1. Chapter 9 Capability and Rolled Throughput Yield

2. What is capability analysis? And what can it tell us?
Provides a measure of how well a process satisfies customer requirements.
Will provide various ways to calculate defects per unit
Allow us to calculate the rolled throughput yield
Therefore uncovering the hidden factory (often consuming 30% of an org’s resources).

3. Measuring Capability
Measure the true quality levels of products and services.
Report the relationship between what is acceptable to the customer and what the process can naturally deliver.
Process Capability – is defined as the spread within which almost all of the values of a data distribution will fall. (Generally described as 6s or 3s)
The main objective of 6s is to have no more than 3.4 defects per million opportunities (DPMO).
The process must be brought into statistical control so that performance becomes predictable and capable of consistently meeting customer expectations.

4. What is a normal distribution?
-6 -5 -4 -3 -2 -1 0 1 2 3 4 5 6 

5. Usually set by customer
So what is Capability?
The proportion of output that will be within product specification tolerances.
Specification Range
Usually set by customer
LSL
Lower Specification Limit
USL
Upper Specification Limit
Process Range

6. How is capability measured?
Cp>=1 process capable
Cp<1 process not capable
Cp= 1.33 minimum value for process to be considered capable*.
*Most organizations use 1.33 as the minimum due to the shift that occurs over time  We have a lower sigma for long-term than short-term since long-term process capability is expected to shift over time by 1.5s.
6s-1.5s = 4.5s  3.4 DPMO answer to HW #1

7. Indices of Capability - Cp
LSL
Lower Specification Limit
USL
Upper Specification Limit
Cp<1
Cp= 1
Cp= 1.5
Cp= 2.0
Improvement

8. Capability Example Example 9.1
CALCULATE the Cp
Process has a mean = .738
s=.0725
LSL=.500, USL=.900
Is this process capable? Why?

9. Cp is missing a key element
It only really makes sense when the process remains centered.
Cpk was created to address instances when the process mean is not centered relative to the specification limits.
Specification Range
LSL
USL
Process Range

10. Indices of Capability - Cpk
LSL
USL
Potential Real
Capability Capability
Increase in rejects
Cp= 2.0 Cpk=2.0
Cp= 2.0 Cpk=<1
Cp= 2.0 Cpk= 0
Cp= 2.0 Cpk< -1

11. How can we calculate Cpk ?
m = process center
 = short-term standard deviation
m = midpoint of specification
MINITAB
STAT
QUALITY TOOLS Capability Analysis

12. What is capability analysis? And what can it tell us?
Provides a measure of how well a process satisfies customer requirements.
Will provide various ways to calculate defects per unit
Allow us to calculate the rolled throughput yield
Therefore uncovering the hidden factory (often consuming 30% of an org’s resources).

13. You can’t improve what you don’t measure
You can’t improve what you don’t measure? But what characteristics do Six Sigma metrics have?
METRIC:
Must have a scale
Must have a goal, or standard
Compensation or other forms of recognition must be attached to actual performance compared to goal.
The metric is reported and reviewed vertically and horizontally throughout the organization on a regular basis.
The metric must be able to be pooled horizontally and vertically within the enterprise.
The metric must be strongly correlated with one or more of the 12 dimensions of quality at the business, operations, and/or process level of the organization.

14. 12 Dimensions of Quality Metrics
Aligned
Owned
Predictive
Actionable
Minimal
Simple
Correlated
Transformative
Standardized
Contextual
Reinforced
Validated

15. What defects are we measuring? And what’s the difference?
Unit = item, service, product, transaction delivered to customer.
Defect = failure to meet customer req. or a performance standard
Defective = unit that contains at least one defect
Defect opportunity = opportunities for a unit to be defective
With DPMO, look up Long-term and Short-term Sigma in the Sigma Conversion Table (Table VIII in Appendix A)

16. DPU/ DPMO Example 9.4
Bank branch receives 300 mortgage applications per business day.
Report shows that these applications contained 50 defects.
Each application as 14 key fields (defect opportunities).
Calculate the DPU, DPO and Sigma Level:
Look up 11, in the Sigma Conversion Table (Table VIII in appendix)
What is the range for the Short-term and Long-term Sigma?

17. DPU/ DPMO Example 9.7
Office receives 4500 engineering permit applications per day.
Audit shows that these applications contained 300 defects.
Each application as 12 key fields (defect opportunities).
Calculate the DPU, DPO and Sigma Level:
Look up 5, in the Sigma Conversion Table
Short-term sigma = 4s - 4.1s
Long-term sigma = 2.5s - 2.6s

18. Capability vs. Performance
For indicating the level of long-term performance that a process can achieve we use:

19. Equivalent Mean Offset
Long-Term Performance
Short-Term Capability
LSL
USL
LSL
USL
1.5

20. What is capability analysis? And what can it tell us?
Provides a measure of how well a process satisfies customer requirements.
Will provide various ways to calculate defects per unit
Allow us to calculate the rolled throughput yield
Therefore uncovering the hidden factory (often consuming 30% of an org’s resources).

21. What is meant by yield?
“Yield” can be viewed as the ratio of output to input:
A successful unit would mean it is free of any type on nonconformity (or defect).
EXAMPLE: Process 100 units, 90 are successful.
Called FTY (Final Test Yield)

22. But…yield is a flawed concept It doesn’t account for rework and replacement
We must look at a process map and measure IPY (In Process Yield) at each step.
RTY (Rolled Throughput Yield) is calculated by multiplying together they IPY.
RTP = IPY1 x IPY2 x IPY3 x…x IPYn
This could be considered a true assessment of process effectiveness.

23. Example of Yield vs. RTY
START
END
Customer gives deposit slip .
Bank associate processes deposit
Enters deposit in electronic system
System generates deposit confirmation
Customer obtains confirmation
Bank with 280 deposits a day. Each slip as 5 defect opportunities. They get a lot of complaints, but they can’t understand why since the # of defects per final confirmation is low.
FIRST: create a flow chart

24. Example of Yield vs. RTY
START
Defs
DPU
IPY 5
5/280= .0179
.9823 6
6/280= .0214
.9788 3
3/280= .0107
.9893 4
4/280= .0143
.9858 2
2/280= .0071
.9929 
.0714
SECOND: Note the defects per step, and calculate the DPU, IPY for each. IPY = e-DPU Since there are multiple defect opportunities per unit.
Customer gives deposit slip .
Bank associate processes deposit
Enters deposit in electronic system
System generates deposit confirmation
Customer obtains confirmation
END

25. Example of Yield vs. RTY
START
Defs
DPU
IPY 50
50/280= .1786
.8364 6
6/280= .0214
.9788 3
3/280= .0107
.9893 4
4/280= .0143
.9858 2
2/280= .0071
.9929 
.2321
SECOND: Note the defects per step, and calculate the DPU, IPY for each. IPY = e-DPU Since there are multiple defect opportunities per unit.
Customer gives deposit slip .
Bank associate processes deposit
Enters deposit in electronic system
System generates deposit confirmation
Customer obtains confirmation
END

26. What is capability analysis? And what can it tell us?
Provides a measure of how well a process satisfies customer requirements.
Will provide various ways to calculate defects per unit
Allow us to calculate the rolled throughput yield
Therefore uncovering the hidden factory (often consuming 30% of an org’s resources).

27. The Hidden Factory
START
END
Customer gives deposit slip .
Bank associate processes deposit
Enters deposit in electronic system
System generates deposit confirmation
Customer obtains confirmation
The hidden factory is used to designate all work performed above and beyond to produce a good unit of output and is not explicitly identified. Can include the costs for rework, scrap, excess floor space and equipment.
Estimated that 30% of an organization’s resources go to the hidden factory.
Inspection
Failure Analysis
Rework
Inspection
Failure Analysis
Rework
Inspection
Failure Analysis
Rework
Inspection
Failure Analysis
Rework
Inspection
Failure Analysis
Rework