TUM School of Management

Production and Supply Chain Management

Prof Martin Grunow Technische Universität München

Impact of Defects
Measuring Defect Levels

Prof. Holly Ott

Production and Supply Chain Management
Chair: Prof. Martin Grunow
TUM School of Management

Holly Ott 1
 TUM School of Management
Production and Supply Chain Management
Prof Martin Grunow Technische Universität München

Learning Objectives
• Discuss the impact of defects in a process.
• Calculate process yield and ppm.
• Discuss the importance of a low fraction defective per part for
complex products.
• Understand the difference between a defect and a defective part.
• Understand the terms DPU and DPMO and how DPMO differs
from ppm.
• Discuss the importance of preventing defects.

Holly Ott 2
 TUM School of Management
Production and Supply Chain Management
Prof Martin Grunow Technische Universität München

Defects
What is a defect?
A defect occurs during any process step when the outcome of the
process step is not the expected outcome.
The expected outcome means that the conditions of the outcome
are specified in advance.

Random Defects: unwanted particles Systematic Defects: process problem

Holly Ott 3
 TUM School of Management
Production and Supply Chain Management
Prof Martin Grunow Technische Universität München

Why worry about a few defects?

Mix
Heat to Mold Label
Paraffin
Wax and
190℉/ and Eject and Market
82℃ Cool package
Pigment

Holly Ott 4
 TUM School of Management
Production and Supply Chain Management
Prof Martin Grunow Technische Universität München

Why worry about a few defects?

You are the manager of a crayon manufacturer.
Out of 100 batches of paraffin wax and color pigment used for the
crayons, an average of 1 batch does not match design specifications.
When you find out about a bad batch, you
need to scrap around 40 batches.
You estimate that the scrap costs you less
than 0.05% of cost of goods sold so you
think this problem is under control.

Are there any flaws in your thinking?

Holly Ott 5
 TUM School of Management
Production and Supply Chain Management
Prof Martin Grunow Technische Universität München

Why worry about a few defects?

Mix
Heat to Mold Label
Paraffin
Wax and
190℉/ and Eject and Market
82℃ Cool package
Pigment

Holly Ott 6
 TUM School of Management
Production and Supply Chain Management
Prof Martin Grunow Technische Universität München

Process Yield
How are the levels of defects measured?

p = # of defective units produced at a process step / total number of

produced units going into the process step (“fraction defective”)

Yield = # good units produced at a process step / # total units going

into the process step

=1–p

Holly Ott 7
 TUM School of Management
Production and Supply Chain Management
Prof Martin Grunow Technische Universität München

Process Yield
If you have more than one process step (or part) to make your product
where
n: number of process steps (or parts)
1 - p: yield at each process step (all steps or parts have same yield)
then the overall good units coming out of the entire process is the
Process Yield* = (1 - p)n
For different yields at each process step, you have to multiply the yields
for each step together
a: Yield at step 1, b: Yield at step 2, c: Yield at step 3…
Process Yield = (a)(b)(c)

*We are going to use “Process Yield,” but this is also referred to as “First Pass Yield” or “First Time Yield” or
“Rolled Throughput Yield.” These are sometimes used interchangeably, although the RTY is normally given as
the probability a manufacturing or service process will complete all required steps without any failures.
Holly Ott 8
 TUM School of Management
Production and Supply Chain Management
Prof Martin Grunow Technische Universität München

Process Yield

Parts In Process Process Process Good Parts Out

Step 1 Step 2 Step 3
Process Yield =
Good Parts Out/
Total Parts In
Parts In
= 10 Process 10 Process 9 Process 9
Good Parts Out
Step 1 Step 2 Step 3 =9
10 parts out: 9 parts out: 9 parts out:
Yield Step 1 Yield Step 2 Yield Step 3
= 10/10 = 9/10 = 9/9
= 100% = 90% = 100%

Process Yield = Yield Step 1×Yield Step 2×Yield Step 3

= 100%×90%×100% = 90%
Holly Ott 9
 TUM School of Management
Production and Supply Chain Management
Prof Martin Grunow Technische Universität München

Process Yield
For 3 process steps, each with 10% fraction defective what is our final
process yield?
Since 10% of the production at each step is defective, p = 0.1.
The yield at each step (good parts/total parts coming out from each step) will
be on average (1 – p) = (1 – 0.1) = 0.90 = 90%.

Process Process Process

Parts In Parts Out
Step 1 Step 2 Step 3
Yield Step 1 Yield Step 2 Yield Step 3
= 90% = 90% = 90%

Process Yield = (0.90)3 = 0.726 = 73%

Holly Ott 10
 TUM School of Management
Production and Supply Chain Management
Prof Martin Grunow Technische Universität München

Process Yield
For 3 process steps, each with 1% fraction defective what is our final process
yield?
Since 1% of the production at each step is defective, p = 0.01.
The yield at each step (good parts/total parts coming out from each step) will
be on average (1 – p) = (1 – 0.01) = 0.99 = 99%.

Process Process Process

Parts In Parts Out
Step 1 Step 2 Step 3
Yield Step 1 Yield Step 2 Yield Step 3
= 99% = 99% = 99%

Process Yield = (0.99)3 = 0.970 = 97%

Holly Ott 11
 TUM School of Management
Production and Supply Chain Management
Prof Martin Grunow Technische Universität München

Process Yield

Parts In Process Process Process Process

Step 1 Step 2 Step 3 Step 4
Yield Step 1 = 90% Yield Step 2 = 90% Yield Step 3 = 90% Yield Step 4 = 90%

Process Process Process

Step 5 Step 6 Step 7
Yield Step 5 = 90% Yield Step 6 = 90% Yield Step 7 = 90%

Process Process Process Parts Out

Step 8 Step 9 Step 10 Process Yield
Yield Step 8 = 90% Yield Step 9 = 90% Yield Step 10 = 90%
For 10 process steps, each with 10%
fraction defective, what is our final
process yield? Process Yield = (0.90)10 = 0.349 = 34.9%

Holly Ott 12
 TUM School of Management
Production and Supply Chain Management
Prof Martin Grunow Technische Universität München

Process Yield

Parts In Process Process Process Process

Step 1 Step 2 Step 3 Step 4
Yield Step 1 = 99% Yield Step 2 = 99% Yield Step 3 = 99% Yield Step 4 = 99%

Process Process Process

Step 5 Step 6 Step 7
Yield Step 5 = 99% Yield Step 6 = 99% Yield Step 7 = 99%

Process Process Process Parts Out

Step 8 Step 9 Step 10 Process Yield
Yield Step 8 = 99% Yield Step 9 = 99% Yield Step 10 = 99%
For 10 process steps, each with 1%
fraction defective, what is our final
process yield? Process Yield = (0.99)10 = 0.904 = 90.4%

Holly Ott 13
 TUM School of Management
Production and Supply Chain Management
Prof Martin Grunow Technische Universität München

Process Yield

For 100 process steps, each with 1% fraction defective what is our final
process yield? 1 - p = 1 – 0.01 = 0.99 = 99% yield at each step.
Process Yield = (0.99)100 = 0.366 = 36.6%

For 1000 process steps, each with 1% fraction defective what is our final
process yield? 1 - p = 1 – 0.01 = 0.99 = 99% yield at each step.

Process Yield = (0.99)1000 = 4.32×10-5 = 0.00432%

For 10000 process steps, each with 1% fraction defective what is our final
process yield? 1 - p = 1 – 0.01 = 0.99 = 99% yield at each step.
Process Yield = (0.99)10000 = 2.25×10-44 = pretty much zero!

Holly Ott 14
 TUM School of Management
Production and Supply Chain Management
Prof Martin Grunow Technische Universität München

Process Yield – Six Sigma

Source of Graph: Automotive News Europe (Supplement), March 2008

Example: Assume a car consists of 10000 parts and production processes.

Holly Ott 15
Quality Engineering & Management
 TUM School of Management
Production and Supply Chain Management
Prof Martin Grunow Technische Universität München

Process Yield

For 10000 process steps, each with 1% fraction defective what is our final
process yield? 1 - p = 1 – 0.01 = 0.99 = 99% yield at each step.
Process Yield = (0.99)10000 = 2.25×10-44 = pretty much zero!

For 10000 process steps, each with 0.621% fraction defective what is our final
process yield? 1 - p = 1 – 0.00621 = 0.99379 = 99.379% yield at each step.

Process Yield = (0.99379)10000 = 8.84×10-28 = pretty much zero!

For 10000 process steps, each with 3.4×10-4 % fraction defective what is our
final process yield? 1 - p = 1 – 0.0000034 = 0.9999966 = 99.99966% yield at
each step.
Process Yield = (0.9999966)10000 = 0.97 = 97% good parts!!
Holly Ott 16