Operations Management: Processes and Supply Chains, 12th Edition

Key Equations

Measuring Supply Chain Performance

1. 1. Average aggregate inventory $\text{value} = \text{average}$ inventory of each SKU multiplied by its value, summed over all SKUs held in stock.

2. 2. $\text{Weeks of supply}=\frac{\text{Average aggregate inventory value}}{\text{Weekly sales }\left(\text{at cost}\right)}$

3. 3. $\text{Inventory turnover}=\frac{\text{Annual sales }\left(\text{at cost}\right)}{\text{Average aggregate inventory value}}$

Outsourcing Processes

1. 4. Make-or-buy break-even quantity: $Q=\frac{F_m-F_b}{c_b-c_m}$