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 ▼ Geir Isene Posting Freak Posts: 896 Threads: 183 Joined: Jul 2005 12-29-2010, 10:16 AM It would be great if someone here could help me symbolically solve the following equation - it is part of an upcoming program to calculate the "processability" of a business area (i.e. if it is a sound business decision to create a process for a certain area of business). To be able to solve the bigger equation, I need help solving this one: Solve for x: (a^x)/x = b ▼ dietmar13 Junior Member Posts: 7 Threads: 4 Joined: Jul 2007 12-29-2010, 10:25 AM wolfram alpha is always your friend... http://www.wolframalpha.com/input/?i=%28a^x%29%2Fx+%3D+b+solve+for+x ▼ Geir Isene Posting Freak Posts: 896 Threads: 183 Joined: Jul 2005 12-29-2010, 10:30 AM Wow. Excellent. Wolfram is a better resource after this. Geir Isene Posting Freak Posts: 896 Threads: 183 Joined: Jul 2005 12-29-2010, 12:48 PM Looking into this further, I am unsure of how I would go about resolving the following in an HP-41 program: How do I handle the Lambert W-Function in a program? ▼ Massimo Gnerucci (Italy) Posting Freak Posts: 882 Threads: 23 Joined: Jan 2005 12-29-2010, 01:20 PM Quote: I am unsure of how I would go about resolving the following in an HP-41 program If you really need to... :-)try with HP-41Z module by Ángel.Greetings,Massimo Edited: 29 Dec 2010, 1:22 p.m. ▼ Geir Isene Posting Freak Posts: 896 Threads: 183 Joined: Jul 2005 12-29-2010, 01:34 PM OK, but how? ▼ PeterP Senior Member Posts: 564 Threads: 72 Joined: Sep 2005 12-29-2010, 02:37 PM [link:http://www.google.com/url?sa=t&source=web&cd=2&ved=0CCUQFjAB&url=http%3A%2%2Fciteseerx.ist.psu.edu%2Fviewdoc%2Fdownload%3Fdoi%3D10.1.1.86.9305%26rep%3Drep1%26type%3Dpdf&rct=j&q=how%20to%20calculate%20the%20lambert%20W%20function&ei=8o0bTcrBIoLGlQfxh6jJCw&usg=AFQjCNGzCdFCPN-BNVvFeSmeqBIbaY59AA&sig2=-qIe1lZhmayysqt745QTmg&cad=rja]and here if you *really* want to know a whole lot about the W (as well as a last chapter on numerical evaluation)[/link] Cheers Peter Edited: 29 Dec 2010, 2:43 p.m. ▼ Geir Isene Posting Freak Posts: 896 Threads: 183 Joined: Jul 2005 12-29-2010, 03:17 PM I am looking for a simpler, more basic approximation - see further down on the "math challenge"; An approximation of the original function to make the symbolic solve easier without it becoming recursive and such. Thomas Klemm Senior Member Posts: 735 Threads: 34 Joined: May 2007 12-29-2010, 03:23 PM Here's the Lambert W function: ``` 01 LBL "W" 02 STO M 03 0 04 STO N 05 LBL 00 06 RCL N 07 ENTER 08 ENTER 09 E^X 10 * 11 LASTX 12 1 13 R^ 14 + 15 * 16 LASTX 17 1/X 18 1 19 + 20 2 21 / 22 R^ 23 RCL M 24 - 25 ENTER 26 RDN 27 * 28 - 29 / 30 ST- N 31 ABS 32 RND 33 X#0? 34 GTO 00 35 RCL N 36 END ``` Here's how to use it: a ENTER b ```X<>Y LN CHS STO 00 X<>Y / XEQ "W" RCL 00 / ``` I'm using:  HTH Thomas ▼ Geir Isene Posting Freak Posts: 896 Threads: 183 Joined: Jul 2005 12-29-2010, 03:52 PM It sure does :) Gerson W. Barbosa Posting Freak Posts: 2,761 Threads: 100 Joined: Jul 2005 12-29-2010, 06:25 PM Alternatively, if you have the Advantage Module: ``` 01 LBL 'W 02 STO 01 03 CLx 04 ENTER 05 10^x 06 'L 07 SOLVE 08 RTN 01 LBL 'L 02 e^x 03 * 04 RCL 01 05 - 06 RTN Example, using your procedure: 2 ENTER 32 x<>y LN CHS STO 00 x<>y / XEQ "W" RCL 00 / --> 0.031949779 2 x<>y y^x LASTx / --> 31.99999999 ``` Another solution is x = 8, but this requires the other real branch of Lambert W. Regards, Gerson. ▼ Gerson W. Barbosa Posting Freak Posts: 2,761 Threads: 100 Joined: Jul 2005 12-31-2010, 12:29 AM The following program can be used to compute the second real solution: ``` 01 LBL 'WM 02 CHS 03 1/x 04 STO 01 05 ENTER 06 ENTER 07 ENTER 08 LBL 00 09 STO 02 10 LN 11 * 12 RCL 02 13 x<>y 14 - 15 x=0? 16 GTO 01 17 CLx 18 RCL 01 19 LASTx 20 GTO 00 21 LBL 01 22 LASTx 23 RCL 01 24 / 25 CHS 26 END 2 ENTER 32 x<>y LN CHS STO 00 x<>y / XEQ WM RCL 00 / --> 7.999999999 (x2) 2 x<>y y^x LASTx / --> 31.99999998 ``` ▼ Geir Isene Posting Freak Posts: 896 Threads: 183 Joined: Jul 2005 01-01-2011, 08:18 AM As this should not fade away to oblivion as programs buried deep into an HP Forum thread, I decided to put the two solutions to the W Lambert fuction into one program here: ▼ Gerson W. Barbosa Posting Freak Posts: 2,761 Threads: 100 Joined: Jul 2005 01-01-2011, 11:41 AM The program for the second real branch of Lambert's W function above (Wp or W-1)is based on this formula, found quite by chance when playing with the RPN stack: `W-1(-1/x) = -(...x*ln(x*ln(x*ln(x*ln(x))))...)/x` This is not a fast method, especially for arguments close to -1/e, it was originally meant for the HP-12C+: `W-1(-0.367) = -1.070791879 (about 5 seconds on the HP-12C+ and 2 min 20 sec on the HP-41CX). Actual 10-digit result: -1.070791887.` A faster method for the second branch should be appreciated. The steps 05 through 07 in the previous program made sense only for manual calculations. This shorter version is better: ``` 01 LBL 'WM 02 CHS 03 1/x 04 STO 01 05 LBL 00 06 STO 02 07 LN 08 RCL 01 09 * 10 RCL 02 11 x<>y 12 - 13 x=0? 14 GTO 01 15 LASTx 16 GTO 00 17 LBL 01 18 LASTx 19 RCL 01 20 / 21 CHS 22 END ``` Edited: 1 Jan 2011, 12:00 p.m. after one or more responses were posted ▼ Geir Isene Posting Freak Posts: 896 Threads: 183 Joined: Jul 2005 01-01-2011, 12:00 PM Check out the updated program listing ▼ Gerson W. Barbosa Posting Freak Posts: 2,761 Threads: 100 Joined: Jul 2005 01-01-2011, 12:28 PM You've been quick! My editing involved checking my result upon Egan's Ford LAMBERTW program for the HP-50g and other minor changes. No changes to the listing have been made. Now, sorry for the dumb question: how to enter STO M, N, on the HP-41? Thanks! ▼ Thomas Klemm Senior Member Posts: 735 Threads: 34 Joined: May 2007 01-01-2011, 12:52 PM Quote: how to enter STO M, N, on the HP-41? Plug in the CCD module. cf. HP-41C Synthetic Programming Just use register 00 and 01 instead of M and N. Cheers Thomas ▼ Gerson W. Barbosa Posting Freak Posts: 2,761 Threads: 100 Joined: Jul 2005 01-01-2011, 02:42 PM Quote: Just use register 00 and 01 instead of M and N. I'll stick to that :-) Thanks, Gerson. ▼ Geir Isene Posting Freak Posts: 896 Threads: 183 Joined: Jul 2005 01-01-2011, 02:55 PM Just as well. Using registers N and M (part of the Alpha register) saves using standard registers that are often used by other programs. Gerson W. Barbosa Posting Freak Posts: 2,761 Threads: 100 Joined: Jul 2005 01-03-2011, 08:25 PM Quote:`W-1(-0.367) = -1.070791879 (about 5 seconds on the HP-12C+ and 2 min 20 sec on the HP-41CX). Actual 10-digit result: -1.070791887.` A faster method for the second branch should be appreciated. A much faster program, using the Solver: ``` 01 LBL 'WW 02 CHS 03 STO 01 04 1/x 05 LN 06 ENTER 07 LN 08 + 09 ENTER 10 ENTER 11 .5 12 + 13 'LL 14 SOLVE 15 CHS 16 END 01 LBL 'LL 02 e^x 03 / 04 RCL 01 05 - 06 RTN -.367 XEQ WW --> -1.070791885 (12 seconds). Actual 10-digit result: -1.070791887. ``` ▼ Ángel Martin Posting Freak Posts: 1,253 Threads: 117 Joined: Nov 2005 01-04-2011, 02:41 AM WL0 and WL1 are available in the SandMath module. MCODE implementation, not using SOLVE (but internal iteration routine instead). ▼ Geir Isene Posting Freak Posts: 896 Threads: 183 Joined: Jul 2005 01-04-2011, 04:34 AM Ah, thanks for that. The Sandmath includes just about everything. Should have checked that listing of course. Gerson W. Barbosa Posting Freak Posts: 2,761 Threads: 100 Joined: Jul 2005 01-04-2011, 02:12 PM Hola Ángel, I'm sure the SandMath module tackles these and other special functions hands down. I'll try it in an emulator, if this is possible. I was never an HP-41 user, mine is used only occasionally. Cheers, Gerson. ▼ Ángel Martin Posting Freak Posts: 1,253 Threads: 117 Joined: Nov 2005 01-05-2011, 01:03 PM Gerson you can use V41 from TOS - it works like a charm. Cheers, AM Ángel Martin Posting Freak Posts: 1,253 Threads: 117 Joined: Nov 2005 12-29-2010, 02:40 PM There´s a WL0 (and WL1 as well) MCODE function in the sandmath, so I´d suggest you use it to program your own expression and then use the Advantage´s SOLVE upon it. Have you considered taking exponentials on each side of the equation? Cheers, ÁM Edited: 29 Dec 2010, 2:42 p.m. Geir Isene Posting Freak Posts: 896 Threads: 183 Joined: Jul 2005 12-29-2010, 02:44 PM To elaborate on the task at hand; I am looking to see if a business area would benefit from a formalized process. A task has the total cost (C) after N repetitions of c*N (where "c" is the cost of doing the task once). If N = n*y (where "n" is the number of times a task is done per year, and "y" is the number of years), we get the total cost of a task done over a certain number of years (or fraction(s) of years): C = nyc (pun not intended) [#1] If introducing a standardized process for the task gives an efficiency ratio of "E" (a number hopefully between 0 and 1), after the process is introduced we get: C = nycE [#2] But establishing a process has an initial cost of "I". To recuperate the cost, we get: nyc - nycE > IR^y [#3] where "R" is the needed return on investment: R = (1 + r/100) where "r" is the percentage needed as annual return on the investment. In some instances the initial cost is recuperated after a certain time, in other cases, the initial cost is never recuperated and a formalized process is not warranted. If the task is repeated often and the cost of introducing a process is not too costly, it would be a sound business decision to formalize a process for the task - as is the case with an assembly belt production line. Other more unpredictable and emergent tasks are very seldom repeated and the initial cost is never recuperated. The challenge is to solve equation #3 for y. Actually it would be good to create a program that would solve for any variable given the other variables in the equation (as in the Ohms Law program discussion recently). I could settle for approximations instead of wild and complex equations as the real world cases are approximations in any case. Take this as a math challenge :) Any suggestions? ▼ PeterP Senior Member Posts: 564 Threads: 72 Joined: Sep 2005 12-29-2010, 02:50 PM why dont you just use solve to find the value 'y' for which the left side equals the right side? You can use any number of available 'solve' programs, but probably the MCODE one in AdvantageMod should be just fine. You can even get fancy and use the FOCAL to MCODE program from a module (forgot its name right now) if speed is an issue. That way no fancy math is needed and that's what I probably would do as the required accuracy is probably pretty low and hence convergence would be very fast. Cheers Peter ▼ Geir Isene Posting Freak Posts: 896 Threads: 183 Joined: Jul 2005 12-29-2010, 02:54 PM I would like a direct approach with a symbolic solving of the equation and not to rely on a brute force SOLVE approach. Edited: 29 Dec 2010, 2:54 p.m. ▼ PeterP Senior Member Posts: 564 Threads: 72 Joined: Sep 2005 12-29-2010, 02:56 PM then wolfram has given you already the symbolic solution of your equation and you can go ahead and program it via one of the numerical procedures mentioned to evaluate W for a particular x. My guess is that this will require a longer and slower Focal program (but I can see the greater appeal in programing the symbolic solution 100%) Cheers Peter ▼ Geir Isene Posting Freak Posts: 896 Threads: 183 Joined: Jul 2005 12-29-2010, 03:06 PM Right, but I can't get my wits around how to treat the W function in a program - and so I am looking for approximations and creative genius to simplify the (to me) daunting Wolfram answer. ▼ Thomas Klemm Senior Member Posts: 735 Threads: 34 Joined: May 2007 12-29-2010, 03:51 PM Try to transform the equation so that you can apply the Lambert W function:     Substitution:     No Wolfram Alpha required. QED. Best regards Thomas Chuck Senior Member Posts: 320 Threads: 59 Joined: Dec 2006 12-29-2010, 06:20 PM The Lambert-W function can't be written in terms of elementary functions, but may be approximated with a recipe of elementary functions depending on the domain for x you have in mind and the maximum allowable error. Any idea what the domain and error desired is? CHUCK ▼ Geir Isene Posting Freak Posts: 896 Threads: 183 Joined: Jul 2005 12-29-2010, 07:14 PM Well, in the equation #3 above, clarified is: (nc(1-E))/I > (R^y)/y [4] then from my original equation; "a" is R "b" is (nc(1-E))/I A value for y here would have to lie in the area 0-7 for a sound business decision to be made. ▼ Thomas Klemm Senior Member Posts: 735 Threads: 34 Joined: May 2007 12-30-2010, 03:47 AM I assume r > 0, thus a > 1. The function  has a minimum at:  I suggest you have a look at the graph. To get real, positive solutions for  b has to be bigger than that:   In this case you will always get two solutions. The bad thing is, that you will lose in the long term: the exponential function outperforms any polynomial. So you might want to rethink your model. Why is it that you don't get any interest for what you gain thanks to the more efficient standardized process? At least you could use that to pay back the initial cost. Cheers Thomas Edited: 30 Dec 2010, 10:01 a.m. ▼ Geir Isene Posting Freak Posts: 896 Threads: 183 Joined: Jul 2005 12-30-2010, 11:54 AM Quote: Why is it that you don't get any interest for what you gain thanks to the more efficient standardized process? At least you could use that to pay back the initial cost. Now that is a good point. One should of course accumulate interest on the gain per year after the implemented process... Firstly: The cost gain per year equals nc - ncE, and that should gain interest: (n*c - n*c*E)*R times number of years: (n*c - n*c*E)*R*y > I*R^y And then: n*c*(1-E)*R/I > (R^y)/y I substitute E = (1-f/100) to make the input in a program more intuitive as "f" would be the percentage of efficiency given by the process. I also substitute R = (1 + r/100) where "r" is the percentage needed as annual return on the investment for a more intuitive use. And to keep with only lower case and to make the initial cost easier to read, I substitute the letter "I" with "i". We get: ncf(1+r/100)/100i > (1+r/100)^y/y [or: ncf(1+r/100)/100i > (1+r/100)^y/(1+r/100)y ] Seems correct? Then it is a matter of applying the Lambert W function to this and we get the result... ▼ Geir Isene Posting Freak Posts: 896 Threads: 183 Joined: Jul 2005 12-30-2010, 02:53 PM Oops, not correct. The compounded interest for the cost saving of the implemented process would actually be: We need to divide every element by two as one would only get half the gain of each year as the process gets repeated throughout the year. Now, to solve the resulting equation for the value "y" gets to be hell IMO - and beyond my current skills set. Can we simplify/approximate/make a shortcut somewhere? Any takers? ▼ PeterP Senior Member Posts: 564 Threads: 72 Joined: Sep 2005 12-30-2010, 04:27 PM at the risk of sounding like a broken record - what is so bad about using solve for such real life problems problems? Its fast, short and lets you change and adapt the code to fit the actual problem of your client quickly and easily. Given that you are interested in a real-life answer I simply don't see the benefit in writing an analytical solution that will for sure require some special function for which you need to write a numerical approximation etc etc but that's just me... Cheers Peter ▼ Geir Isene Posting Freak Posts: 896 Threads: 183 Joined: Jul 2005 12-30-2010, 04:35 PM I am starting to lean toward your solution... :-/ I would like to write a self-contained program, though. ▼ Marcus von Cube, Germany Posting Freak Posts: 3,283 Threads: 104 Joined: Jul 2005 12-31-2010, 03:21 AM Looking at the graph, the function seems to be well behaved so writing the solver (e. g. Newton) yourself should not be the problem. You can even use the analytical derivative instead of an approximation in the algorithm because the function to be solved is known in advance. Geir Isene Posting Freak Posts: 896 Threads: 183 Joined: Jul 2005 12-31-2010, 08:53 AM After excellent input here and some pondering and tweaking, I have come to this formula for the processability of a business area (whether an area warrants the formalization of a process): p = initial cost of implementing a process i = interest rate (return) needed for a sound business decision (as a percentage) t = number of time periods (the time period corresponds to "i"; usually yearly) n = number of times a task is done per time period (i.e. the number of times a process would get run per time period) c = cost of doin the task without a formalized process in place f = efficiency benefit from executing the task as a formalized process (as a percentage indicating how much one would benefit from the formalized process) As long as one can estimate the initial cost (p) and the process efficiency (f), set the time period - usually yearly, the maximum payback time (t), set the required return (i) and estimate the number of times the process would be repeated per time period [per year] (n), the job of calculating whether the area would yield a profit from introducing a process is pretty straight forward. But if one would attempt to solve for e.g. "t", this gets tough. How would I go about using SOLVE to solve this equation for "t"? BTW: A short explanation of the elements in the equation: The first part is the initial cost with the compounded interest for the period evaluated. The second part is the economic gain from an implemented process - the gain comes from each repetition of the process and that gain gets compounded interest as well. The total cost of the implementation minus the total gain for the process should be negative to indicate a profit durin the time period one evaluates for. Edited: 31 Dec 2010, 11:55 a.m. after one or more responses were posted ▼ Walter B Posting Freak Posts: 4,587 Threads: 105 Joined: Jul 2005 12-31-2010, 09:41 AM First, I'd throw away the unnecessary stuff: by expressing i and f in real numbers. Then I'd turn back to your question: Quote: How would I go about using SOLVE to solve this equation for "t"? Well, I have to admit I don't know how you would go about that ... d;-> ▼ Geir Isene Posting Freak Posts: 896 Threads: 183 Joined: Jul 2005 12-31-2010, 11:44 AM :) Well, those elements are unnecessary. But... It's a matter of using the numbers most familiar to a business person ("i" and "f" being percentages and all). Marcus von Cube, Germany Posting Freak Posts: 3,283 Threads: 104 Joined: Jul 2005 12-31-2010, 12:41 PM If you'd expect to be t a non integer, I must admit I don't have a solution but with t being a (hopefully small) positive integer you can just compute the part left of the "-" by repetitive multiplication and the sum by repetitive addition until the condition is met. You'll do n additions per multiplication. If you want the result to be exact to the level of single instances of the process, just stop the summation as soon as the condition is met even if j is below n*t. j is then the total number of process executions for the break even. Thomas Klemm Senior Member Posts: 735 Threads: 34 Joined: May 2007 01-02-2011, 12:23 PM Though I'm not familiar with your business process I guess the interest of the economic gain is payed at the end of the time period and not when the task is done. So in fact you have a variant of an ordinary "time value of money" (TVM) problem with the following payment at the end of the period (year):  The interest rate i in this formula is already divided by 100 as suggested by Walter. The present value PV corresponds to your initial cost of implementing a process while the future value FV = 0 (break-even). Most solvers (e.g. HP-12C, HP-48GX, ...) use n for the number of time periods. So take care because you use this variable for the number of tasks (and that's also the meaning in my formula above). It might be better to use another variable instead. It appears that the Advantage module contains a TVM-solver adapted from Finance Pac. So you can use either of these. Best regards Thomas Edited: 2 Jan 2011, 12:40 p.m. Geir Isene Posting Freak Posts: 896 Threads: 183 Joined: Jul 2005 01-03-2011, 01:02 PM Thanks for the input, guys - it's highly appreciated. I have now concluded with the following formula: p = initial cost of implementing a process i = interest rate (return) needed for a sound business decision (as a percentage) n = number of time periods (the time period corresponds to "i"; usually yearly) r = number of repetitions of the task per time period (i.e. the number of times a process would get run per time period) m = maintenance cost of having the process in place per time period (knowledge management cost, training cost) c = cost of doing the task without a formalized process in place f = efficiency benefit from executing the task as a formalized process (as a percentage indicating how much one would benefit from the formalized process) With this, we now have a complete formula to identify whether it is an economically sound decision to formalize a process in a business area. ▼ Walter B Posting Freak Posts: 4,587 Threads: 105 Joined: Jul 2005 01-03-2011, 01:13 PM Watch out, this formula won't work with values entered as percenteages. Use real values instead. ▼ Geir Isene Posting Freak Posts: 896 Threads: 183 Joined: Jul 2005 01-03-2011, 01:26 PM I know. I took your advice :) Thomas Klemm Senior Member Posts: 735 Threads: 34 Joined: May 2007 01-03-2011, 02:44 PM Still I think the 3rd term in your equation is wrong. Taking the additional maintenance cost into account I get:  From your formula I assumed m is paid at the end of the time period. Then I used this formula for TVM calculations: This may be simplified since FV = 0:  In your case PV and PMT have different signs:  That's what I end up with:  Now all you have to do is solve this equation for n. You're lucky! This can be done symbolically. Best regards Thomas Edited: 3 Jan 2011, 2:53 p.m. ▼ Geir Isene Posting Freak Posts: 896 Threads: 183 Joined: Jul 2005 01-03-2011, 03:51 PM The reason I think the third term is correct is that for every time the process is run, one gets the profit "cf", but from then on and out until r*n, one will accrue interest on that one profit. The first profit will result in a total profit of cf(1+i/r)^(nr-1), the next process run will result in a profit with accrued interest of one less, i.e. cf(1+i/r)^(nr-2), all the way until the last process run which will accrue only cf as profit (which means that my third term is actually a tad wrong as it should be summed from j=0 [not j=1] until (nr-1). All those profits with accrued interests are summed up for a total of the process gain over the time periods n. I have updated the formula above to correct the error found. ▼ Thomas Klemm Senior Member Posts: 735 Threads: 34 Joined: May 2007 01-03-2011, 05:49 PM It all depends on when the interest is paid: if it's at the end of the process I agree with you. But that's not how the banks I know handle it: the interest is usually paid at the end of the year. The interest is proportional to the time and of course the interest rate. The annual temporal ratio of the first process is (r-1)/r while the last process (still of the first year) doesn't get any interest. Assuming the process is run monthly then r = 12 and the first process gets interest for 11 months and the last process gets none. If you sum all this up you get the annual payment PMT. Only from now on you get compound interest every year. It's up to you to decide whether to subtract the maintenance m once at the end of the year (as I did) or monthly. In the latter case the formula will slightly change. You might also ignore this consideration altogether and use PMT = cfr - m instead if you're just interested in a rough approximation of n. As long as i << 1 and n is not too big it should still be quiet accuarate. I hope I could clarify my objection. Kind regards Thomas Bonus question: What happens with your 3rd expression when r gets bigger and bigger but still the annual cost cr is constant? ▼ Geir Isene Posting Freak Posts: 896 Threads: 183 Joined: Jul 2005 01-04-2011, 01:30 AM Yes, you did clarify your objection. However, from a business viewpoint, you get compounded interest for every process gain as the alternative is not to put the money in the bank (as very few businesses do for investment). The alternative is to invest the money otherwise in the business that would get (also) immediate return/profit. Do you agree that the formula is correct given that interest is calculated from every process repetition? Edited: 4 Jan 2011, 2:10 a.m. Thomas Klemm Senior Member Posts: 735 Threads: 34 Joined: May 2007 01-04-2011, 04:08 AM Quote: You might also ignore this consideration altogether and use PMT = cfr - m instead if you're just interested in a rough approximation of n.  Of course you want to use LN1+X to calculate that with your HP-41. This should also be a good initial value for a solver of your equation. Cheers Thomas Edited: 4 Jan 2011, 4:25 a.m. Geir Isene Posting Freak Posts: 896 Threads: 183 Joined: Jul 2005 01-04-2011, 03:57 AM Rethinking this, I believe you are right - it would be the usual business optimism that interests are accrued after each gain (that would be the maximum of the gain, but not a realistic one). So, unless you have something to add to your formula above, I think we can conclude that your equation is the final answer for this chapter. The next chapter would be to add Risk Management to the equation; We simply RCS to cf to obtain the gain from each process run, where R is the risk of the task going wrong (real number), C is the cost when/if it goes wrong and S is the security offered by the process (a real number between 0 and 1, where 0.1 indicates a 10% security added by the process). Thus, given that a task has 0.001 chance of failure and the corresponding average cost of such failure is 10000, the added risk cost per task is then 10. If a process would help the security of the process by 10%, the added value of doing the task via a formalized process is then 0.001*10000*0.1 = 1. I use capital letters for RCS as it indicates a more "virtual" gain through Risk Management. Viewpoints? Edited: 4 Jan 2011, 7:31 a.m. after one or more responses were posted ▼ Geir Isene Posting Freak Posts: 896 Threads: 183 Joined: Jul 2005 01-04-2011, 04:29 AM And would you agree that the break-even of the equation would be: ▼ Geir Isene Posting Freak Posts: 896 Threads: 183 Joined: Jul 2005 01-04-2011, 12:31 PM This equation is easy to solve for all variables, except "i". I'm up against a brick wall on that one. ▼ Thomas Klemm Senior Member Posts: 735 Threads: 34 Joined: May 2007 01-04-2011, 01:51 PM Not the solution but shows the way to go. Thomas Klemm Senior Member Posts: 735 Threads: 34 Joined: May 2007 01-04-2011, 07:49 AM What's the meaning of \$^2 (or NOK^2) when you multiply cost c with cost C? ▼ Geir Isene Posting Freak Posts: 896 Threads: 183 Joined: Jul 2005 01-04-2011, 07:59 AM Sorry, changed it to addition, not multiplication - there is an economic gain from efficiency of the process and there is a "virtual" economic gain from the process minimizing failure of the task. Added, not multiplied. Thus, one could justify implementing a process purely from a security perspective or an efficiency perspective or both. Thomas Klemm Senior Member Posts: 735 Threads: 34 Joined: May 2007 01-04-2011, 02:23 AM Still you can use:   ▼ Geir Isene Posting Freak Posts: 896 Threads: 183 Joined: Jul 2005 01-04-2011, 03:18 AM True. And nice. But how do you account for p(1+i)^n? I mean, one would get compounded interest over n periods for the initial investment if one would rather invest that cost into something else.

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