CPU Sizing is based on the number of transactions per CPU per second under optimal and regular conditions.
The typical formula for computing CPU sizes is as follows:
Number of transactions = number of concurrent requests * (optimal/regular response times) 0.80 * (Speed of CPU in Mega Cycles) * No. of CPUs
= Mega Cycles per Transaction * No. of Transactions
The reason we use the 0.80 factor is because the threshold for CPU utilization before it is considered a bottleneck is 80%. If you want to take into account future growth you should use a smaller factor.