Formulae List

I. Vital Statistics

1. 𝑃𝑡 = 𝑃0 + (𝐵 − 𝐷) + (𝐼 − 𝐸)
𝑛𝑢𝑚𝑏𝑒𝑟 𝑜𝑓 𝑙𝑖𝑣𝑒 𝑏𝑖𝑟𝑡ℎ𝑠 𝑖𝑛 𝑎 𝑦𝑒𝑎𝑟
2. 𝐶𝐵𝑅 = × 1000
𝑡𝑜𝑡𝑎𝑙 𝑝𝑜𝑝𝑢𝑙𝑎𝑡𝑖𝑜𝑛 𝑖𝑛 𝑡ℎ𝑒 𝑦𝑒𝑎𝑟
3. 𝐺𝐹𝑅 =
𝑛𝑢𝑚𝑏𝑒𝑟 𝑜𝑓 𝑙𝑖𝑣𝑒 𝑏𝑖𝑟𝑡ℎ𝑠 𝑖𝑛 𝑎 𝑦𝑒𝑎𝑟
× 1000
𝑡𝑜𝑡𝑎𝑙 𝑛𝑢𝑚𝑏𝑒𝑟 𝑜𝑓 𝑤𝑜𝑚𝑒𝑛 𝑜𝑓 𝑐ℎ𝑖𝑙𝑑 𝑏𝑒𝑎𝑟𝑖𝑛𝑔 𝑎𝑔𝑒 𝑖𝑛 𝑡ℎ𝑒 𝑦𝑒𝑎𝑟
4. 𝐴𝑆𝐹𝑅 =
𝑛𝑢𝑚𝑏𝑒𝑟 𝑜𝑓 𝑙𝑖𝑣𝑒 𝑏𝑖𝑟𝑡ℎ𝑠 𝑖𝑛 𝑎 𝑠𝑝𝑒𝑐𝑖𝑓𝑖𝑒𝑑 𝑎𝑔𝑒 𝑔𝑟𝑜𝑢𝑝 𝑖𝑛 𝑎 𝑦𝑒𝑎𝑟
×
𝑡𝑜𝑡𝑎𝑙 𝑝𝑜𝑝𝑢𝑙𝑎𝑡𝑖𝑜𝑛 𝑜𝑓 𝑓𝑒𝑚𝑎𝑙𝑒𝑠 𝑖𝑛 𝑡ℎ𝑎𝑡 𝑝𝑎𝑟𝑡𝑖𝑐𝑢𝑙𝑎𝑟 𝑎𝑔𝑒 𝑔𝑟𝑜𝑢𝑝 𝑖𝑛 𝑡ℎ𝑒 𝑦𝑒𝑎𝑟
1000
5. 𝑇𝐹𝑅 = 5 × ∑𝑄𝑢𝑖𝑛𝑞𝑢𝑒𝑛𝑛𝑖𝑎𝑙 𝐴𝑆𝐹𝑅
𝑛𝑢𝑚𝑏𝑒𝑟 𝑜𝑓 𝑓𝑒𝑚𝑎𝑙𝑒 𝑙𝑖𝑣𝑒 𝑏𝑖𝑟𝑡ℎ𝑠 𝑡𝑜 𝑤𝑜𝑚𝑒𝑛 𝑜𝑓 𝑎𝑔𝑒 𝑋 𝑖𝑛 𝑎 𝑦𝑒𝑎𝑟
6. 𝑊𝑆𝐹𝑅 = ×
𝑇𝑜𝑡𝑎𝑙 𝑓𝑒𝑚𝑎𝑙𝑒 𝑝𝑜𝑝𝑢𝑙𝑎𝑡𝑖𝑜𝑛 𝑜𝑓 𝑎𝑔𝑒 𝑋 𝑖𝑛 𝑡ℎ𝑒 𝑦𝑒𝑎𝑟
1000
7. 𝐺𝑅𝑅 = 𝑖 × ∑𝑊𝑆𝐹𝑅
8. 𝑁𝑅𝑅 = 𝑖 × ∑𝑊𝑆𝐹𝑅 × 𝑆
𝑛𝑢𝑚𝑏𝑒𝑟 𝑜𝑓 𝑑𝑒𝑎𝑡ℎ𝑠 𝑜𝑐𝑐𝑢𝑟𝑖𝑛𝑔 𝑖𝑛 𝑎 𝑦𝑒𝑎𝑟
9. 𝐶𝐷𝑅 = × 1000
𝑡𝑜𝑡𝑎𝑙 𝑝𝑜𝑝𝑢𝑙𝑎𝑡𝑖𝑜𝑛 𝑖𝑛 𝑡ℎ𝑒 𝑦𝑒𝑎𝑟
𝑛𝑢𝑚𝑏𝑒𝑟 𝑜𝑓 𝑑𝑒𝑎𝑡ℎ𝑠 𝑖𝑛 𝑎 𝑠𝑝𝑒𝑐𝑖𝑓𝑖𝑐 𝑎𝑔𝑒 𝑔𝑟𝑜𝑢𝑝 𝑖𝑛 𝑎 𝑦𝑒𝑎𝑟
10.𝐴𝑆𝐷𝑅 = ×
𝑡𝑜𝑡𝑎𝑙 𝑝𝑜𝑝𝑢𝑙𝑎𝑡𝑖𝑜𝑛 𝑜𝑓 𝑠𝑝𝑒𝑐𝑖𝑓𝑖𝑐 𝑎𝑔𝑒 𝑔𝑟𝑜𝑢𝑝 𝑖𝑛 𝑡ℎ𝑒 𝑦𝑒𝑎𝑟
1000
∑𝑃𝐴
11.𝑆𝑇𝐷𝑅[𝐴] =
∑𝑃
𝑛𝑢𝑚𝑏𝑒𝑟 𝑜𝑓 𝑑𝑒𝑎𝑡ℎ𝑠 𝑎𝑚𝑜𝑛𝑔 𝑖𝑛𝑓𝑎𝑛𝑡𝑠 𝑖𝑛 𝑡ℎ𝑒 𝑦𝑒𝑎𝑟
12.𝐼𝑀𝑅 = × 1000
𝑡𝑜𝑡𝑎𝑙 𝑛𝑢𝑚𝑏𝑒𝑟 𝑜𝑓 𝑙𝑖𝑣𝑒 𝑏𝑖𝑟𝑡ℎ𝑠 𝑖𝑛 𝑡ℎ𝑒 𝑠𝑎𝑚𝑒 𝑦𝑒𝑎𝑟
𝑛𝑢𝑚𝑏𝑒𝑟 𝑜𝑓 𝑑𝑒𝑎𝑡ℎ𝑠 𝑎𝑚𝑜𝑛𝑔 𝑛𝑒𝑜𝑛𝑎𝑡𝑎𝑙 𝑖𝑛 𝑡ℎ𝑒 𝑦𝑒𝑎𝑟
13. 𝑁𝑀𝑅 = × 1000
𝑡𝑜𝑡𝑎𝑙 𝑛𝑢𝑚𝑏𝑒𝑟 𝑜𝑓 𝑙𝑖𝑣𝑒 𝑏𝑖𝑟𝑡ℎ𝑠 𝑖𝑛 𝑡ℎ𝑒 𝑠𝑎𝑚𝑒 𝑦𝑒𝑎𝑟
𝑛𝑢𝑚𝑏𝑒𝑟 𝑜𝑓 𝑑𝑒𝑎𝑡ℎ𝑠 𝑜𝑓 𝑚𝑜𝑡ℎ𝑒𝑟𝑠 𝑑𝑢𝑒 𝑡𝑜 𝑐ℎ𝑖𝑙𝑑𝑏𝑖𝑟𝑡ℎ𝑠 𝑖𝑛 𝑎 𝑦𝑒𝑎𝑟
14. 𝑀𝑀𝑅 = × 1000
𝑡𝑜𝑡𝑎𝑙 𝑛𝑢𝑚𝑏𝑒𝑟 𝑜𝑓 𝑙𝑖𝑣𝑒 𝑏𝑖𝑟𝑡ℎ𝑠 𝑖𝑛 𝑡ℎ𝑒 𝑦𝑒𝑎𝑟
15.𝑑𝑥 = 𝑙𝑥 − 𝑙𝑥+1
𝑇
16.𝑒𝑥 = 𝑥
𝑙𝑥

II. Index Number

𝑝
1. 𝑃 = 𝑝1 × 100
0
∑𝑃
2. Simple (Unweighted) A.M 𝑃01 = 𝑛
∑𝑙𝑜𝑔𝑃
3. Simple (Unweighted) G.M 𝑃01 = 𝑎𝑛𝑡𝑖𝑙𝑜𝑔( )
𝑛
 ∑𝑝
4. Simple (Unweighted) aggregative 𝑃01 = ∑𝑝1 × 100
0
∑𝑊𝑃
5. Weighted A.M 𝑃01 = ∑𝑊
∑𝑊𝑙𝑜𝑔𝑃
6. Weighted G.M 𝑃01 = 𝑎𝑛𝑡𝑖𝑙𝑜𝑔( )
∑𝑊
∑𝑝 𝑞
7. 𝑃01 (𝐿) = ∑𝑝1𝑞0 × 100
0 0
∑𝑝1 𝑞1
8. 𝑃01 (𝑃) = ∑𝑝 × 100
0 𝑞1
∑𝑝1 𝑞0 + ∑𝑝1 𝑞1
9. 𝑃01 (𝑀𝐸) = × 100
∑𝑝0 𝑞0 +∑𝑝0 𝑞1
1 ∑𝑝1 𝑞0 ∑𝑝1 𝑞1
10. 𝑃01 (𝐷𝐵) = 2 [∑𝑝 + ∑𝑝 ] × 100
0 𝑞0 0 𝑞1
∑𝑝1 𝑞0 ∑𝑝1 𝑞1
11. 𝑃01 (𝐹) = √ × × 100
∑𝑝0 𝑞0 ∑𝑝0 𝑞1
∑𝑝1 𝑞
12. 𝑃01 (𝐾) = ∑𝑝 × 100
0𝑞
13. Condition for TRT: 𝑃01 × 𝑃10 = 1
14. Condition for FRT: 𝑃01 × 𝑄01 = 𝑉01
15. Aggregative expenditure method
∑𝑝1 𝑞0
𝐶𝑃𝐼 = × 100
∑𝑝0 𝑞0
16. Family budget method
∑𝑊𝑃
𝐶𝑃𝐼 = ∑𝑊

III. Time Series

∑𝑦 ∑𝑥𝑦
1. Linear / Straight line trend 𝑎 = ,𝑏 =
𝑛 ∑𝑥 2
∑𝑥𝑦
2. Parabolic / Quadratic trend 𝑏 = ∑𝑥 2
3. Exponential / Logarithmic trend
∑𝑙𝑜𝑔𝑦 ∑𝑥𝑙𝑜𝑔𝑦
𝑎 = 𝑎𝑛𝑖𝑙𝑜𝑔( ) , 𝑏 = 𝑎𝑛𝑡𝑖𝑙𝑜𝑔( )
𝑛 ∑𝑥 2

IV. Interpolation and Extrapolation

1. Methods of interpolation and Extrapolation

a) Binomial Expansion method
b) Newton’s advancing difference method

2. Expansion of (𝑦 − 1)4 = 0 is
𝑦4 − 4𝑦3 + 6𝑦2 − 4𝑦1 + 𝑦0 = 0
 3. Expansion of (𝑦 − 1)5 = 0 is
𝑦5 − 5𝑦4 + 10𝑦3 − 10𝑦2 + 5𝑦1 − 𝑦0 = 0

4. Newton’s advance difference method

𝑥(𝑥−1) 𝑥(𝑥−1)(𝑥−2)
𝑦𝑥 = 𝑦0 + 𝑥∆01 + ∆0 2 + ∆0 3 +
2! 3!
𝑥(𝑥−1)(𝑥−2)(𝑥−3)
∆0 4 +-------------
4!
𝑤ℎ𝑒𝑟𝑒
𝑡ℎ𝑒 𝑣𝑎𝑙𝑢𝑒 𝑜𝑓 𝑋 𝑡𝑜 𝑏𝑒 𝑖𝑛𝑡𝑒𝑟𝑝𝑜𝑙𝑎𝑡𝑒𝑑−𝑡ℎ𝑒 𝑣𝑎𝑙𝑢𝑒 𝑜𝑓 𝑋 𝑎𝑡 𝑡ℎ𝑒 𝑜𝑟𝑖𝑔𝑖𝑛
𝑥=
𝑡ℎ𝑒 𝑑𝑖𝑓𝑓𝑒𝑟𝑒𝑛𝑐𝑒 𝑏𝑒𝑡𝑤𝑒𝑒𝑛 𝑡𝑤𝑜 𝑎𝑑𝑗𝑜𝑖𝑛𝑖𝑛𝑔 𝑣𝑎𝑙𝑢𝑒 𝑜𝑓 𝑋

V. Theoretical Distribution

Name of the Parameters Range Mean Variance Relation

distribution b/w Mean
& Variance
Bernoulli P x = 0,1 p p.q Mean >
Variance
Binomial n&p x =0,1------- np n.p.q Mean >
-n Variance
Poisson Λ x =0,1,2---- 𝜆 λ Mean =
--∞ Variance
Hyper a, b & n x =0,1,2---- 𝑛𝑎 𝑛𝑎𝑏(𝑎 + 𝑏 − 𝑛)
Geometric -- 𝑎+𝑏 (𝑎 + 𝑏)2 (𝑎 + 𝑏 − 1)
min (𝑎, 𝑛)
Normal 𝜇 𝑎𝑛𝑑 𝜎 -∞ < 𝑥 < 𝜇 𝜎2
∞
Standard 0 and 1 -∞ < 𝑧 < 0 1
Normal ∞
Chi - Square N 0≤ 𝜒 2 < n 2n
∞
𝑛
Student’s – t N -∞ < 𝑡 < 0 𝑓𝑜𝑟 𝑛 > 2
𝑛−2
∞

1. P.m.f of Bernoulli distribution is

𝑝(𝑥) = 𝑝 𝑥 𝑞1−𝑥 𝑤ℎ𝑒𝑟𝑒 𝑥 = 0,1

2. P.m.f of Binomial distribution is

𝑝(𝑥) = 𝑛𝐶𝑥 𝑝 𝑥 𝑞 𝑛−𝑥 𝑤ℎ𝑒𝑟𝑒 𝑥 = 0,1, … … . 𝑛
𝑛−𝑥+1 𝑝
𝑇𝑥 = . . 𝑇𝑥−1
𝑥 𝑞
3. P.m.f of Poisson distribution is
𝑝(𝑥) = 𝑒 𝜆 𝜆𝑥 𝑤ℎ𝑒𝑟𝑒 𝑥 = 0,1, … … . ∞
𝜆
𝑇𝑥 = . 𝑇𝑥−1
𝑥
4. P.m.f of Hyper Geometric distribution is
𝑎𝐶𝑥 . 𝑏𝐶𝑛−𝑥
𝑝(𝑥) = 𝑤ℎ𝑒𝑟𝑒 𝑥 = 0,1, … … . . min (𝑎, 𝑛)
𝑎 + 𝑏𝐶𝑛
5. P.d.f of Normal distribution is
1 1 𝑥−𝜇 2
𝑓(𝑥) = 𝑒 −2( 𝜎 ) 𝑤ℎ𝑒𝑟𝑒 − ∞ < 𝑥 < ∞
𝜎√2𝜋
2 4
𝑄. 𝐷 = 𝜎 𝑎𝑛𝑑 𝑀. 𝐷 = 𝜎
3 5
𝑄1 = 𝜇 − 0.6745𝜎 𝑎𝑛𝑑 𝑄3 = 𝜇 + 0.6745𝜎

6. P.d.f of Standard Normal distribution is

1 𝑧2
−
𝑓(𝑍) = 𝑒 2 𝑤ℎ𝑒𝑟𝑒 − ∞ < 𝑧 < ∞
√2𝜋
𝑥−𝜇
If X is a normal variate with mean = 𝜇 𝑎𝑛𝑑 𝑠. 𝑑 = 𝜎 then 𝑧 = is a
𝜎
standard normal variate.
7. P.d.f of Chi – Square distribution is
−𝜒2 2 𝑛 −1
𝐾𝑒 2 (𝜒 )
2) 2
𝑓(𝜒 = 𝑤ℎ𝑒𝑟𝑒 0 ≤ 𝜒2 < ∞

8. P.d.f of Student’s – t distribution is

1
𝑓(𝑡) = 𝐾 𝑤ℎ𝑒𝑟𝑒 − ∞ < 𝑡 < ∞
𝑡 2 𝑛+1
(1 + ) 2
𝑛

VI. a) Statistical Inference

𝜎
1. 𝐸(𝑥̅ ) = 𝜇 𝑎𝑛𝑑 𝑆. 𝐸(𝑥̅ ) =
√𝑛
𝜎1 2 + 𝜎2 2
2. 𝐸(𝑥̅1 − 𝑥̅2 ) = 𝜇1 − 𝜇2 𝑎𝑛𝑑 𝑆. 𝐸(𝑥̅1 − 𝑥̅2 ) = √
𝑛1 +𝑛2

𝑃𝑄
3. 𝐸(𝑝) = 𝑃 𝑎𝑛𝑑 𝑆. 𝐸(𝑝) = √ 𝑤ℎ𝑒𝑟𝑒 𝑄 = 1 − 𝑃
𝑛
𝑃1 𝑄1 𝑃2 𝑄2
4. 𝐸(𝑝1 − 𝑝2 ) = 𝑃1 − 𝑃2 𝑎𝑛𝑑 𝑆. 𝐸(𝑝1 − 𝑝2 ) = √ +
𝑛1 𝑛2
5. Size of the test = P (type I error) = P (reject 𝐻0 𝑤ℎ𝑒𝑛 𝑖𝑡 𝑖𝑠 𝑡𝑟𝑢𝑒)
6. Power of the test = 1 – P (type II error)
= 1 – P (reject 𝐻0 𝑤ℎ𝑒𝑛 𝑖𝑡 𝑖𝑠 𝑛𝑜𝑡 𝑡𝑟𝑢𝑒)

b)Large Sample test (𝒏 ≥ 𝟑𝟎)

Table of critical values

Two tailed test One tailed test

𝜶 -K K -K K

5% -1.96 1.96 -1.65 1.65

1% -2.58 2.58 -2.33 2.33

7. Application 1: Test for population mean

𝑥̅ −𝜇
𝑍=𝜎
⁄ 𝑛
√
8. Application 2: Test for equality of means of two population
𝑥̅1 −𝑥̅2
𝑍=
𝜎 2 + 𝜎2 2
√ 1
𝑛1 +𝑛2

9. Application 3: Test for Population proportion

𝑝−𝑃 𝑥
𝑍= 𝑤ℎ𝑒𝑟𝑒 𝑝 = 𝑎𝑛𝑑 𝑄 = 1 − 𝑃
𝑃𝑄 𝑛
√
𝑛

10.Application 4: Test for equality of Proportions of two populations

𝑝1 −𝑝2 𝑥 𝑥 𝑥 +𝑥 𝑛 𝑝 +𝑛 𝑝
𝑍= 𝑤ℎ𝑒𝑟𝑒 𝑝1 = 1 , 𝑝2 = 2 , 𝑃 = 1 2 = 1 1 2 2
1 1 𝑛1 𝑛2 𝑛1 +𝑛2 𝑛1 +𝑛2
√𝑃𝑄(𝑛 +𝑛 )
1 2

c) T- Test (Small sample test n<30)

11.Application 1: To test the significance of mean of a population using

small sample
𝑥̅ −𝜇
𝑡=𝑠 ~𝑡 𝑤𝑖𝑡ℎ (𝑛 − 1)𝑑. 𝑓
⁄ 𝑛−1
√
∑ 𝑑2 ∑𝑑 2
𝑠=√ −( )
𝑛 𝑛
12.Application 2: To test the difference between the means of two
populations using small sample (independent sample)
 𝑥̅1 −𝑥̅ 2
𝑡= 1 1
~𝑡 𝑤𝑖𝑡ℎ (𝑛1 + 𝑛2 − 2)𝑑. 𝑓
√𝑆𝑐 2 (𝑛 +𝑛 )
1 2

𝑛1 𝑠 2 1 +𝑛2 𝑠 2 2 ∑(𝑥1 −𝑥̅1 )2 +(𝑥2 −𝑥̅2 )2

𝑆𝑐 2 = =
𝑛1 +𝑛2 −2 𝑛1 +𝑛2 −2
13.Application 3: To test the difference between the means of two
populations using two samples
𝑑̅
𝑡 = 𝑆𝑑 ~𝑡 𝑤𝑖𝑡ℎ (𝑛 − 1)𝑑. 𝑓
⁄
√𝑛−1
∑ 𝑑2 ∑𝑑 2
𝑆𝑑 = √ −( )
𝑛 𝑛

d) Chi – Square test

14.Application 1: Test for Variance

𝑛𝑠 2 ∑𝑛
𝑖=1(𝑥𝑖 −𝑥̅ )
2
𝜒2 = = ~𝜒 2 𝑤𝑖𝑡ℎ (𝑛 − 1)𝑑. 𝑓
𝜎20 𝜎20
15.Application 2: Chi – square test for goodness of fit
(𝑂𝑖 −𝐸𝑖 )2 (𝑂𝑖 )2
𝜒2 = ∑ =∑ − 𝑁 𝑤𝑖𝑡ℎ (𝑛 − 𝑐)𝑑. 𝑓
𝐸𝑖 𝐸𝑖
16.Application 3: Chi – square test for independence of attributes
𝑁(𝑎𝑑−𝑏𝑐)2
𝜒 2 = (𝑎+𝑏)(𝑐+𝑑)(𝑎+𝑐)(𝑏+𝑑) ~𝜒 2 𝑤𝑖𝑡ℎ 1 𝑑. 𝑓

VII. Statistical Quality Control

1. Control limits for 𝑋̅ − 𝑐ℎ𝑎𝑟𝑡

Control Limits Standards known Standards unknown

C.L 𝑋̅ 𝐼 𝑋̿
L.C. L 𝑋̅ 𝐼 − 𝐴𝜎 𝐼 𝑋̿ − 𝐴2 𝑅̅
U.C.L 𝑋̅ 𝐼 + 𝐴𝜎 𝐼 𝑋̿ + 𝐴2 𝑅̅

2. Control limits for R – chart

Control Limits Standards known Standards unknown

C.L 𝑑2 𝜎 𝐼
𝑅̅
L.C. L 𝐷1 𝜎 𝐼 𝐷3 𝑅̅
U.C.L 𝐷2 𝜎 𝐼 𝐷4 𝑅̅
 ∑𝑋 ∑ 𝑋̅ ∑𝑅
𝑋̅ = ̿
,𝑋 = 𝑎𝑛𝑑 𝑅̅ =
𝑛 𝐾 𝐾

3. Control limits for np / d – chart

Control Limits Standards known Standards unknown

C.L 𝑛𝑃𝐼 𝑛𝑃̅
L.C. L 𝑛𝑃𝐼 − 3√𝑛𝑃𝐼 𝑄 𝐼 𝑛𝑃̅ − 3√𝑛𝑃𝑄
̅̅̅̅
U.C.L 𝑛𝑃𝐼 + 3√𝑛𝑃𝐼 𝑄 𝐼 𝑛𝑃̅ + 3√𝑛𝑃𝑄
̅̅̅̅

∑𝑑
𝑃̅ =
𝑛𝐾
4. Control limits for c – chart

Control Limits Standards known Standards unknown

C.L 𝜆𝐼 𝑐̅
L.C. L 𝜆𝐼 − 3√𝜆𝐼 𝑐̅ − 3√𝑐̅
U.C.L 𝜆𝐼 + 3√𝜆𝐼 𝑐̅ + 3√𝑐̅

∑𝑐
𝑐̅ =
𝐾
The statistical constants are:-

Sample A 𝐴2 𝑑2 𝐷1 𝐷2 𝐷3 𝐷4
size
n=4 1.500 0.729 2.059 0 4.698 0 2.282
n=5 1.342 0.577 2.326 0 4.918 0 2.115

VIII. (a) L.P.P

Methods of solving an L.P.P

(i) Graphical Method
(ii) Simplex method
 (b) Transportation Problem
Techniques to find initial basic feasible solution
(i) North west corner rule (NWCR)
(ii) Least cost method or Matrix minima method (MMM)
(iii) Vogel’s approximation method (VAM)

a) Degenerate : any BFS is less than (m+ n - 1)

b) Non – Degenerate : any BFS is equal to (m+ n - 1)
c) Total cost = ∑ ∑ 𝐶𝑖𝑗 𝑥𝑖𝑗

D) Replacement Theory

𝑇(𝑛) (𝑃 − 𝑆𝑛 ) + ∑𝑛𝑖=1 𝐶𝑖
𝐴(𝑛) = =
𝑛 𝑛
Where (𝑃 − 𝑆𝑛 ) = 𝑑𝑒𝑝𝑟𝑒𝑐𝑖𝑎𝑡𝑖𝑜𝑛 𝑐𝑜𝑠𝑡

E) Inventory Theory

Model – I Model – II
EOQ / ELS
2𝑅𝐶3 2𝑅𝐶3 𝐶1 + 𝐶2
𝑄0 = √ 𝑄0 = √ √
𝐶1 𝐶1 𝐶2
Re – order time 𝑄0
0 0
𝑄0
𝑡 = 𝑡 =
𝑅 𝑅
Frequency of 1 1
𝑛= 0 𝑛= 0
replenishment 𝑡 𝑡
Minimum average C (𝑄0 )= √2𝑅𝐶1 𝐶3 𝐶2
cost C (𝑄0 )= √2𝑅𝐶1 𝐶3 √
𝐶1 +𝐶2
Maximum 𝑄0
inventory level 0
𝐶2 𝑄0
𝑆 =
𝐶1 + 𝐶2
Maximum ----------- 𝑄0 − 𝑆 0
shortage level

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