0.00010 0.00010 0.00010 0.00009 0.00009 0.00008 0.00008 0.00008 0.00008
-3.6 0.00016 0.00015 0.00015 0.00014 0.00014 0.00013 0.00013 0.00012 0.00012 0.00011
-3.5 0.00023 0.00022 0.00022 0.00021 0.00020 0.00019 0.00019 0.00018 0.00017 0.00017

-3.4 0.00034 0.00032 0.00031 0.00030 0.00029 0.00028 0.00027 0.00026 0.00025 0.00024
-3.3 0.00048 0.00047 0.00045 0.00043 0.00042 0.00040 0.00039 0.00038 0.00036 0.00035
-3.2 0.00069 0.00066 0.00064 0.00062 0.00060 0.00058 0.00056 0.00054 0.00052 0.00050
-3.1 0.00097 0.00094 0.00090 0.00087 0.00084 0.00082 0.00079 0.00076 0.00074 0.00071
-3 0.00135 0.00131 0.00126 0.00122 0.00118 0.00114 0.00111 0.00107 0.00104 0.00100

-2.9 0.00187 0.00181 0.00175 0.00169 0.00164 0.00159 0.00154 0.00149 0.00144 0.00139
-2.8 0.00256 0.00248 0.00240 0.00233 0.00226 0.00219 0.00212 0.00205 0.00199 0.00193
-2.7 0.00347 0.00336 0.00326 0.00317 0.00307 0.00298 0.00289 0.00280 0.00272 0.00264
-2.6 0.00466 0.00453 0.00440 0.00427 0.00415 0.00402 0.00391 0.00379 0.00368 0.00357
-2.5 0.00621 0.00604 0.00587 0.00570 0.00554 0.00539 0.00523 0.00508 0.00494 0.00480

-2.4 0.00820 0.00798 0.00776 0.00755 0.00734 0.00714 0.00695 0.00676 0.00657 0.00639
-2.3 0.01072 0.01044 0.01017 0.00990 0.00964 0.00939 0.00914 0.00889 0.00866 0.00842
-2.2 0.01390 0.01355 0.01321 0.01287 0.01255 0.01222 0.01191 0.01160 0.01130 0.01101
-2.1 0.01786 0.01743 0.01700 0.01659 0.01618 0.01578 0.01539 0.01500 0.01463 0.01426
-2 0.02275 0.02222 0.02169 0.02118 0.02068 0.02018 0.01970 0.01923 0.01876 0.01831

-1.9 0.02872 0.02807 0.02743 0.02680 0.02619 0.02559 0.02500 0.02442 0.02385 0.02330
-1.8 0.03593 0.03515 0.03438 0.03362 0.03288 0.03216 0.03144 0.03074 0.03005 0.02938
-1.7 0.04457 0.04363 0.04272 0.04182 0.04093 0.04006 0.03920 0.03836 0.03754 0.03673
-1.6 0.05480 0.05370 0.05262 0.05155 0.05050 0.04947 0.04846 0.04746 0.04648 0.04551
-1.5 0.06681 0.06552 0.06426 0.06301 0.06178 0.06057 0.05938 0.05821 0.05705 0.05592

-1.4 0.08076 0.07927 0.07780 0.07636 0.07493 0.07353 0.07215 0.07078 0.06944 0.06811
-1.3 0.09680 0.09510 0.09342 0.09176 0.09012 0.08851 0.08691 0.08534 0.08379 0.08226
-1.2 0.11507 0.11314 0.11123 0.10935 0.10749 0.10565 0.10383 0.10204 0.10027 0.09853
-1.1 0.13567 0.13350 0.13136 0.12924 0.12714 0.12507 0.12302 0.12100 0.11900 0.11702
-1 0.15866 0.15625 0.15386 0.15151 0.14917 0.14686 0.14457 0.14231 0.14007 0.13786

-0.9 0.18406 0.18141 0.17879 0.17619 0.17361 0.17106 0.16853 0.16602 0.16354 0.16109
-0.8 0.21186 0.20897 0.20611 0.20327 0.20045 0.19766 0.19489 0.19215 0.18943 0.18673
-0.7 0.24196 0.23885 0.23576 0.23270 0.22965 0.22663 0.22363 0.22065 0.21770 0.21476
-0.6 0.27425 0.27093 0.26763 0.26435 0.26109 0.25785 0.25463 0.25143 0.24825 0.24510
-0.5 0.30854 0.30503 0.30153 0.29806 0.29460 0.29116 0.28774 0.28434 0.28096 0.27760

-0.4 0.34458 0.34090 0.33724 0.33360 0.32997 0.32636 0.32276 0.31918 0.31561 0.31207
-0.3 0.38209 0.37828 0.37448 0.37070 0.36693 0.36317 0.35942 0.35569 0.35197 0.34827
-0.2 0.42074 0.41683 0.41294 0.40905 0.40517 0.40129 0.39743 0.39358 0.38974 0.38591
-0.1 0.46017 0.45620 0.45224 0.44828 0.44433 0.44038 0.43644 0.43251 0.42858 0.42465
0 0.50000 0.49601 0.49202 0.48803 0.48405 0.48006 0.47608 0.47210 0.46812 0.46414

OM2 Appendix A 359

Entries in the table give the area under the standard normal distribution
less than z. The second half of the table applies to positive values of z.
For example, for z = 2.33, the area below z is 0.99010.
—` 0 z

z 0 0.01 0.02 0.03 0.04 0.05 0.06 0.07 0.08 0.09

0 0.50000 0.50399 0.50798 0.51197 0.51595 0.51994 0.52392 0.52790 0.53188 0.53586
0.1 0.53983 0.54380 0.54776 0.55172 0.55567 0.55962 0.56356 0.56749 0.57142 0.57535
0.2 0.57926 0.58317 0.58706 0.59095 0.59483 0.59871 0.60257 0.60642 0.61026 0.61409
0.3 0.61791 0.62172 0.62552 0.62930 0.63307 0.63683 0.64058 0.64431 0.64803 0.65173
0.4 0.65542 0.65910 0.66276 0.66640 0.67003 0.67364 0.67724 0.68082 0.68439 0.68793

0.5 0.69146 0.69497 0.69847 0.70194 0.70540 0.70884 0.71226 0.71566 0.71904 0.72240
0.6 0.72575 0.72907 0.73237 0.73565 0.73891 0.74215 0.74537 0.74857 0.75175 0.75490
0.7 0.75804 0.76115 0.76424 0.76730 0.77035 0.77337 0.77637 0.77935 0.78230 0.78524
0.8 0.78814 0.79103 0.79389 0.79673 0.79955 0.80234 0.80511 0.80785 0.81057 0.81327
0.9 0.81594 0.81859 0.82121 0.82381 0.82639 0.82894 0.83147 0.83398 0.83646 0.83891

1 0.84134 0.84375 0.84614 0.84849 0.85083 0.85314 0.85543 0.85769 0.85993 0.86214
1.1 0.86433 0.86650 0.86864 0.87076 0.87286 0.87493 0.87698 0.87900 0.88100 0.88298
1.2 0.88493 0.88686 0.88877 0.89065 0.89251 0.89435 0.89617 0.89796 0.89973 0.90147
1.3 0.90320 0.90490 0.90658 0.90824 0.90988 0.91149 0.91309 0.91466 0.91621 0.91774
1.4 0.91924 0.92073 0.92220 0.92364 0.92507 0.92647 0.92785 0.92922 0.93056 0.93189

1.5 0.93319 0.93448 0.93574 0.93699 0.93822 0.93943 0.94062 0.94179 0.94295 0.94408
1.6 0.94520 0.94630 0.94738 0.94845 0.94950 0.95053 0.95154 0.95254 0.95352 0.95449
1.7 0.95543 0.95637 0.95728 0.95818 0.95907 0.95994 0.96080 0.96164 0.96246 0.96327
1.8 0.96407 0.96485 0.96562 0.96638 0.96712 0.96784 0.96856 0.96926 0.96995 0.97062
1.9 0.97128 0.97193 0.97257 0.97320 0.97381 0.97441 0.97500 0.97558 0.97615 0.97670

2 0.97725 0.97778 0.97831 0.97882 0.97932 0.97982 0.98030 0.98077 0.98124 0.98169
2.1 0.98214 0.98257 0.98300 0.98341 0.98382 0.98422 0.98461 0.98500 0.98537 0.98574
2.2 0.98610 0.98645 0.98679 0.98713 0.98745 0.98778 0.98809 0.98840 0.98870 0.98899
2.3 0.98928 0.98956 0.98983 0.99010 0.99036 0.99061 0.99086 0.99111 0.99134 0.99158
2.4 0.99180 0.99202 0.99224 0.99245 0.99266 0.99286 0.99305 0.99324 0.99343 0.99361

2.5 0.99379 0.99396 0.99413 0.99430 0.99446 0.99461 0.99477 0.99492 0.99506 0.99520
2.6 0.99534 0.99547 0.99560 0.99573 0.99585 0.99598 0.99609 0.99621 0.99632 0.99643
2.7 0.99653 0.99664 0.99674 0.99683 0.99693 0.99702 0.99711 0.99720 0.99728 0.99736
2.8 0.99744 0.99752 0.99760 0.99767 0.99774 0.99781 0.99788 0.99795 0.99801 0.99807
2.9 0.99813 0.99819 0.99825 0.99831 0.99836 0.99841 0.99846 0.99851 0.99856 0.99861

3 0.99865 0.99869 0.99874 0.99878 0.99882 0.99886 0.99889 0.99893 0.99896 0.99900
3.1 0.99903 0.99906 0.99910 0.99913 0.99916 0.99918 0.99921 0.99924 0.99926 0.99929
3.2 0.99931 0.99934 0.99936 0.99938 0.99940 0.99942 0.99944 0.99946 0.99948 0.99950
3.3 0.99952 0.99953 0.99955 0.99957 0.99958 0.99960 0.99961 0.99962 0.99964 0.99965
3.4 0.99966 0.99968 0.99969 0.99970 0.99971 0.99972 0.99973 0.99974 0.99975 0.99976

3.5 0.99977 0.99978 0.99978 0.99979 0.99980 0.99981 0.99981 0.99982 0.99983 0.99983
3.6 0.99984 0.99985 0.99985 0.99986 0.99986 0.99987 0.99987 0.99988 0.99988 0.99989
3.7 0.99989 0.99990 0.99990 0.99990 0.99991 0.99991 0.99992 0.99992 0.99992 0.99992
3.8 0.99993 0.99993 0.99993 0.99994 0.99994 0.99994 0.99994 0.99995 0.99995 0.99995
3.9 0.99995 0.99995 0.99996 0.99996 0.99996 0.99996 0.99996 0.99996 0.99997 0.99997

360 OM2 Appendix A

 OM6 Formulas

CHAPTER REVIEW
Break-even quantity for outsourcing Feasible range of cycle times
Maximum operation time ≤ CT ≤ Sum of operation times [8.1]
FC
Q* 5 [2.1]
VC2 2 VC1 Cycle time

Productivity CT 5 A/R [8.2]

Quantity of output Theoretical minimum number of wo rkstations

Productivity 5 [2.1]
Quantity of input
Minimum number of workstations required
  5 Sum of task times/Cycle time 5 St/CT [8.3]
Value of a loyal customer
Total time available 5 (Number of workstations)(Cycle time)
VLC 5 (P)(CM)(RF)(BLC) [2.2]
           
5 (N)(CT) [8.4]
Taguchi loss function
Total idle time 5 (N)(CT) 2 St [8.5]
L(x) 5 k(x 2 T)2 [5.1]
Assembly-line efficiency 5 St/(N 3 CT) [8.6]
System reliability of an n-component series
system Balance delay 5 1 2 Assembly-line efficiency [8.7]

Rs 5 (p1 )(p2)(p3   ) . . . (pn ) [5.2]

Center of gravity
System reliability of an n-component parallel Cx 5 S  XiWi/SWi [9.1]
system Cy 5 SYiWi S/Wi [9.2]
Rp 5 1 2 (1 2 p1)(1 2 p2)(1 2 p3) . . . (1 2 pn) [5.3]
Mean square error (MSE)
Total cost of production 5 (VC1)Q 1 FC [6.1]
2
Total cost of outsourcing 5 (VC2)Q [6.2] S(At 2 Ft )
MSE 5 [9.1]
T
The break-even quantity is
Mean absolute deviation (MAD)
FC
Qp 5  [6.3] Su At 2 Ftu
VC2 2 VC1 MAD 5 [9.2]
T

The center of gravity Mean absolute percentage error

               Cx 5 SXiWi /SWi[6.4]

Su (At 2 Ft)/Atu3100
MAPE 5 [9.3]
               Cy 5 SYiWi /SWi[6.5] T

Moving average (MA) forecast

Resource utilization
Ft11 5 S(most recent “k” observations)/k
Resources used 5 (At 1 At21 1 At22 1 . . . 1 At2k11)/k [9.4]
Utilization(U) 5 [7.1]
Resources available
Exponential-smoothing forecasting model
Demand rate Ft11 5  At 1 (1 2 )Ft 5 Ft 1  (At 2 Ft) [9.5]
Utilization(U) 5     [7.2]
[Service rate3Number of servers]
Smoothing constant approximate relationship
Little’s Law to the value of k in the moving average model
 5 2/(k 1 1) [9.6]
WIP 5 R 3 T [7.3]

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 OM6 Formulas
CHAPTER REVIEW

Linear regression forecasting model Economic order quantity

CHAPTER 2 Learning outcomes / Key terms

Î
Yt 5 a 1 bt [9.7 ]
2D C0
Q* 5 [11.7]
Average safety capacity Ch

Average safety capacity (%)

5100% 2 Average resource utilization (%) [10.1] Reorder point

r 5 Lead time demand 5 (Demand rate)(Lead time)

Capacity required to meet a given production 5 (d)(L) [11.8]
volume for one work order [i]
Capacity required (Ci ) 5 Setup time (Si ) 1 [Processing time (Pi ) Reorder point with safety stock
          3 Order size (Qi )] [10.2] r 5 mL 1 zsL [11.9]

Total capacity required over all work orders Mean demand during lead time with uncertain
SCi = S[Si 1 (Pi 3 Qi)] [10.3] demand
m L 5 mt L [11.10]
Tracking signal
Tracking signal 5 S(At 2 Ft)/MAD [10.8] Standard deviation of demand during lead time with
uncertain demand
Inventory position (IP) sL 5 st ÏL [11.11]
IP 5 OH 1 SR 2 BO [11.1]
Economic time interval
Average cycle inventory
T 5 Q*/D [11.12]
Average cycle inventory 5 (Maximum inventory
1 Minimum inventory)/2 5 (Q 1 0)/2 5 Q/2 [11.2] Replenishment level without safety stock (FPS)
M 5 d(T 1 L) [11.13]
Holding cost
Ch 5 (I)(C) [11.3] Replenishment level with safety stock (FPS)
M 5 mT1L 5 zsT1L [11.14]
Annual inventory holding cost
mT1L 5 mt (T 1 L) [11.15]

21 2
Annual Annual
inventory 5
holding cost
Average
inventory 1 1
holding cost 5 QCh   [11.4]
per unit
2
sT 1 L 5 stÏT 1 L [11.16]

Marginal economic analysis for a single-period

inventory model
Annual ordering cost
cu
Annual

1 21 2
Number cost P(demand  Q*) 5 [11.17]
cu 1 cs
ordering 5 of orders per 5 D C [11.5]
cost per year order Q 0
Inventory turnover (IT) 5 Cost of goods sold
/Average inventory value [12.1]
Total annual cost

1 D
TC 5 QCh 1 C0 [11.6]
2 Q

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 OM6 Formulas

CHAPTER REVIEW
Total supply chain cost (TSCC) dpmo 5 (Number of defects discovered/opportunities
5 Procurement cost 1 Oversight cost for error) 3 1,000,000 [15.2]
1 Transportation Cost 1 Order cycle
Inventory cost 1 Pipeline inventory cost NORM.S.INV(1 − dpmo/1,000,000) + 1.5 [15.3]

or Overall mean
 pD 1 OpD 1 Ct pD 1 Co(D/Q) 1 (1/2)Q Ch 1 dpLpCh
TSCC 5 P k

TSCC 5 D(P 1 O 1 Ct) 1 Co(D/Q) 1 (1/2)Q Ch 1 dpLpCh  [12.2]

ox
i51
i

x5 [16.1]
k
Inventory days’ supply (IDS)
5 Average total inventory/Cost of goods sold per day [12.3]
Average range
Cost of goods sold per day (CGS/D) k

5 Cost of goods sold value/Operating days per year [12.4] oR

i51
i
[16.2]
R5
ARDS 5 Accounts receivable value/Revenue per day  [12.5] k

Upper and lower control limits

APDS 5 Accounts payable value/Revenue per day [12.6]
UCLR 5 D4R    UCLX 5 X 1 A2R
Revenue per day (R/D)
5 Total revenue/Operating days per year [12.7] LCLR 5 D3R    LCLX 5 X 2 A2R [16.3]

Cash-to-cash conversion cycle 5 IDS 1 ARDS 2 APDS [12.8] Average fraction nonconforming for p-chart

Projected on-hand inventory y1 1 y2 1 Á 1 yk

[16.4]
nk
Ending inventory 5 Beginning inventory
1 Production 2 Demand [13.1] Standard deviation of fraction nonconforming for
Projected on-hand in period t (POHt)
p-chart

5 On-hand inventory in period t 2 1 (OHt21)

or
sp 5 Î p(1 2 p)
n
[16.5]

POHt 5 OHt21 1 S/PRt 2 GRt [13.2] Upper and lower control limits for p-charts

Flow time UCLp 5 p 1 3sp

Fi 5 Spij 1 Swij 5 Ci 2 Ri [14.1]

LCLp 5 p 2 3sp [16.6]

Upper and lower control limits for c-charts

Makespan
UCLc 5 c 1 3Ïc
M5C2S [14.2]
LCLc 5 c 2 3Ïc [16.7]
Lateness (L) Approximation of standard deviation with x- and
Li 5 Ci 2 Di [14.3] R-charts
R
Tardiness (T) s5 [16.8]
d2
Ti 5 Max (0, Li) [14.4]
Process capability index
Number of defects discovered USL 2 LSL
Defects per unit 5 [15.1] Cp 5
Number of units produced 6s [16.9]

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 OM6 Formulas
One-sided capability index Crash cost per unit of time
CHAPTER REVIEW

USL 2 m
Cpu 5 (upper one { sided index) [16.10] Crash cost 2 Normal cost
3s Crash cost per unit of time 5 [18.1]
Normal time 2 Crash time
m 2 LSL
Cpl 5 (lower one { sided index) [16.11] Expected time
3s
Cpk 5 min (Cpl9 Cpu) [16.12] Expected time 5 (a 1 4m 1 b)/6 [18.2]

Number of Kanban cards required Variance of activity times

Average daily demand during Variance 5 (b 2 a)2/36 [18.3]
lead time plus a safety stock
K5
Number of units per container

d(p 1 w)(1 1 )
5 [17.1]
C

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