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Six Sigma quality: A structured review and implications for future

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IJQRM
27,3
268
Received March 2009
Revised September 2009
Accepted September 2009
International Journal of Quality &
Reliability Management
Vol. 27 No. 3, 2010
pp. 268-317
q Emerald Group Publishing Limited
0265-671X
DOI 10.1108/02656711011023294
The current issue and full text archive of this journal is available at
www.emeraldinsight.com/0265-671X.htm
Six Sigma quality: a structured
review and implications for future
research
Mohamed Gamal Aboelmaged
Management Department, College of Business Administration,
Ajman University of Science and Technology, Ajman, United Arab Emirates
Abstract
Purpose – This paper aims to clarify emerging aspects and trends of Six Sigma literature over 17
years, from 1992 to 2008.
Design/methodology/approach – The literature on Six Sigma from 417 referred journal articles in
business and management disciplines, information systems and computer science, engineering,
healthcare, etc. were systematically analyzed based on a scheme that consists of four distinct
dimensions: publication year and journal, major themes, research type, and application sector (i.e.
manufacturing vs service).
Findings – A number of key findings emerged: Six Sigma research is growing rapidly, covering
various disciplines and domains with a great focus on Six Sigma tools and techniques; empirical
research is dominant with more emphasis on case study approach; and the growing gap between
manufacturing- and service-focused articles implies the return of Six Sigma to manufacturing as its
initial base. Although a large volume of literature is available on Six Sigma, the topic is still under
development and offers potential opportunities for further research and applications.
Originality/value – The paper provides both academics and practitioners with a useful framework
for pursuing rigorous Six Sigma research through explaining the chronological growth of Six Sigma,
challenging themes of Six Sigma research, dominating research types and application areas in Six
Sigma, and the major sources of Six Sigma information.
Keywords Six Sigma, Total quality management, Lean production, Supply chain management
Paper type Literature review
Introduction
Six Sigma has evolved from scientific management and continuous improvement
theories by combining the finest elements of many former quality initiatives.
Originally, Motorola was the first to launch a Six Sigma program in the 1980s. In 1988,
Motorola was the first company awarded the Baldrige Award, which led other
organizations to show an increased interest in adopting and modifying Six Sigma
methodology. Companies such as Allied Signal, IBM, and General Electric adopted Six
Sigma as a corporate requirement for strategic and tactical operations to produce
high-level results, improve work processes, expand employees’ skills and change the
culture. Now, Six Sigma is well established in almost every industry and many
organizations worldwide have modified Six Sigma methodology and tools to fit their
own operations.
For the term “Six Sigma” there appears to be little consensus on its definition.
Proposing an emergent definition of Six Sigma based on a grounded theory approach,
Schroeder et al. (2008) concluded that Six Sigma offers a new structure that promotes
both control and exploration in improvement efforts. They asserted that academics Six Sigma
need to develop a deeper and richer knowledge of Six Sigma so that they do not over quality
hype or quickly dismiss it. Table I shows examples of Six Sigma definitions that reflect
different perspectives. From a statistical perspective, Six Sigma is a metric of process
measurement symbolized by the Greek letter s that represents the amount of variation
with a normal data distribution. Fundamentally, Six Sigma quality level relates to 3.4
defects per million opportunities (DPMO). The focus of Six Sigma is not on counting 269
the defects in processes, but the number of opportunities within a process that could
result in defects so that causes of quality problems can be eliminated before they are
transformed into defects (Antony, 2006). From a business perspective, Six Sigma could
be described as a process that allows companies to drastically focus on continuous and
breakthrough improvements in everyday business activities to increase customer
satisfaction (Andersson et al., 2006).
In this paper, we classify the literature on Six Sigma research and present a
comprehensive review of these studies. The review covers 417 journal articles

Andersson et al. (2006) Improvement program for reducing variation, which

Antony (2002)
Banuelas and Antony (2002)
Behara et al. (1995)
Bendell (2006)
Black and Revere (2006)
Chakrabarty and Tan (2007)
Kwak and Anbari (2006)
focuses on continuous and breakthrough
improvements
A business performance improvement strategy that
aims to reduce the number of mistakes/defects – to
as low as 3.4 occasions per million opportunities
A philosophy that employs a well-structured
continuous improvement methodology to reduce
process variability and drive out waste within the
business processes using statistical tools and
techniques
The rating that signifies “best in class”, with only 3.4
defects per million units or operations
A strategic, company-wide, approach . . . focusing on
variation reduction, projects have the potential of
simultaneously reducing cost and increasing
customer satisfaction
A quality movement, a methodology, and a
measurement. As a quality movement, Six Sigma is a
major player in both manufacturing and service
industries throughout the world. As a methodology,
it is used to evaluate the capability of a process to
perform defect-free, where a defect is defined as
anything that results in customer dissatisfaction
A quality improvement program with a goal of
reducing the number of defects to as low as 3.4 parts
per million opportunities or 0.0003 per cent
A business strategy used to improve business
profitability, to improve the effectiveness and Table I.
efficiency of all operations to meet or exceed Examples of Six Sigma
customer needs and expectations definitions
IJQRM published between 1992 and 2008. The paper is divided into four remaining sections.
27,3 First, the research methodology used in the study is described. This is followed by the
classification framework in the second section. Third, Six Sigma articles are analyzed
and the classification results are reported. Fourth, conclusions are presented and the
implications of the study are discussed.

270
Research methodology
The research targeted peer-reviewed journal papers having more than two pages, as
academics and practitioners alike most often use journals to obtain information and
disseminate the highest level of research findings, both in width and breadth research
findings. Therefore, editorials, news reports, book reviews, viewpoints, conference
papers, masters and doctoral dissertations, textbooks, and unpublished working
papers were excluded. The survey focused only on papers with “Six Sigma” as a part of
their titles. The exceptions are those articles that are explicitly dealing with “Six
Sigma” but for some reasons the authors decided to use one of Six Sigma
methodologies, “DMAIC” or DFSS, in the title. Finally, to avoid never ending revision
of the article, the end of 2008 was selected as the cut-off date. These criteria should
allow a quality and comprehensive set of papers on Six Sigma by different fields. The
compiling effort has been carried out over 19 months through extensive database
search, internet search, reference checking, etc. However, it is possible that there exist
an article that is not surveyed in this paper.
Considering the nature of the research on Six Sigma, it would be difficult to group
the literature under any specific disciplines. As a result, various online journal
databases shown were selected and searched to provide a comprehensive bibliography
on Six Sigma literature. The literature contributions were primarily of articles from
research databases including Emerald, Science Direct (Elsevier), ProQuest Global,
Interscience, Inderscience, ASQ, Springer and IEEE-Xplore. These databases provide
online delivery systems with full text access to thousands of high quality articles and
journals that cover a wide range of social and applied science titles including business
and management disciplines, engineering, healthcare and computer science. The
search yielded 417 Six Sigma articles from 147 journals. Each article was carefully
reviewed and then the data was organized to produce a classification from several
perspectives. Although this research is not exhaustive, it serves as a comprehensive
base for an understanding of Six Sigma research.

Classification framework
The classification framework was based on the literature review, the nature of Six
Sigma research, and the work of Nonthaleerak and Hendry (2006) and Brady and Allen
(2006). The articles were reviewed, analyzed and classified based on four dimensions as
follows:
(1) Publication year and journal.
(2) Major theme and subject.
(3) Research type.
(4) Application sector: manufacturing vs service.
This framework will provide guidelines for pursuing rigorous Six Sigma research by Six Sigma
explaining the chronological growth of Six Sigma, challenging themes of Six Sigma quality
research, dominating research types and application areas in Six Sigma and the major
sources of Six Sigma information.

Results and analysis of the classifications

Distribution by year of publication 271
Figure 1 shows the distribution of 417 Six Sigma articles published over the period
from 1992 to 2008. There appears to be limited research outputs before 2000. The
blooming years for Six Sigma research were between 2000 and 2006 since the number
of journal articles has increased significantly over this period, and started to decline in
2007. However, the escalation in number of Six Sigma articles in 2008 is noteworthy.

Distribution of articles by journal

There were a total of 147 different journals from various business, engineering, statistics,
information systems/technology and healthcare disciplines that published Six Sigma
articles. Figure 2 demonstrates that the vast number of articles (122 articles, 53 percent)
is published in 14 journals, while 196 articles (47 percent) were published in 133 journals,
among them 91 journals published one article only and 42 journals published 2 to 4
articles each. Among the leading journals, International Journal of Six Sigma and
Competitive Advantage had by far the largest number of articles per journal (72 articles,
17.3 percent). Since 2004, the journal is devoted to advancing the understanding and
practice of Six Sigma research. To reflect the close relationship between total quality
management and Six Sigma research, total quality management journals had the second
largest percentages of Six Sigma articles. This includes Total Quality Management and
Business Excellence and The TQM Journal (previously, The TQM Magazine which share
the second position (27 articles, 6.5 percent each). Besides, the engineering perspective to

Figure 1.
Distribution of Six Sigma
articles by year
(1992-2008)
IJQRM
27,3

272

Figure 2.
Distribution of Six Sigma
articles by journals

quality deployment is noticeable in Six Sigma articles since the third and fourth largest
percentages of Six Sigma articles are in Quality Engineering (23 articles, 5.5 percent) and
Quality and Reliability Engineering International (18 articles, 4.3 percent). International
Journal of Product Development (eight articles, 1.9 percent) had the fifth position.
International Journal of Quality & Reliability Management and International Journal of
Production Research share the sixth position (seven articles, 1.67 percent each). The
seventh position is shared by The Quality Management Journal and The Journal of
Validation Technology (six articles, 1.43 each). Four journals including Measuring Six Sigma
Business Excellence, Journal of Organizational Excellence, Journal of Manufacturing quality
Technology Management, and Journal of Healthcare Management share the eighth
largest percentages of Six Sigma articles (five articles, 1.2 percent each). Surprisingly,
these 14 journals represent the main disciplines that construct Six Sigma research;
business, engineering, and healthcare. A comprehensive list of all contributing journals
is illustrated in the Appendix. 273
Distribution of articles by themes
Table II provides a comprehensive list containing the themes and their classified
references for each theme. It is unavoidable to have an article that is relevant to more
than one theme, so listing an article under more than one theme was allowed. For
example, an article may address critical success factors for Six Sigma implementation
but provide information on Six Sigma tools and techniques. In such a case, a more
weighted theme is chosen to classify the article according to the author’s judgment. A
total of 13 themes were identified in Six Sigma articles. The most heavily published
theme is in Six Sigma tools and techniques (169 articles). The two major Six Sigma
methodologies, DMAIC and DFSS, made up the second largest proportion within Six
Sigma themes (87 articles). DAMIC (54 articles) and DFSS, design for Six Sigma (33
articles). The conventional relationship between Six Sigma and other quality
approaches, TQM and continuous improvement in particular, had the third largest
number of articles (48 articles), while the human structure of Six Sigma in terms of the
Belt system had the fourth position (37 articles) (Figure 3).
This is followed by the relationship between Six Sigma and lean production in the
fifth position (34 articles). Success factors for Six Sigma implementation is the sixth
largest proportion within Six Sigma themes (33 articles). Evaluating Six Sigma in
terms of challenges and benefits is in the seventh and eighth positions with 31 and 29
articles continuously. Selection of Six Sigma project is in the ninth position (16 articles).
Themes that link Six Sigma with management disciplines are also present. This
involves organizational change in the tenth position (14 articles), supply chain in the
11th position (13 articles) and organizational learning in the 13th position (seven
articles). Surprisingly, there are relatively fewer articles on Six Sigma education in the
12th position (11 articles). An elaboration of the cited themes is presented in the
following subsections.
Six Sigma tools and techniques. The great deal of Six Sigma literature has focused on
Six Sigma tools and techniques. They can be described as practical methods and skills
employed by Six Sigma project teams to tackle quality related problems for fostering
performance improvement. While Six Sigma tool has a specific role and is often narrow
in focus, Six Sigma technique has a wider application and requires specific skills,
creativity and training (Antony, 2006). Examples of Six Sigma tools include Pareto
analysis, root cause analysis, process mapping or process flow chart, Gantt chart,
affinity diagrams, run charts, histograms, quality function deployment (QFD), Kano
model, brainstorming, etc. Examples of Six Sigma techniques include statistical process
control (SPC), process capability analysis, suppliers-input-process-output-customer
(SIPOC), SERVQUAL, benchmarking, etc. Moreover, a Six Sigma technique can utilize
various tools. For example, statistical process control (SPC) is a technique that utilizes
various tools such as control charts, histograms, root cause analysis, etc.
IJQRM
27,3 Theme References Total

Tools and Adams et al. (2004); Al-Aomar (2006); Al-Aomar and Youssef (2006); 169
techniques Antony (2006); Antony (2007a); Antony and Fergusson (2004); Antony et al.
(2001); Antony et al. (2005); Antony et al. (2007a); Antony et al. (2007c);
274 Banuelas and Antony (2003); Banuelas et al. (2005); Basu (2004); Beard
(2008); Bellows (2004); Benedetto (2003); Bhatnagar and Pandey (2005);
Biedry (2001); Biehl (2004); Bigio et al. (2004); Box and Luceno (2000);
Brewer and Eighme (2005); Bunce et al. (2008); Card (2000); Carrigan and
Kujawa (2006); Caulcutt (2001); Chan et al. (2005); Chang and Su (2007);
Chang and Wang (2008); Chatterjee (2003); Chen et al. (2007); Chen et al.
(2005a, b); Cheng (2007b, c); Cheng et al. (2008); Cook et al. (2005); Cupryk
et al. (2007); Das and Hughes (2006); De Koning and De Mast (2006); De
Vore (2008); Doble (2005); Does et al. (2002); Drenckpohl et al. (2007);
Echempati and White (2000); Ehie and Sheu (2005); Elberfeld et al. (2007);
Eldridge et al. (2006); Erlandson (2006); Fairbanks (2007); Flott (2000);
Frank (2003); Frankel et al. (2005); Fuller (2000b); Gack and Robison (2003);
Glower (2006); Goh (2002b); Goh and Xie (2003); Goh and Xie (2004); Goh
et al. (2003); Graves (2002); Hahn (2005); Hahn et al. (1999); Han and Lee
(2002); Hare (2005); Harjac et al. (2008); Harrington and Trusko (2005);
Henderson and Evans (2000); Hendricks and Kelbaugh (1998); Holtz and
Campbell (2004); Hong and Goh (2003); Hsu et al. (2005, 2008); Huq (2006);
Hutchins (2000); Hwang (2006); Ingram (2000a, b, c); Isaacson (2008);
Johnston et al. (2008); Johnstone et al. (2003); Juras et al. (2007); Kanji (2008);
Kapur and Feng (2005); Kaushik et al. (2008); Knowles et al. (2004); Krishna
and Dangayach (2007); Krishna et al. (2008); Kumi and Morrow (2006);
Ladani et al. (2006); Lee-Mortimer (2006, 2007); Li et al. (2006); Lin et al.
(2008); Lipscomb and Lewis (2004); Little (2003); Lloyd (2006); Lucier and
Seshadri (2001); McAdam and Lafferty (2004); Mahanti (2005); Mahanti
and Antony (2005, 2006); Mahesh et al. (2006); Maleyeff and Kaminsky
(2002); Maleyeff and Krayenvenger (2004); Malhan and Rao (2005); Malliga
and Srinivasan (2007); Manikandan et al. (2008); Manual (2006); Markarian
(2004a, b); Miles (2006); Montgomery and Woodall (2008); Moorman (2005);
Morgan and Cooper (2004); Mukhopadhyay and Ray (2006); Murugappan
and Keeni (2003); Neagu and Hoerl (2005); Ng et al. (2005); Nonthaleerak
and Hendry (2008); O’Neill (2005); Pan and Cheng (2008); Pandey (2007);
Patterson et al. (2005); Perng et al. (2008); Perry and Barker (2006); Pheng
and Hui (2004); Raisinghani et al. (2005); Rajagopalan et al. (2004);
Ravichandran (2006, 2007, 2008); Revere et al. (2004); Sadagopan et al.
(2005); Sahoo et al. (2008); Sarkar (2007a); Schön (2006); Schroeder et al.
(2008); Sehwail and De Yong (2003); Sekhar and Mahanti (2006); Setijono
(2008); Smith (1993); Snee (2004); Stewart and Spencer (2006); Su et al.
(2005); Sudhahar et al. (2008); Taner et al. (2007); Tannock et al. (2007);
Thakkar et al. (2006); Thiele et al. (2008); Thomas and Barton (2006);
Thomas and Lewis (2007); Thompson et al. (2008); Ung et al. (2007); Van
Den Heuvel et al. (2005); Van Iwaarden et al. (2008); Vaughan (1998); Vote
and Huston (2005); Woodall (2001); Woodard (2005, 2006); Wright and
Table II. Basu (2008); Xue-Liang et al. (2007); Yang (2004); Zaroukian and Sierra
Classification of Six (2006); Zhan (2008)
Sigma articles by themes (continued)
 Six Sigma
Theme References Total
quality
Methodology 87
DAMIC Antony (2006); Antony et al. (2007c); Bandyopadhyay and Jenicke (2007);
Bandyopadhyay and Lichtman (2007); Banuelas et al. (2005); Brewer and
Eighme (2005); Chen et al. (2005, 2008); Cronemyr (2007); De Koning and
De Mast (2005); Dedhia (2005); Dreachslin and Lee (2007); Drenckpohl et al. 275
(2007); Edgeman and Dugan (2008); Edgeman et al. (2005); Friday-Stroud
and Sutterfield (2007); Hamza (2008); Henderson and Evans (2000); Ho and
Chuang (2006); Holtz and Campbell (2004); Hu et al. (2005); Jenicke et al.
(2008); Kaushik and Khanduja (2008); Kuei and Madu (2003); Kumar et al.
(2008a, b); Kumi and Morrow (2006); Lee-Mortimer (2007); Li and Al-Refaie
(2008); Li et al. (2008); Lipscomb and Lewis (2004); Lloyd (2006); McCarty
and Fisher (2007); Mahanti and Antony (2005, 2006); Mahesh et al. (2006);
Man (2002); Miles (2006); Neri et al. (2008); Sanders and Hild (2000c);
Schroeder et al. (2008); Sehwail and De Yong (2003); Szeto and Tsang (2005);
Taghaboni-Dutta and Moreland (2004); Taner et al. (2007); Tang et al. (2007);
Thawani (2004); Thomas and Barton (2006); Thomas and Lewis (2007);
Tong et al. (2004); Vote and Huston (2005); Wyper and Harrison (2000); Yeh
(2007); Yeh et al. (2007) 54
DFSS Amer et al. (2008); Anand et al. (2007); Antony (2002); Banuelas and Antony
(2003, 2004); Bayle et al. (2001); Chang and Su (2007); Chung et al. (2008);
De Feo and Bar-El (2002); Erlandson (2006); Ferryanto (2007); Gerhorst et al.
(2006); Goh (2001); Gremyr (2005); Hasenkamp and Olme (2008); Hu and
Antony (2007); Hu and Pieprzak (2005); Johnson et al. (2006a); Kalamdani
and Khalaf (2006); Khalaf and Yang (2006); Kovach (2007); Kovach and Cho
(2006); Liu et al. (2008); Mekki (2006); Rajagopal and Castillo (2007); Savage
(2007); Savage and Son (2008); Shahin (2008); Sokovic et al. (2005); Thomas
and Singh (2006); Yang (2005) 33

Quality approaches Aggogeri and Gentili (2008); Al-Mishari and Suliman (2008); Andersson
et al. (2006); Antony (2002); Black and McGlashan (2006); Camgoz-Akdag
(2007); Cheng (2007c); Cheng (2008); Craven et al. (2006); Dahlgaard and
Dahlgaard-Park (2006); Davison and Al-Shaghana (2007); Delsanter
(1992); Ehie and Sheu (2005); Ferng and Price (2005); Foster (2007);
Freiesleben (2007); Furterer and Elshennawy (2005); Goeke and Offodile
(2005); Green (2006b); Hagemeyer et al. (2006); Haikonen et al. (2004);
Hild et al. (2000); Hoerl (1998); Hong and Goh (2004); Jeffery (2005);
Klefsjo et al. (2006); Klefsjö et al. (2001); Knowles et al. (2004); Krishna
et al. (2008); Lupan et al. (2005); Pfeifer et al. (2004); Revere and Black
(2003); Ribardo and Allen (2003); Ricondo and Viles (2005); Sadagopan
et al. (2005); Sarkar (2007b); Savolainen and Haikonen (2007); Schroeder
et al. (2008); Stewart and Spencer (2006); Thirunavukkarasu et al. (2008);
Thomas et al. (2008a); Walters (2005); Wessel and Burcher (2004); Yang
(2004); Yang and Yeh (2007); Yeung, S. (2007); Zhang and Xu (2008);
Zu et al. (2008) 48
(continued) Table II.
IJQRM
Theme References Total
27,3
Belt system Andersson et al. (2006); Antony (2004b); Antony et al. (2001, 2005, 2007b, c);
Banuelas et al. (2006); Bendell (2006); Black and McGlashan (2006); Black
and Revere (2006); Buch and Tolentino (2006a, b); Gowen (2005); Green
(2006a); Green et al. (2006); Hagemeyer et al. (2006); Haikonen et al. (2004);
276 Henderson and Evans (2000); Ho et al. (2008); Hoerl et al. (2001); Ingle and
Roe (2001); Johnson et al. (2006b, c); Klefsjö et al. (2001); Kwak and Anbari
(2006); Lee-Mortimer (2006); Linderman et al. (2003, 2006); Mitra (2004);
Motwani et al. (2004); Pandey (2007); Pfeifer et al. (2004); Rasis et al.
(2002a, b); Sadagopan et al. (2005); Savolainen and Haikonen (2007);
Schroeder et al. (2008) 37

Lean production Al-Aomar (2006); Andersson et al. (2006); Bendell (2006); Bonilla et al. (2008);
Brett and Queen (2005); Byrne et al. (2007); Chang and Su (2007); Cupryk
et al. (2007); Dahlgaard and Dahlgaard-Park (2006); De Koning et al. (2006,
2008a, b); Fairbanks (2007); Ferng and Price (2005); Furterer and
Elshennawy (2005); Gibbons (2006); Hu et al. (2008); Jin et al. (2008); Khalaf
and Yang (2006); Kumar et al. (2006); Marti (2005); Mazzola et al. (2007);
Morgan and Cooper (2004); Naslund (2008); Pickrell et al. (2005); Pojasek
(2003); Proudlove et al. (2008); Ricondo and Viles (2005); Shah et al. (2008);
Shahin and Alinavaz (2008); Sharma (2003); Su et al. (2006); Thomas et al.
(2008b); Van Den Heuvel et al. (2006) 34

Success factors Antony (2004a, 2006, 2008a); Antony and Banuelas (2002); Antony and
Fergusson (2004); Antony et al. (2005, 2007a, 2008); Buch and Tolentino
(2006a, b); Byrne (2003); Chakrabarty and Tan (2007); Cheng (2007a, 2008);
Chung et al. (2008); Coronado and Antony (2002); Feng and Manuel (2008);
Frings and Grant (2005); Gowen (2005); Hilton et al. (2008); Ho et al. (2008);
Jenicke et al. (2008); Kumar (2007); Laosirihongthong et al. (2006); Linderman
et al. (2003, 2006); McAdam and Evans (2004b); Knowles et al. (2005);
Sanders and Hild (2000a); Shanmugam (2007); Szeto and Tsang (2005);
Wessel and Burcher (2004); Yang et al. (2008) 33

Challenges Antony (2004b, 2006, 2007b, 2008a, b); Antony et al. (2001, 2008); Cheng
(2007a); Feld and Stone (2002); Gijo and Rao (2005); Goh and Xie (2004); Goh
et al. (2006); Hammer (2002); Ho et al. (2006); Hoerl (1998); Kumar (2007);
Kumar et al. (2008); Kwak and Anbari (2006); Lee and Choi (2006); Liu et al.
(2008); McAdam and Evans (2004a, b); McAdam and Lafferty (2004);
McAdam et al. (2005); McClusky (2006); Nonthaleerak and Hendry (2006);
Sanders and Hild (2000b); Senapati (2004); Shahabuddin (2008); Van Den
Heuvel et al. (2004); Yeung, S. (2007) 31

Benefits Agarwal and Bajaj (2008); Aggogeri and Gentili (2008); Antony (2004b,
2006); Antony et al. (2001, 2005, 2007c); Behara et al. (1995); Carnell and
Lambert (2000); Chen et al. (2005); Das et al. (2006); De Mast (2006); Desai
(2006, 2008); Douglas and Erwin (2000); Feld and Stone (2002); Freiesleben
(2006); Ganesh (2004); Goh et al. (2006); Hutchins (2000); Johnson (2002,
2006); Johnson and Swisher (2003); Kuei and Madu (2003); Kumar et al.
(2007); Kwak and Anbari (2006); McClusky (2006); Sahoo et al. (2008); Snee
(2004) 29
Table II. (continued)
 Six Sigma
Theme References Total
quality
Project selection Antony (2004a, b, 2006); Antony et al. (2001, 2005, 2007c); Banuelas et al.
(2006); Bonilla et al. (2008); Hu et al. (2008); Jung and Lim (2007); Kumar et al.
(2007, 2008); Kumi and Morrow (2006); Kwak and Anbari (2006); Savolainen
and Haikonen (2007); Su and Chou (2008) 16
Organizational Brewer (2004); Carnell and Lambert (2000); Craven et al. (2006); Davison and
277
change Al-Shaghana (2007); De Feo and Bar-El (2002); Fazzari and Levitt (2008);
Immaneni et al. (2007); Lloréns-Montes and Molina (2006); Lok et al. (2008);
Motwani et al. (2004); Rajamanoharan and Collier (2006); Sadagopan et al.
(2005); Schroeder et al. (2008); Thawani (2004) 14
Supply chain Antony et al. (2006); Bandyopadhyay and Jenicke (2007); Chan et al. (2006);
Chappell and Peck (2006); Das (2005); Dasgupta (2003); Garg et al. (2004);
Gowen (2005); Knowles et al. (2005); Wang et al. (2004); Yang et al. (2007);
Yeh et al. (2007) 13
Six Sigma Anderson-Cook et al. (2005); Cook et al. (2005); Edgeman and Dugan (2008);
education Ho et al. (2006); Maleyeff and Kaminsky (2002); Man (2002); Mitra (2004);
Montgomery et al. (2005); Rao and Rao (2007); Stevenson and Mergen (2006);
Weinstein et al. (2008) 11
Org. learning Box (2006); Jeffery (2005); Lin et al. (2008); Motwani et al. (2004); Ricondo and
Viles (2005); Savolainen and Haikonen (2007); Wiklund and Wiklund (2002) 7 Table II.

Figure 3.
Distribution of Six Sigma
articles by themes
IJQRM Six Sigma methodologies (DMAIC and DFSS). The second largest part of Six Sigma
27,3 literature deals with the theorization and application of Six Sigma methodologies.
There are two major improvement methodologies in Six Sigma. The first methodology,
DMAIC, is used to improve already existing processes and can be divided into five
phases; define, measure, analyze, improve and control. Several studies have shown
successful cases of DMAIC application in a variety of contexts such as healthcare
278 (Dreachslin and Lee, 2007), thermal power plants (Kaushik and Khanduja, 2008),
retailing (Kumar et al., 2008a), financial services (Kumar et al., 2008b) and
manufacturing process (Li et al., 2008; Tong et al., 2004). In contrast, the second
methodology, design for Six Sigma (DFSS), is used for new processes or when the
existing processes are unable to achieve business objectives such as customer
satisfaction (Andersson et al., 2006). DFSS methodology can also be divided into five
phases (DMADV); define, measure, analyze, design and verify (Banuelas and Antony,
2003). Antony (2002) refers to DFSS as a powerful approach to design products and
processes in a cost effective and simple manner. Applications of DFSS are also varied
from high-tech manufacturing (Chung et al., 2008) to designing new housing (Johnson
et al., 2006a).
Six Sigma belt system. A part of Six Sigma structure is the role of Six Sigma leaders
who initiate, support and review improvement projects. Most Six Sigma organizations
adopt the hierarchical level of black belt and green belt systems. A black belt is a
full-time team leader dedicated to the Six Sigma initiative. Black belts are equipped
with expertise in using the Six Sigma methodology and statistical analysis techniques
for process improvement. Individuals at the highest level of expertise in Six Sigma
methodologies are called master black belts. They teach, coach and mentor the
lower-level black belts and green belts. About 5 percent of employees in Six Sigma
organization will be black belts, while the rest are trained to be green belts. Green belts
are project leaders and/or process experts who integrate Six Sigma into their daily job
duties. They are trained in the use the Six Sigma methodology and dedicating
approximately 30 percent of their time toward Six Sigma initiatives. Most of the
literature on Six Sigma belt system focuses mainly on belts’ training and attributes.
For example, Ingle and Roe (2001) contrasted the Six Sigma black belt programs used
in both Motorola and General Electric (GE). They concluded that GE has a more
structured approach to training black belts than does Motorola. The program in GE is
more intensive, takes a shorter time and therefore results in a greater number of
accredited black belts. The authors also warn about the dangers of focusing on the
metric rather than the mission in black belt training since some people were only
becoming black belts in order to be promoted, and those that could not become black
belts were resentful and disillusioned. With regard to black belts attributes, Antony
et al. (2007b) and Black and McGlashan (2006) found that several characteristics were
more essential than others in considering potential black belt candidates. The key
attributes of Six Sigma black belts in manufacturing companies include effective
communicators, change agents, customer advocators, team builders, results-driven
mindset personnel and positive thinkers. With regard to green belts, Green (2006a) and
Green et al. (2006) uses case studies to examine the nature of their training, work and
the projects in which they were involved.
Selection of Six Sigma projects. Selection of Six Sigma projects has received
substantial attention from authors (e.g. Antony, 2004a; Banuelas et al., 2006; Hu et al.,
2008; Jung and Lim, 2007; Kumar et al., 2007; Su and Chou, 2008) given that the right Six Sigma
selection of Six Sigma projects is one of the most critical factors for the effective quality
deployment of a Six Sigma program. Antony (2004a) has indicated some project
selection criteria when a service organization wants to implement Six Sigma programs.
Those criteria include financing, customer satisfaction, cost, risks and alignment of
strategic business goals and objectives. If project selection is systematically sloppy, the
entire Six Sigma effort could fail. Based on the results of a survey study, Banuelas et al. 279
(2006) have pointed to project selection criteria employed in UK organizations. These
criteria include customer satisfaction, financial benefits, top management commitment
and the integration with the company’s strategy. Moreover, Su and Chou (2008)
employed three main steps for selecting Six Sigma projects. Those steps are
understanding and analyzing the voice of customers (VOCs), drawing up the
organization’s business strategic policies and deploying the possible Six Sigma
projects based on the organization’s business policies and the voice of customers. They
suggest that Six Sigma projects can be prioritized based on evaluating benefits and
risks of each project. However, the prioritization of projects in many organizations is
still based on pure subjective judgment and very few powerful tools are available for
prioritizing projects (Su and Chou, 2008). Cost benefit analysis, cause and effect matrix,
brainstorming and Pareto analysis are among these tools and techniques which can be
employed to identify and prioritize such projects (Banuelas et al., 2006).
Six Sigma and quality approaches. Six Sigma literature has linked Six Sigma to
quality approaches through two pivotal perspectives. The first perspective links Six
Sigma to TQM, while the second treats Six Sigma as a continuous improvement
approach. Within the first perspective, Six Sigma authors (e.g. Andersson et al., 2006;
Black and Revere, 2006; Dahlgaard and Dahlgaard-Park, 2006; Ferng and Price, 2005;
Furterer and Elshennawy, 2005; Green, 2006a; Ricondo and Viles, 2005) asserted that
Six Sigma is not an alternative to TQM.
Even though most Six Sigma tools and techniques are already being applied in the
TQM field and both approaches preach that continuous improvement of quality is
essential to business success, there is a vital distinction between them. Hence, the
impression raised by some researchers (e.g. Thirunavukkarasu et al., 2008) that Six
Sigma could be easily implemented in a company that implements TQM is still
debatable. While authors regard TQM as a mushy management system consisting of
values, methodologies and tools that aims to improve customer satisfaction, they
consider Six Sigma as a more structured methodology that fosters product and process
improvement so that the defects are never produced in the first place. Contrary to
TQM, Six Sigma allows organizations to measure process capability and improvement
efforts internally and externally. Schroeder et al. (2008) have identified four core
advantages of Six Sigma over TQM. These advantages involve the focus on financial
and business results, use of a structured method for process improvement or new
product introduction, use of specific metrics such as DPMO, critical-to-quality (CTQ),
and use of a significant number of full-time improvement specialists. According to
Antony and Banuelas (2002), Ford found that Six Sigma is more profit orientated, while
TQM focuses on fixing the quality problem regardless of the cost. The above
mentioned differences affirm the necessity of critical ingredients related to Six Sigma
training, structure and focus to ensure successful transformation from TQM to Six
Sigma in an organization.
IJQRM On the other hand, Six Sigma has gained popularity as a continuous improvement
27,3 strategy aimed at reducing process-variations (Antony, 2002; Ehie and Sheu, 2005;
Haikonen et al., 2004; Savolainen and Haikonen, 2007; Stewart and Spencer, 2006). This
view is triggered through the link between the DMAIC-structure described above and
the Deming’s plan-do-check-act (PDCA) cycle. The idea in both procedural practices
forms a continuum over time for dynamic continuous improvement structure to sustain
280 business performance and bottom-line (Savolainen and Haikonen, 2007). Operationally,
continuous improvement should be guided by Six Sigma tools and techniques for
defining specific process to be improved, analyzing root causes and designing actions
for making improvement (Ehie and Sheu, 2005).
Six Sigma and lean production. Recent Six Sigma studies have focused on the
relationship between Six Sigma and lean production (e.g. Andersson et al., 2006;
Arnheiter and Maleyeff, 2005; Bendell, 2006; Chang and Su, 2007; Dahlgaard and
Dahlgaard-Park, 2006; Ferng and Price, 2005; Naslund, 2008; Pickrell et al., 2005) or on
the implementation of the new labeled concept “Lean Six Sigma” (e.g. Bonilla et al.,
2008; Byrne et al., 2007; Cupryk et al., 2007; De Koning et al., 2006, 2008a, b; Furterer
and Elshennawy, 2005; Gibbons, 2006; Marti, 2005).
The authors arrived at a conclusion that lean and Six Sigma complement each other
and represent a powerful framework for eliminating process waste and variation when
used together. Lean production is primarily concerned with eliminating waste and
reducing cycle time in processes, but cannot reduce variation alone. Six Sigma can
reduce variation and improve process by applying a problem-solving approach using
statistical tools, but alone does not reduce waste or cycle time. Another distinction
between the two approaches is related to the scope. Whereas lean production
encompasses the entire organization value chain, Six Sigma concentrates more
narrowly on specific project or process within an organization. Despite these
differences, both approaches share common features that may combined together to
develop the “Lean Six Sigma” concept as an improvement methodology that
maximizes shareholder value and improves customer satisfaction, cost, quality,
process speed and invested capital by reducing variation and eliminating waste in an
organization (Byrne et al., 2007). Typically, some of lean Six Sigma cases that have
been reported in the literature are applied in service settings including financial service
(De Koning et al., 2008a, b), healthcare (De Koning et al., 2006), and local government
(Furterer and Elshennawy, 2005).
Six Sigma success factors. Key factors for success or failure during Six Sigma
implementation have always been subject to intensive literature (e.g. Antony, 2004b,
2006; Antony and Fergusson, 2004; Antony and Banuelas, 2002; Antony et al., 2005;
Buch and Tolentino, 2006b; Chakrabarty and Tan, 2007; Coronado and Antony, 2002;
Kumar, 2007; Kwak and Anbari, 2006; McAdam and Evans, 2004a; Revere et al., 2006;
Szeto and Tsang, 2005; Wessel and Burcher, 2004). The most cited success factors in
Six Sigma literature include the following:
.
Strong top management involvement and commitment.
.
Selection of Six Sigma projects.
.
Changing organizational culture.
.
Aligning Six Sigma projects to corporate business objectives.
.
Cross-functional team working.
 .
Effective communication. Six Sigma
.
Infrastructure (both organizational and IT infrastructure). quality
.
Training.
.
Linking Six Sigma to business strategy, customer, HRM, suppliers.
.
Measurement.
.
Accountability. 281
.
Understanding tools and techniques within Six Sigma.
.
Project management skills.

Benefits of Six Sigma. When Six Sigma is implemented successfully, it will offer a
disciplined approach for improving effectiveness and efficiency in a broad range of
businesses. The most cited benefit of Six Sigma in the literature is customer
satisfaction (e.g. Behara et al., 1995; Chen et al., 2005; Das et al., 2006; Desai, 2006;
Douglas and Erwin, 2000; Ganesh, 2004; Kuei and Madu, 2003; Kumar et al., 2007;
Rylander and Provost, 2006). Freiesleben (2006) suggested that successful application
of Six Sigma quality is positively correlated with better financial performance and
profit generation. In the manufacturing context, Six Sigma benefits are related to
various areas such as reduction in process variability, reduction in in-process defect
levels, reduction in maintenance inspection time, improving capacity cycle time,
improving inventory on-time delivery, increasing savings in capital expenditures,
increase in profitability, reduction of operational costs, reduction in the cost of poor
quality (COPQ), increase in productivity, reduction of cycle time, reduction of customer
complaints, improved sales and reduced inspection (Antony et al., 2005, 2007a; Kwak
and Anbari, 2006). Service organizations adopting Six Sigma strategy, on the other
hand, will have various benefits. According to Antony (2006, 2004a), Antony et al.
(2007c), and Kwak and Anbari (2006), Six Sigma benefits for service organizations may
involve improved accuracy of resources allocation, improving accuracy of reporting,
reduced documentary defects, improving timely and accurate claims reimbursement,
streamlining the process of service delivery, reduced inventory of equipment, reduced
service preparation times, improved customer satisfaction, reduced defect rate in
service processes, reduced variability of key service processes, transformation of
organizational culture from fire-fighting mode to fire-prevention mode with the
attitude of continuous improvement of service process performance, reduced process
cycle time and hence achieve faster service delivery, reduced service operational costs,
increased market share, improved cross-functional teamwork across the entire
organization, increased employee morale, reduced number of non-value added steps in
critical business processes through systematic elimination, leading to faster delivery of
service, reduced cost of poor quality (COPQ) (costs associated with late delivery,
customer complaints, costs associated with misdirected problem solving, etc.),
increased awareness of various problem solving tools and techniques, leading to
greater job satisfaction for employees, improved consistency level of service through
systematic reduction of process variability and effective management decisions due to
reliance on data and facts rather than assumptions and gut-feelings.
Six Sigma challenges. Bridging the gap between the theory and practice in Six
Sigma research has been given more attention by Six Sigma researchers (e.g. Antony,
2004b, 2007b, 2008b; Chakrabarty and Tan, 2007; Goh and Xie, 2004; McAdam et al.,
IJQRM 2005; McAdam and Evans, 2004a, b; Nonthaleerak and Hendry, 2007; Senapati, 2004;
27,3 Shahabuddin, 2008). Although its powerful strategy and impact on industry and
service sectors, Six Sigma still lacks a theoretical underpinning with other
management theory (Antony, 2008b). However, Linderman et al. (2003, 2006)
attempt to enhance the underlying theory by linking Six Sigma to goal theory. They
develop a set of propositions that need further empirical verification. McAdam and
282 Evans (2004a, b) have claimed that the Six Sigma program is weak in understanding
customer needs and transforming these needs into products. Other Six Sigma
limitations are related to its application. These challenges and limitations as illustrated
by Antony (2004b, 2007b, 2008b) are as follows:
.
The 1.5 sigma shift resulting in a 3.4 DPMO does not make sense in service
processes.
.
The impact of leadership styles on Six Sigma success needs more research.
.
No unified standards have been accepted regarding the contents of belt training.
.
The relationship between the cost of poor quality (COPQ) and the sigma quality
level (SQL) is based on experience not empirical research.
.
The relationship between COPQ and its financial impact in SMEs needs further
research since SMEs are hardly considering quality costs.
.
Availability of quality data is still a great challenge in Six Sigma projects.
.
In some cases, the solutions driven by Six Sigma are expensive and only a small
part of the solution is implemented at the end.
. Six Sigma project selection in many organizations is based on subjective
judgment.
.
The calculation of defect rates is based on the assumption of normality, while the
calculation of defect rates for non-normal situations is not yet properly
addressed.
.
Owing to dynamic market demands, critical-to-quality characteristics (CTQs)
should be critically examined at all times and refined as necessary.
.
Training programs usually do not address forecasting and time series methods.
.
Six Sigma research needs to investigate the validity of 5 sigma approach
assumption in design for Six Sigma (DFSS).
.
There is no standard curriculum for Six Sigma in many top schools.

Six Sigma education. A series of Six Sigma papers have pointed to the entry of Six
Sigma program in an educational context. Edgeman and Dugan (2008) have argued
that the pragmatic and intellectual focus of Six Sigma combined with tools and
strategies from engineering and business, develops a magnet curriculum that attract
many students. They have suggested two deployment approaches for its academic
instruction. The first approach is via central control at the unit, departmental, or
college level for their own students and to attract students from other fields, while the
other approach is via a radiant instructional model with core courses and elective
courses in discipline specific areas that match students’ needs. Moreover, Antony
(2008b), Ho et al. (2006), Mitra (2004), and Rao and Rao (2007) believe that a Six Sigma
framework provides an excellent platform for integrating statistical, management and
technical tools and skills into the curricula of engineering and business schools to help Six Sigma
students tackle business problems in organizations. Further, Rao and Rao (2007) quality
suggested that all students of management must leave the institution as certified black
belts. Maleyeff and Kaminsky (2002) and Cook et al. (2005) have revealed a positive
feedback from students regarding a course on Six Sigma taught at US universities.
However, successful academic adoption of Six Sigma curricula require not only fine
content, but also its organization and supporting culture that rely in part on intellectual 283
and practical experiences from external contributors such as Six Sigma black belts
(Edgeman and Dugan, 2008).
Six Sigma and organizational change. Many authors have seen Six Sigma as an
organizational change vehicle that possesses a culture of accountability, quality, and
innovation (Brewer, 2004; Carnell and Lambert, 2000; Craven et al., 2006; Davison and
Al-Shaghana, 2007; Immaneni et al., 2007; Lok et al., 2008). Schroeder et al. (2008)
suggested that Six Sigma should be viewed as an organization change process. The
view will improve Six Sigma implementation through identifying what needs to be
changed and boost change management process itself. Thawani (2004) revealed that
Six Sigma has been deployed strategically to change the culture of organization
through inculcating process control discipline in business context. The main issue is
that organizations need to know when and how changes can be made to deploy Six
Sigma tools. Sadagopan et al. (2005) suggested three Six Sigma transitions (i.e.
physical, psychological, and mindset) which are required for successful
implementation of Six Sigma program. These transitions ensure changes in
resources, employees and management to facilitate the implementation of alternative
processes that achieve 3.4 DPMO in organizational performance. In the same vein,
Lloréns-Montes and Molina (2006) suggested that the implementation of a Six Sigma
program needs successful change management of behavioral and work processes to
achieving planned aspirations. Moreover, Rajamanoharan and Collier (2006) used
change management model as a framework to explore Six Sigma implementation
issues. They indicated that successful change management can be facilitated by
leadership support, learning capacity and IT leveragability while a low level of cultural
readiness and an inadequate knowledge-sharing capability inhibits successful change.
A success story of organizational transformation process to implement Six Sigma in
Dow Chemical’s has been reported by Motwani et al. (2004).
Six Sigma and supply chain. Several studies have investigated how Six Sigma
methodology can effectively be employed in supply chain management (SCM) to measure,
monitor and improve the performance of the whole supply network. For example,
Dasgupta (2003) called for the application of Six Sigma metrics as a comprehensive and
flexible framework for evaluating and benchmarking the performance of a supply chain
and its entities against world-class standards. Wang et al. (2004) developed an application
guideline for the assessment, improvement and control of quality in SCM in Taiwan using
Six-Sigma improvement methodology. They advocated that improvements in the quality
of all supply chain processes lead to cost reductions as well as service enhancements.
Although they demonstrated that Six Sigma has not been successfully adapted to deliver
similar benefits across supply chains, Knowles et al. (2005) concluded that Six Sigma does
have something novel to offer organizations over the contribution of existing approaches to
supply chain improvement. They proposed a conceptual model that integrates the
Balanced Scorecard, SCOR model (Supply Chain Reference model) and Six Sigma DMAIC
IJQRM methodology in a strategic- and operational-level cycles. Chappell and Peck (2006)
27,3 concluded that Six Sigma can be applied to supply chains by following the DMAIC
framework and employing a mixture of quantitative and qualitative tools. However, they
also suggest that it is difficult to implement Six Sigma methodology throughout the supply
chain under some circumstances related to stock holding policies and levels of demand.
Furthermore, Antony et al. (2006) proposed a Six Sigma constrained genetic algorithm
284 (GA) based heuristic to optimize supply chain performance through the synchronization of
the business processes. The suggested model aimed at minimizing the total cost and
ensuring very high delivery probability within the customer specified delivery window. In
the same scene, Garg et al. (2004) introduced “Six Sigma supply chains” as a new notion to
describe and quantify supply chains with sharp and timely deliveries. Using inventory
optimization (IOPT) problem, they show that the design of Six Sigma supply chains can
deliver products within a customer specified delivery window, with at most 3.4 missed
deliveries per million. Presenting a real industry case about Six Sigma methodology for the
SCM, Yang et al. (2007) argued how the black belt program in Samsung has produced
highly qualified and talented SCM specialists, who are currently training the methodology
to members in their organizations and leading SCM projects. As a result, SCM projects in
Samsung are prepared and conducted in a more disciplined way and their outcomes are
continuously monitored and shared through the company’s repository.
Six Sigma and organizational learning. Few studies have looked at the link between
Six Sigma and organizational learning from a perspective that Six Sigma methodologies
are mature enough to be integrated with different learning approaches. Wiklund and
Wiklund (2002) discussed Six Sigma as a company-wide approach for organizational
improvement incorporating organizational learning. The authors covered the factors that
are essential for improving organizational learning and for stimulating the competence,
development and motivation among personnel. Further, Ricondo and Viles (2005)
considered Six Sigma as an improvement program that can be linked to organizational
learning under certain conditions depending on their problem-solving capabilities.
Savolainen and Haikonen (2007) examined the dynamics of organizational learning in the
context of Six Sigma implementation in organizations. They suggested that learning in
Six Sigma implementation is a single-loop and incremental type where the learning
process is characterized by measurement, detection and correction of errors and cost
reduction. Consequently, continuous improvement occurs through procedural practices
like in the DMAIC-cycle that forms a structure for sustained learning process.
Distribution of articles by research method. The distribution of articles by research
method is shown in Table III. About 63 percent of the articles (263 articles) were
classified as empirical articles using either surveys or case studies, while about 37
percent of the articles (154 articles) were theoretical articles that usually employ
extensive literature review to focus on the development of concepts, propositions,
models, or theory building. Also, it is clear that case study is the most dominant
research method in Six Sigma articles (231 articles, 55.4 percent). Figure 4 shows the
growing gap over the years between case study method and other research methods,
particularly survey research. Case study method is used to document and analyze Six
Sigma implementation in particular contexts; industry, service, process or phase of a
specific project. Examples of Six Sigma case study research include Desai (2006)
concerning applying Six Sigma approach to improve customer service in an Indian
small scale industry, Echempati and White (2000) regarding analyzing hinge
 Total
Six Sigma
Method References n % quality
Case-focused Adams et al. (2004); Agarwal and Bajaj (2008); Al-Aomar (2006); Al-Mishari
articles and Suliman (2008); Amer et al. (2007, 2008); Anand et al. (2007); Antony and
Fergusson (2004); Antony et al. (2007c); Arul and Kohli (2004);
Bandyopadhyay and Jenicke (2007); Bandyopadhyay and Lichtman (2007);
Banuelas and Antony (2003); Banuelas et al. (2005); Bayle et al. (2001); Beard
(2008); Behara et al. (1995); Benedetto (2003); Bigio et al. (2004); Bonilla et al. 285
(2008); Box (2006); Brett and Queen (2005); Brewer (2004); Brewer and
Eighme (2005); Bunce et al. (2008); Byrne (2003); Camgoz-Akdag (2007); Chan
et al. (2005); Chang and Su (2007); Chappell and Peck (2006); Chatterjee (2003);
Chen et al. (2005a, b, 2007, 2008); Cheng et al. (2008a); Craven et al. (2006);
Cupryk et al. (2007); Das (2005); Das and Hughes (2006); Dasgupta (2003);
Davison and Al-Shaghana (2007); De Koning et al. (2006, 2008a, b); De Vore
(2008); Desai (2006, 2008); Doble (2005); Does et al. (2002); Douglas and Erwin
(2000); Dreachslin and Lee (2007); Drenckpohl et al. (2007); Echempati and
White (2000); Edgeman et al. (2005); Ehie and Sheu (2005); Elberfeld et al.
(2007); Eldridge et al. (2006); Erlandson (2006); Ferng and Price (2005); Frank
(2003); Frankel et al. (2005); Furterer and Elshennawy (2005); Garg et al.
(2004); Gerhorst et al. (2006); Gibbons (2006); Gijo and Rao (2005); Goel and
Chen (2008); Goh (2001, 2002b); Goh et al. (2003); Gowen (2008); Green (2006a);
Green et al. (2006); Hagemeyer et al. (2006); Haikonen et al. (2004); Hamza
(2008); Han and Lee (2002); Harjac et al. (2008); Harrington and Trusko (2005);
Hasenkamp and Olme (2008); Henderson and Evans (2000); Hendricks and
Kelbaugh (1998); Hensley and Dobie (2005); Hild et al. (2000); Hilton et al.
(2008); Ho and Chuang (2006); Ho et al. (2006, 2008); Holtz and Campbell
(2004); Hong and Goh (2003, 2004); Hsu et al. (2008); Hu and Antony (2007);
Hu and Pieprzak (2005); Hwang (2006); Immaneni et al. (2007); Ingle and Roe
(2001); Isaacson (2008); Jenicke et al. (2008); Jin et al. (2008); Johnson (2002,
2006); Johnson and Swisher (2003); Johnson et al. (2006a, b, c); Johnston et al.
(2008); Johnstone et al. (2003a, b); Jung and Lim (2007); Juras et al. (2007);
Kalamdani and Khalaf (2006); Kapur and Feng (2005); Kaushik and
Khanduja (2008); Kaushik et al. (2008); Khalaf and Yang (2006); Knowles et al.
(2004); Kovach (2007); Kovach and Cho (2006); Krishna and Dangayach
(2007); Krishna et al. (2008); Kumar (2007); Kumar et al. (2006, 2007, 2008a, b);
Kumi and Morrow (2006); Ladani et al. (2006); Lee-Mortimer (2006, 2007); Li
and Al-Refaie (2008); Li et al. (2006, 2008); Lin et al. (2008); Lipscomb and
Lewis (2004); Liu et al. (2008); Lloyd (2006); Lok et al. (2008); Lucier and
Seshadri (2001); McAdam and Lafferty (2004); Mahanti and Antony (2005,
2006); Mahesh et al. (2006); Malhan and Rao (2005); Malliga and Srinivasan
(2007); Manikandan et al. (2008); Markarian (2004a, b); Marti (2005); Martin
et al. (2006); Mazzola et al. (2007); Mekki (2006); Miles (2006); Morgan and
Cooper (2004); Morusca and Cupryk (2005); Motwani et al. (2004);
Mukhopadhyay and Ray (2006); Murugappan and Keeni (2003); Neagu and
Hoerl (2005); Neri et al. (2008); Ng et al. (2005); Nonthaleerak and Hendry
(2008); ONeill (2005); Pan and Cheng (2008); Pandey (2007); Patterson et al.
(2005); Perng et al. (2008); Perry and Barker (2006); Pheng and Hui (2004);
Pickrell et al. (2005); Proudlove et al. (2008); Rajagopal and Castillo (2007);
Rajagopalan et al. (2004); Rasis et al. (2002a); Rasis et al. (2002b);
Ravichandran (2006, 2008); Revere and Black (2003); Revere et al. (2004);
Sadagopan et al. (2005); Sahoo et al. (2008); Sarkar (2007a, b); Savage (2007);
Savage and Son (2008); Savolainen and Haikonen (2007); Sehwail and De
Yong (2003); Sekhar and Mahanti (2006); Setijono (2008); Shahin (2008);
Sharma (2003); Smith (1993); Sokovic et al. (2005); Stewart and Spencer
(2006); Su and Chou (2008); Su et al. (2006); Su et al. (2005); Sudhahar et al.
(2008); Taghaboni-Dutta and Moreland (2004); Tang et al. (2007); Tannock
et al. (2007); Thakkar et al. (2006); Thiele et al. (2008); Thomas and Barton
(2006); Thomas and Lewis (2007); Thomas et al. (2008a, b); Thomas and
Singh (2006); Thompson et al. (2008); Tong et al. (2004); Ung et al. (2007); Van
Den Heuvel et al. (2004, 2005, 2006); Van Iwaarden et al. (2008); Vaughan
(1998); Vote and Huston (2005); Wang et al. (2004); Woodall (2001); Woodard Table III.
(2005, 2006); Wright and Basu (2008); Wyper and Harrison (2000); Xue-Liang Classification of Six
et al. (2007); Yang and Yeh (2007); Yang et al. (2007); Yeh (2007); Yeung, V.
(2007); Zaroukian and Sierra (2006); Zhan (2008); Zhang and Xu (2008) 231 55.4 Sigma articles by
(continued) research method
IJQRM Total
Method References n %
27,3
Review-focused Aggogeri and Gentili (2008); Al-Aomar and Youssef (2006); Anderson-Cook
articles et al. (2005); Andersson et al. (2006); Antony (2002, 2004b, 2006, 2007a, b,
2008b); Antony and Banuelas (2002); Antony et al. (2006); Arnheiter and
Maleyeff (2005); Banuelas and Antony (2004); Basu (2004); Bellows (2004);
Bendell (2006); Biedry (2001); Biehl (2004); Bisgaard and Freiesleben (2000);
Black and McGlashan (2006); Box and Luceno (2000); Brady and Allen (2006);
286 Brewer and Bagranoff (2004); Byrne et al. (2007); Card (2000); Carnell and
Lambert (2000); Carrigan and Kujawa (2006); Caulcutt (2001); Chan et al.
(2006); Cook et al. (2005); Coronado and Antony (2002); Cronemyr (2007);
Dahlgaard and Dahlgaard-Park (2006); Das et al. (2006); De Feo (2000); De
Feo and Bar-El (2002); De Koning and De Mast (2005, 2006); De Mast (2006,
2007); Dedhia (2005); Delsanter (1992); Edgeman and Dugan (2008);
Fairbanks (2007); Fazzari and Levitt (2008); Feld and Stone (2002); Ferryanto
(2007); Flott (2000); Foster (2007); Freiesleben (2006, 2007); Friday-Stroud and
Sutterfield (2007); Fuller (2000a, b); Gack and Robison (2003); Ganesh (2004);
Garg et al. (2004); Glower (2006); Goeke and Offodile (2005); Goh (2002a); Goh
and Xie (2003, 2004); Goh et al. (2006); Graves (2002); Green (2006b); Gremyr
(2005); Hahn (2005); Hahn et al. (1999, 2000); Hammer (2002); Hare (2005);
Hoerl (1998, 2004); Hoerl et al. (2001); Hsieh et al. (2007); Hu et al. (2005, 2008);
Huq (2006); Hutchins (2000); Ingram (2000a, b, c); Jeffery (2005); Johnson
(2006); Kanji (2008); Kleasen (2007); Klefsjo et al. (2001, 2006); Knowles et al.
(2005); Kuei and Madu (2003); Kumar, M. et al. (2008); Kumar, U. et al. (2008);
Kwak and Anbari (2006); Lanyon (2003); Lee and Choi (2006); Linderman et al.
(2006); Linderman et al. (2003); Little (2003); Lloréns-Montes and Molina
(2006); Lupan et al. (2005); McAdam et al. (2005); McCarty and Fisher (2007);
McClusky (2006); Mahanti (2005); Maleyeff and Kaminsky (2002); Maleyeff
and Krayenvenger (2004); Man (2002); Manual (2006); Markarian (2004a, b);
Mitra (2004); Montgomery et al. (2005); Moorman (2005); Naslund (2008);
Nonthaleerak and Hendry (2006, 2007); Pfeifer et al. (2004); Pojasek (2003);
Prabhushankar et al. (2008); Raisinghani et al. (2005); Rajamanoharan and
Collier (2006); Rao and Rao (2007); Ravichandran (2007); Ribardo and Allen
(2003); Ricondo and Viles (2005); Rudisill and Clary (2004); Rylander and
Provost (2006); Sanders and Hild (2000a, b, c); Schroeder et al. (2008);
Senapati (2004); Shah et al. (2008); Shahabuddin (2008); Shahin and Alinavaz
(2008); Shanmugam (2007); Smith and Phadke (2005); Snee (2004); Sodhi and
Sodhi (2005); Stevenson and Mergen (2006); Thawani (2004);
Thirunavukkarasu et al. (2008); Treville et al. (2008); Vestal (2004); Walters
(2005); Weinstein et al. (2008); Wiklund and Wiklund (2002); Yang, C. (2004);
Yang, K. (2004, 2005); Yeung (2007); Yilmaz and Chatterjee (2000); Zu et al.
(2008) 154 36.9
Survey-focused Antony (2004a, 2008a); Antony et al. (2001, 2005, 2007a, b, 2008); Banuelas
articles et al. (2006); Bhatnagar and Pandey (2005); Black and Revere (2006); Buch
and Tolentino (2006a, b); Chakrabarty and Tan (2007); Chang and Wang
(2008); Cheng (2007a, b, c, 2008); Chung et al. (2008); Feng and Manuel (2008);
Frings and Grant (2005); Gowen (2005); Kumar et al. (2007);
Laosirihongthong et al. (2006); McAdam and Evans (2004a, b); Revere et al.
(2006); Schön (2006); Szeto and Tsang (2005); Taner et al. (2007); Wessel and
Table III. Burcher (2004); Yang et al. (2008) 32 7.7

alignment problems using six-sigma quality, Furterer and Elshennawy (2005) on

implementing TQM and lean Six Sigma tools in local government, Gerhorst et al. (2006)
about using DFSS in product development at Ford Motor Company and Knowles et al.
(2004) on Six Sigma application at a UK food manufacturer. The analysis is typically
narrow, in-depth and provides a thorough examination of a limited Six Sigma area.
Some case study articles represent anecdotal examples of Six Sigma practices, without
exploring practice in any rigorous or in-depth manner. On the contrary, surveys
represent the least dominant research method in Six Sigma articles (32 articles, 7.7
percent) where typical wide perspective or superficial generalization are employed to a
 Six Sigma
quality

287

Figure 4.
Distribution of Six Sigma
articles by research
method (1992-2008)

large number of cases. Examples of Six Sigma survey research involve Feng and
Manuel (2008) who conducted a national survey of Six Sigma programs in US
healthcare organizations, Antony (2004a) regarding Six Sigma application in UK
service organizations, Antony et al. (2005) concerning Six Sigma implementation in
manufacturing SMEs in the UK, and Black and McGlashan (2006) on essential
characteristics of Six Sigma black belt candidates in US companies.

Distribution of articles by sector: manufacturing vs service

According to this distribution, empirical Six Sigma articles (263 articles, 63.3 percent)
are broken down into two major sectors; manufacturing and service. Table IV shows
that the majority of empirical articles are deemed to be manufacturing-focused (169
articles, 64.3 percent). This category comprises articles examining Six Sigma within
manufacturing contexts such as semiconductor (e.g. Su and Chou, 2008; Su et al., 2005),
automotive (e.g. Chen et al., 2005; Krishna et al., 2008; Kumar et al., 2007), aerospace
(e.g. Maleyeff and Krayenvenger, 2004), chemical (e.g. Motwani et al., 2004; Doble,
2005), software (e.g. Antony and Fergusson, 2004; Hong and Goh, 2003, 2004; Mahanti,
2005; Mahanti and Antony, 2005, 2006), pharmaceutical (e.g. Cupryk et al., 2007;
Morusca and Cupryk, 2005), steel (e.g. Sarkar, 2007a, b) and aluminum (e.g. Das and
Hughes, 2006) industries. On the contrary, service-focused articles constitute the least
published empirical articles in Six Sigma (52 articles, 34 percent). Healthcare context,
however, is the most dominant setting in the service category. Examples of Six Sigma
articles in healthcare include Antony et al. (2007c), De Koning et al. (2006), Dreachslin
and Lee (2007), Feng and Manuel (2008), Harrington and Trusko (2005), Jin et al. (2008),
Johnstone et al. (2003a), Lloyd and Holsenbach (2006), Proudlove et al. (2008), and
Taner et al. (2007). Other service contexts may include government (e.g. Furterer and
Elshennawy, 2005; Ho and Chuang, 2006), banking (e.g. Immaneni et al., 2007), and
education (e.g. Thakkar et al., 2006; Weinstein et al., 2008). Table IV provides a
comprehensive list containing classified references for each of Six Sigma application
IJQRM
Total
27,3 Sector References n %

Manufacturing- Agarwal and Bajaj (2008); Al-Mishari and Suliman (2008); Amer et al.
focused (2007, 2008); Anand et al. (2007); Antony (2008a); Antony and
Fergusson (2004); Antony et al. (2005, 2007a, b, 2008); Arul and Kohli
(2004); Bandyopadhyay and Jenicke (2007); Banuelas and Antony
288 (2003); Banuelas et al. (2005, 2006); Bayle et al. (2001); Bhatnagar and
Pandey (2005); Black and Revere (2006); Brewer (2004); Buch and
Tolentino (2006a, b); Bunce et al. (2008); Byrne (2003); Camgoz-Akdag
(2007); Chang and Wang (2008); Chatterjee (2003); Chen et al. (2005,
2007); Cheng (2007a, b, c); Cheng et al. (2008a); Chung et al. (2008b);
Cupryk et al. (2007); Das (2005); Das and Hughes (2006); Dasgupta
(2003); Davison and Al-Shaghana (2007); De Vore (2008); Desai (2006);
Doble (2005); Echempati and White (2000); Ehie and Sheu (2005);
Erlandson (2006); Gerhorst et al. (2006); Gibbons (2006); Gijo and Rao
(2005); Goel and Chen (2008); Goh (2001); Goh (2002b); Gowen (2005);
Green (2006a); Green et al. (2006); Hagemeyer et al. (2006); Haikonen
et al. (2004); Hamza (2008); Han and Lee (2002); Harjac et al. (2008);
Hasenkamp and Olme (2008); Henderson and Evans (2000);
Hendricks and Kelbaugh (1998); Hild et al. (2000); Ho et al. (2008);
Holtz and Campbell (2004); Hong and Goh (2003, 2004); Hsu et al.
(2008); Hu and Antony (2007); Hu and Pieprzak (2005); Hwang (2006);
Ingle and Roe (2001); Johnson (2002); Johnson and Swisher (2003);
Johnson et al. (2006b, c); Johnston et al. (2008); Jung and Lim (2007);
Kalamdani and Khalaf (2006); Kapur and Feng (2005); Kaushik and
Khanduja (2008); Kaushik et al. (2008); Khalaf and Yang (2006);
Knowles et al. (2004); Kovach and Cho (2006); Krishna and
Dangayach (2007); Krishna et al. (2008); Kumar (2007); Kumar, M et al.
(2006, 2007); Kumar, U. et al. (2007); Ladani et al. (2006); Lee-Mortimer
(2006); Lee-Mortimer (2007); Li et al. (2008); Li and Al-Refaie (2008); Li
et al. (2006); Lin et al. (2008); Liu et al. (2008); Lok et al. (2008); Lucier
and Seshadri (2001); McAdam and Evans (2004a, b); McAdam and
Lafferty (2004); Mahanti and Antony (2005); Mekki (2006); Mahanti
and Antony (2006); Mahesh et al. (2006); Maleyeff and Kaminsky
(2002); Manikandan et al. (2008); Markarian (2004a, b); Mazzola et al.
(2007); Miles (2006); Morusca and Cupryk (2005); Motwani et al.
(2004); Mukhopadhyay and Ray (2006); Murugappan and Keeni
(2003); Neagu and Hoerl (2005); Nonthaleerak and Hendry (2008); Pan
and Cheng (2008); Pandey (2007); Patterson et al. (2005); Perng et al.
(2008); Pickrell et al. (2005); Rajagopal and Castillo (2007);
Rajagopalan et al. (2004); Rasis et al. (2002a, b); Ravichandran (2008);
Revere et al. (2006); Sadagopan et al. (2005); Sahoo et al. (2008); Sarkar
(2007a, b); Savage (2007); Savage and Son (2008); Savolainen and
Haikonen (2007); Schön (2006); Sekhar and Mahanti (2006); Setijono
(2008); Shahin (2008); Sharma (2003); Smith (1993); Sokovic et al.
(2005); Su and Chou (2008); Su et al. (2005); Sudhahar et al. (2008);
Szeto and Tsang (2005); Tang et al. (2007); Tannock et al. (2007);
Thomas and Barton (2006); Thomas and Lewis (2007); Thomas et al.
(2008a, b); Thomas and Singh (2006); Tong et al. (2004); Ung et al.
(2007); Van Iwaarden et al. (2008); Vaughan (1998); Wang et al. (2004);
Table IV. Wessel and Burcher (2004); Wright and Basu (2008); Wyper and
Classification of Six Harrison (2000); Yang and Yeh (2007); Yang et al. (2007, 2008); Yeh
Sigma articles by (2007); Yeh et al. (2007); Zhan (2008) 169 64.3
application sector (continued)
 Total
Six Sigma
Sector References n % quality
Service-focused Adams et al. (2004); Al-Aomar (2006); Antony (2004a); Antony et al.
(2001, 2007c); Bandyopadhyay and Lichtman (2007); Beard (2008);
Behara et al. (1995); Benedetto (2003); Bigio et al. (2004); Bonilla et al.
(2008); Box (2006); Brett and Queen (2005); Brewer and Eighme
(2005); Chakrabarty and Tan (2007); Chan et al. (2005); Chang and 289
Su (2007); Chappell and Peck (2006); Chen et al. (2005, 2008); Cheng
(2008); Craven et al. (2006); De Koning et al. (2006, 2008a, b); Desai
(2008); Does et al. (2002); Douglas and Erwin (2000); Dreachslin and
Lee (2007); Drenckpohl et al. (2007); Edgeman et al. (2005); Elberfeld
et al. (2007); Eldridge et al. (2006); Feng and Manuel (2008); Ferng
and Price (2005); Frank (2003); Frankel et al. (2005); Frings and
Grant (2005); Furterer and Elshennawy (2005); Garg et al. (2004);
Goh et al. (2003); Gowen (2008); Harrington and Trusko (2005);
Hensley and Dobie (2005); Hilton et al. (2008); Ho and Chuang (2006);
Ho et al. (2006); Immaneni et al. (2007); Isaacson (2008); Jenicke et al.
(2008); Jin et al. (2008); Johnson et al. (2006a); Johnstone et al.
(2003a, b); Juras et al. (2007); Kovach (2007); Kumar et al. (2008a, b);
Kumi and Morrow (2006); Lipscomb and Lewis (2004); Lloyd (2006);
Malhan and Rao (2005); Malliga and Srinivasan (2007); Marti (2005);
Martin et al. (2006); Morgan and Cooper (2004); Neri et al. (2008); Ng
et al. (2005); ONeill (2005); Perry and Barker (2006); Pheng and Hui
(2004); Proudlove et al. (2008); Ravichandran (2006); Revere and
Black (2003); Revere et al. (2004); Sehwail and De Yong (2003);
Stewart and Spencer (2006); Snee (2004); Taghaboni-Dutta and
Moreland (2004); Taner et al. (2007); Thakkar et al. (2006); Thiele
et al. (2008); Thompson et al. (2008); Van Den Heuvel et al. (2004,
2005, 2006); Vote and Huston (2005); Woodall (2001); Woodard
(2005, 2006); Wright and Basu (2008); Yeh (2007); Yeung (2007);
Zaroukian and Sierra (2006) 94 35.7 Table IV.

Figure 5.
Distribution of Six Sigma
articles by application
sector (1992-2008)
IJQRM contexts. Figure 5 demonstrates the growing gap between manufacturing – and
27,3 service – focused Six Sigma research over years.

Conclusions and future research directions

Our conclusions are based on the analysis of 417 Six Sigma articles that were
published in 147 journals over a 17-year period from 1992 to 2008. Overall, we have
290 observed that Six Sigma research has attracted the attention of both practitioners and
academics. In particular, research activities on Six Sigma have increased significantly
after 1999. The trend implies that more than 98 percent of Six Sigma articles were
published between 2000 and 2008. Clearly Six Sigma research is difficult to confine to
specific discipline since it is scattered across various journals from various domains
and fields.
The review has observed that Six Sigma research is empirical in nature which
reinforces the use of real-world data. Case study was the dominant approach in Six
Sigma research and this is may be due to the fact that quality problems in
manufacturing and service contexts are usually treated as a case in terms of
documentation and analysis. In addition, the lack of implementing Six Sigma tools and
methodologies across a wide range of processes or organizations makes the use of
survey approach impractical.
Although modifications have been made in the Six Sigma framework to extend its
application from manufacturing to service context, the increasing gap between the
numbers of manufacturing – and service – focused Six Sigma articles since 2005
implies the return of Six Sigma to manufacturing as its initial base.
Although this review does not claim to be exhaustive, it does provide reasonable
insights into the state of the art in Six Sigma research. One of the most significant
findings from our analysis has been the great empirical focus on Six Sigma tools and
techniques. There is very little room for clarifying the confusion in the literature as to
what constitutes Six Sigma theory and how does it integrate with other improvement
strategies. We would argue that theoretical development is critical to the development
of Six Sigma studies. Based on the literature review presented in this paper, we identify
below a number of research implications and directions for future research as follows:
.
There is no doubt that Six Sigma research will grow rapidly in future covering
various disciplines and domains. Hence, there is a need to construct and clearly
present the application of Six Sigma within each domain in a proposed
framework or generic model.
.
It is not surprising that a large portion of the reviewed articles in this study were
related to Six Sigma tools, techniques, and methodologies. This reflects the
researchers’ concern of the core nature of Six Sigma as a more structured quality
approach compared to TQM. Detailed analysis of these tools and methodologies
within manufacturing and service contexts is required.
. We expect more research to be conducted on user experiences reflecting Six
Sigma pros and cons in such context.
.
While researchers try to develop new Six Sigma applications, the capabilities of
user infrastructure need to be considered.
.
More theory based empirical research is needed to enhance the construction of
Six Sigma theory.
 .
There is a great potential for practicable application of survey approach in Six Six Sigma
Sigma research as a wide range of processes or organizations adopt Six Sigma quality
tools and methodologies.
.
Since the combined use of analytical and empirical research techniques has the
potential to offer greater insights into research, it is desirable to see more papers
apply triangulation approach in Six Sigma research through the use of multiple
data collection methods. 291
.
Researchers are encouraged to map the efforts of Six Sigma research in
manufacturing and service organizations to a proposed framework and then
provide a through analysis on each framework.
. Researchers and practitioners are encouraged to propose a standard Six Sigma
curriculum design with multidisciplinary orientation.
.
Managing Six Sigma risks and crises is a new attractive topic for researchers.

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methodology to maximise magnetic resonance imaging capacity in a hospital”,
International Journal of Healthcare Technology and Management, Vol. 6 No. 3, pp. 321-30.
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Chang, C.-M. and Su, C.-T. (2007), “Service process design and/or redesign by fusing the powers
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pp. 1033-44.
Chappell, A. and Peck, H. (2006), “Risk management in military supply chains: is there a role for
Six Sigma?”, International Journal of Logistics, Vol. 9 No. 3, pp. 253-67.
Chatterjee, A. (2003), “Innovating growth through ‘Six Sigma’: a strategic approach for
combining robustness with flexibility”, Global Journal of Flexible Systems Management,
Vol. 4 No. 3, pp. 33-7.
Chen, K., Hsu, C. and Ouyang, L. (2007), “Applied product capability analysis chart in measure
step of Six Sigma”, Quality and Quantity, Vol. 41 No. 3, pp. 387-400.
Chen, K., Lin, C. and Chen, S. (2008), “Applying Six-Sigma methodology in constructing the quick
response of a case reporting system”, Total Quality Management and Business Excellence,
Vol. 19 No. 4, pp. 381-98.
Chen, K., Lin, J. and Chang, C. (2005a), “Taiwan: improving radiography through application of
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Chen, S., Chen, K. and Hsia, T. (2005b), “Promoting customer satisfaction by applying Six Sigma:
an example from the automobile industry”, The Quality Management Journal, Vol. 12 No. 4,
pp. 21-33.
Cheng, J.-L. (2007a), “Comparative study of local and transnational enterprises in Taiwan and
their implementation of Six Sigma”, Total Quality Management and Business Excellence,
Vol. 18 No. 7, pp. 793-806.
Cheng, J.-L. (2007b), “Six Sigma business strategy in Taiwan: an empirical study”, International
Journal of Six Sigma and Competitive Advantage, Vol. 3 No. 1, pp. 1-12.
Cheng, J.-L. (2007c), “Six Sigma and TQM in Taiwan: an empirical study”, The Quality
Management Journal, Vol. 14 No. 2, pp. 7-19.
Cheng, J.-L. (2008), “Implementing Six Sigma via TQM improvement: an empirical study in
Taiwan”, The TQM Journal, Vol. 20 No. 3, pp. 182-95.
Cheng, Y.-C., Hsu, Y.-W. and Ten, T.-M. (2008), “Using the Six Sigma system approach to reduce
core process times at a manufacturing plant”, International Journal of Management, Vol. 25
No. 3, pp. 431-8.
Chung, Y.-C., Hsu, Y.-W. and Tsai, C.-H. (2008), “An empirical study on the correlation between
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competitive advantages in Taiwan’s high-tech manufacturers”, Total Quality Management
and Business Excellence, Vol. 19 No. 6, pp. 595-607.
Cook, A., Patterson, A. and Hoerl, R. (2005), “A structured problem-solving course for graduate
students: exposing students to Six Sigma as part of their university training”, Quality and
Reliability Engineering International, Vol. 21, pp. 249-56.
Coronado, R. and Antony, J. (2002), “Critical success factors for the successful implementation of
Six Sigma projects in organisations”, The TQM Magazine, Vol. 14 No. 2, pp. 92-9.
IJQRM Craven, E., Clark, J., Cramer, M., Corwin, S. and Cooper, M. (2006), “NewYork-Presbyterian
hospital uses Six Sigma to build a culture of quality and innovation”, Journal of
27,3 Organizational Excellence, Vol. 25 No. 4, pp. 11-19.
Cronemyr, P. (2007), “DMAIC and DMADV differences, similarities and synergies”, International
Journal of Six Sigma and Competitive Advantage, Vol. 3 No. 3, pp. 193-209.
Cupryk, M., Takahata, D. and Morusca, D. (2007), “‘Crashing the schedule’ in DCS validation
296 pharmaceutical projects with lean Six Sigma and project management techniques: case
study and discussion”, Journal of Validation Technology, Vol. 13 No. 3, pp. 222-33.
Dahlgaard, J. and Dahlgaard-Park, S. (2006), “Lean production, Six Sigma quality, TQM and
company culture”, The TQM Magazine, Vol. 18 No. 3, pp. 263-81.
Das, N., Gauri, S. and Das, P. (2006), “Six Sigma principles in marketing: an application”,
International Journal of Six Sigma and Competitive Advantage, Vol. 2 No. 3, pp. 243-62.
Das, P. (2005), “Reduction in delay in procurement of materials using Six Sigma philosophy”,
Total Quality Management and Business Excellence, Vol. 16 No. 5, pp. 645-56.
Das, S. and Hughes, M. (2006), “Improving aluminum can recycling rates: a Six Sigma study in
Kentucky”, JOM, Vol. 58 No. 8, pp. 27-31.
Dasgupta, T. (2003), “Using the Six-Sigma metric to measure and improve the performance of a
supply chain”, Total Quality Management and Business Excellence, Vol. 14 No. 3,
pp. 355-66.
Davison, L. and Al-Shaghana, K. (2007), “The link between six sigma and quality culture:
an empirical study”, Total Quality Management and Business Excellence, Vol. 18 No. 3,
pp. 249-65.
De Feo, J. (2000), “Six Sigma: new opportunities for HR, new career growth for employees”,
Employment Relations Today, Vol. 27 No. 2, pp. 1-6.
De Feo, J. and Bar-El, Z. (2002), “Creating strategic change more efficiently with a new design for
Six Sigma process”, Journal of Change Management, Vol. 3 No. 1, pp. 60-80.
De Koning, H. and De Mast, J. (2005), “Grounding of Six Sigma’s breakthrough cookbook: how to
research a methodology?”, International Journal of Six Sigma and Competitive Advantage,
Vol. 1 No. 3, pp. 263-75.
De Koning, H. and De Mast, J. (2006), “A rational reconstruction of Six-Sigma’s breakthrough
cookbook”, International Journal of Quality & Reliability Management, Vol. 23 No. 7,
pp. 766-87.
De Koning, H., Does, R. and Bisgaard, S. (2008a), “Lean Six Sigma in financial services”,
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project definitions in financial services”, The Quality Management Journal, Vol. 15 No. 4,
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De Mast, J. (2006), “Six Sigma and competitive advantage”, Total Quality Management and
Business Excellence, Vol. 17 No. 4, pp. 455-64.
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pp. 353-61.
De Vore, K. (2008), “Six-Sigma approach to stability testing”, Journal of Pharmaceutical and
Biomedical Analysis, Vol. 47 No. 2, pp. 413-21.
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Delsanter, J. (1992), “Six Sigma”, Managing Service Quality, Vol. 2 No. 4, pp. 203-6.
Desai, D. (2006), “Improving customer delivery commitments the Six Sigma way: case study of
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Desai, D. (2008), “Improving productivity and profitability through Six Sigma: experience of a
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small-scale jobbing industry”, International Journal of Productivity & Quality
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Doble, M. (2005), “Six Sigma and chemical process safety”, International Journal of Six Sigma
and Competitive Advantage, Vol. 1 No. 2, pp. 229-44.
Does, R., Van Den Heuvel, J., De Mast, J. and Bisgaard, S. (2002), “Comparing non-manufacturing
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Douglas, P.C. and Erwin, J. (2000), “Six Sigma’s focus on total customer satisfaction”, Journal for
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Dreachslin, J. and Lee, P. (2007), “Applying Six Sigma and DMAIC to diversity initiatives”,
Journal of Healthcare Management, Vol. 52 No. 6, pp. 361-7.
Drenckpohl, D., Bowers, L. and Cooper, H. (2007), “Use of the Six Sigma methodology to reduce
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Echempati, R. and White, C. (2000), “Case study of hinge alignment problems: a Six-Sigma
quality analysis”, Production and Inventory Management Journal, Vol. 41 No. 2, pp. 1-23.
Edgeman, R. and Dugan, J. (2008), “Six Sigma: from products to pollution to people”, Total
Quality Management and Business Excellence, Vol. 19 No. 1, pp. 1-9.
Edgeman, R., Bigio, D. and Ferleman, T. (2005), “Six Sigma and business excellence: strategic
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Vol. 21 No. 3, pp. 257-73.
Ehie, I. and Sheu, C. (2005), “Integrating Six Sigma and theory of constraints for continuous
improvement: a case study”, Journal of Manufacturing Technology Management, Vol. 16
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Elberfeld, A., Bennis, S., Ritzius, J. and Yhlen, A. (2007), “The innovative use of Six Sigma in
home care”, Home Healthcare Nurse, Vol. 25 No. 1, pp. 25-33.
Eldridge, N., Woods, S., Bonello, R., Clutter, K. and Ellingson, L. (2006), “Using the Six Sigma
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Erlandson, P. (2006), “DFSS for shift quality using full-vehicle ADAMS model”, International
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Fairbanks, C. (2007), “Using Six Sigma and lean methodologies to improve OR through-put”,
AORN, Vol. 86 No. 1, pp. 73-82.
Fazzari, A. and Levitt, K. (2008), “Human resources as a strategic partner: sitting at the table with
Six Sigma”, Human Resource Development Quarterly, Vol. 19 No. 2, pp. 171-80.
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Performance Improvement, Vol. 41 No. 9, pp. 20-6.
IJQRM Feng, Q. and Manuel, C. (2008), “Under the knife: a national survey of Six Sigma programs in US
healthcare organizations”, International Journal of Health Care Quality Assurance, Vol. 21
27,3 No. 6, pp. 535-47.
Ferng, J. and Price, A. (2005), “An exploration of the synergies between Six Sigma, total quality
management, lean construction and sustainable construction”, International Journal Six
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298 Ferryanto, L. (2007), “Analytical design for Six Sigma for multiple response products”,
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Foster, T. (2007), “Does Six Sigma improve performance?”, The Quality Management Journal,
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Frank, S. (2003), “Applying Six Sigma to revenue and pricing management”, Journal of Revenue
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Frankel, H., Crede, W., Topal, J., Roumanis, S., Devlin, M. and Foley, A. (2005), “Use of corporate
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Freiesleben, J. (2006), “Communicating Six Sigma’s benefits to top management”, Measuring
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Freiesleben, J. (2007), “Can Six Sigma claim to be a generic strategy? Reassessing the competitive
implications of quality improvement”, International Journal of Six Sigma and Competitive
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Friday-Stroud, S. and Sutterfield, J. (2007), “A conceptual framework for integrating Six-Sigma
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Magazine, Vol. 19 No. 6, pp. 561-71.
Frings, G. and Grant, L. (2005), “Who moved my sigma? Effective implementation of the Six
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Fuller, H. (2000b), “Six Sigma for validation”, Journal of Validation Technology, Vol. 6 No. 4,
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Ganesh, M. (2004), “Six Sigma: time for a reality check”, Customer Management, Vol. 12 No. 2,
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Garg, D., Narahari, Y. and Viswanadham, N. (2004), “Design for Six Sigma supply chain”, IEEE
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Gibbons, P. (2006), “Improving overall equipment efficiency using a lean Six Sigma approach”,
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Glower, M. (2006), “Six Sigma: bringing it to your team”, Nurse Leader, Vol. 4 No. 2, pp. 44-6.
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Goel, S. and Chen, V. (2008), “Integrating the global enterprise using Six Sigma: business process
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Goh, T.-N. (2001), “Information transformation perspective on experimental design in Six
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Goh, T.-N. (2002b), “The role of statistical design of experiments in Six Sigma: perspectives of a
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Vol. 15 No. 4, pp. 587-92.
Goh, T.-N. and Xie, M. (2004), “Improving on the Six Sigma paradigm”, The TQM Magazine,
Vol. 16 No. 4, pp. 235-40.
Goh, T.-N., Low, P., Tsui, K. and Xie, M. (2003), “Impact of Six Sigma implementation on stock
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Gowen, C. III and Tallon, W. (2005), “Effect of technological intensity on the relationship among
Six Sigma design, electronic business, and competitive advantage: a dynamic capability
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Gowen, C. III, Stock, G. and McFadden, K. (2008), “Simultaneous implementation of Six Sigma
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International Journal of Six Sigma and Competitive Advantage, Vol. 2 No. 3, pp. 291-300.
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International Journal of Six Sigma and Competitive Advantage, Vol. 2 No. 2, pp. 179-89.
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Hahn, G., Hill, W., Hoerl, R. and Zinkgraf, S. (1999), “The impact of Six Sigma improvement:
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300 Manufacturing Technology Management, Vol. 15 No. 4, pp. 369-78.
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Harrington, H. and Trusko, B. (2005), “Six Sigma: an aspirin for healthcare”, International
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Hasenkamp, T. and Olme, A. (2008), “Introducing design for Six Sigma at SKF”, International
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Hoerl, R., Montgomery, D., Lawson, C., Molnau, W., Elias, R., Abraham, B., MacKay, J., Snee, R.,
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Holtz, R. and Campbell, P. (2004), “Six Sigma: its implementation in Ford’s facility management 301
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Hsieh, C.-T., Lin, B. and Manduca, B. (2007), “Information technology and Six Sigma
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Jeffery, A. (2005), “Integrating organization development and Six Sigma: Six Sigma as a process
302 improvement intervention in action research”, Organization Development Journal, Vol. 23
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Jin, M., Switzer, M. and Agirbas, G. (2008), “Six Sigma and lean in healthcare logistics centre
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Johnstone, P., Hendrickson, J., Dernbach, A., Secord, A., Parker, J., Favata, M. and Puckett, M.
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Jung, J. and Lim, S.-G. (2007), “Project categorization, prioritization, and execution based on Six
Sigma concept: a case study of operational improvement project”, Project Management
Journal, Vol. 38 No. 1, pp. 55-60.
Juras, P., Martin, D. and Aldhizer, D. (2007), “Adapting Six Sigma to help tame the SOX 404
compliance beast”, Strategic Finance, Vol. 88 No. 9, pp. 36-41.
Kalamdani, R. and Khalaf, F. (2006), “Application of design for Six Sigma to manufacturing
process design at Ford PTO”, International Journal of Product Development, Vol. 3 Nos 3/4,
pp. 369-87.
Kanji, G. (2008), “Reality check of Six Sigma for business excellence”, Total Quality Management
and Business Excellence, Vol. 19 No. 6, pp. 575-82.
Kapur, K. and Feng, Q. (2005), “Integrated optimisation models and strategies for the
improvement of the Six Sigma process”, International Journal of Six Sigma and
Competitive Advantage, Vol. 1 No. 2, pp. 210-28.
Kaushik, P. and Khanduja, D. (2008), “DM make up water reduction in thermal power plants Six Sigma
using Six Sigma DMAIC methodology”, Journal of Scientific and Industrial Research,
Vol. 67 No. 1, pp. 36-42. quality
Kaushik, P., Grewal, C., Bilga, P. and Khanduja, D. (2008), “Utilising Six Sigma for energy
conservation: a process industry case study”, International Journal of Six Sigma and
Competitive Advantage, Vol. 4 No. 1, pp. 18-34.
Khalaf, F. and Yang, K. (2006), “Product development processes – from deterministic to 303
probabilistic: a design for Six Sigma approach to lean product validation, Part II”,
International Journal of Product Development, Vol. 3 No. 1, pp. 18-36.
Kleasen, K. (2007), “Building human resources strategic planning, process and measurement
capability: using Six Sigma as a foundation”, Organization Development Journal, Vol. 25
No. 2, pp. 37-41.
Klefsjo, B., Bergquist, B. and Edgeman, R. (2006), “Six Sigma and total quality management:
different day, same soup?”, International Journal of Six Sigma and Competitive Advantage,
Vol. 2 No. 2, pp. 162-78.
Klefsjö, B., Wiklund, H. and Edgeman, R. (2001), “Six Sigma seen as a methodology for total
quality management”, Measuring Business Excellence, Vol. 5 No. 1, pp. 31-5.
Knowles, G., Johnson, M. and Warwood, S. (2004), “Medicated sweet variability: a Six Sigma
application at a UK food manufacturer”, The TQM Magazine, Vol. 16 No. 4, pp. 284-92.
Knowles, G., Whicker, L., Femat, J. and Canales, F. (2005), “A conceptual model for the
application of Six Sigma methodologies to supply chain improvement”, International
Journal of Logistics, Vol. 8 No. 1, pp. 51-65.
Kovach, J. (2007), “Designing efficient Six Sigma experiments for service process improvement
projects”, International Journal of Six Sigma and Competitive Advantage, Vol. 3 No. 1,
pp. 72-90.
Kovach, J. and Cho, B. (2006), “A D-optimal design approach to robust design under constraints:
a new design for Six Sigma tool”, International Journal of Six Sigma and Competitive
Advantage, Vol. 2 No. 4, pp. 389-403.
Krishna, G. and Dangayach, G. (2007), “Six Sigma implementation at an auto component
manufacturing plant: a case study”, International Journal of Six Sigma and Competitive
Advantage, Vol. 3 No. 3, pp. 282-302.
Krishna, R., Dangayach, G., Motwani, J. and Akbulut, A. (2008), “Implementation of Six Sigma
approach to quality improvement in a multinational automotive parts manufacturer in
India: a case study”, International Journal of Services and Operations Management, Vol. 4
No. 2, pp. 264-76.
Kuei, C.-H. and Madu, C. (2003), “Customer-centric Six Sigma quality and reliability
management”, International Journal of Quality & Reliability Management, Vol. 20 No. 8,
pp. 954-64.
Kumar, M. (2007), “Critical success factors and hurdles to Six Sigma implementation: the case of
a UK manufacturing SME”, International Journal of Six Sigma and Competitive
Advantage, Vol. 3 No. 4, pp. 333-51.
Kumar, M., Antony, J., Antony, F. and Madu, C. (2007), “Winning customer loyalty in an
automotive company through Six Sigma: a case study”, Quality and Reliability Engineering
International, Vol. 23 No. 7, pp. 849-66.
Kumar, M., Antony, J., Madu, C., Montgomery, D. and Park, S. (2008), “Common myths of Six
Sigma demystified”, International Journal of Quality & Reliability Management, Vol. 25
No. 8, pp. 878-95.
IJQRM Kumar, M., Antony, J., Singh, R., Tiwari, M.K. and Perry, D. (2006), “Implementing the Lean
Sigma framework in an Indian SME: a case study”, Production Planning and Control,
27,3 Vol. 17 No. 4, pp. 407-23.
Kumar, S., Strandlund, E. and Thomas, D. (2008a), “Improved service system design using Six
Sigma DMAIC for a major US consumer electronics and appliance retailer”, International
Journal of Retail & Distribution Management, Vol. 36 No. 12, pp. 970-94.
304 Kumar, S., Wolfe, A. and Wolfe, K. (2008b), “Using Six Sigma DMAIC to improve credit initiation
process in a financial services operation”, International Journal of Productivity and
Performance Management, Vol. 57 No. 8, pp. 659-76.
Kumar, U., Nowicki, D., Ramı́rez-Márquez, J. and Verma, D. (2008), “On the optimal selection of
process alternatives in a Six Sigma implementation”, International Journal of Production
Economics, Vol. 111, pp. 456-67.
Kumar, U., Saranga, H., Ramı́rez-Márquez, J. and Nowicki, D. (2007), “Six Sigma project selection
using data envelopment analysis”, The TQM Magazine, Vol. 19 No. 5, pp. 419-41.
Kumi, S. and Morrow, J. (2006), “Improving self-service the Six Sigma way at Newcastle
University Library”, Program: electronic library and information systems, Vol. 40 No. 2,
pp. 123-36.
Kwak, Y.H. and Anbari, F.T. (2006), “Benefits, obstacles and future of Six Sigma approach”,
Technovation, Vol. 26, pp. 708-15.
Ladani, L., Das, D., Cartwright, J., Yenkner, R. and Razmi, J. (2006), “Implementation of Six Sigma
quality system in Celestica with practical examples”, International Journal of Six Sigma
and Competitive Advantage, Vol. 2 No. 1, pp. 69-88.
Lanyon, S. (2003), “At Raytheon Six Sigma works, too, to improve HR management processes”,
Journal of Organizational Excellence, Vol. 22 No. 4, pp. 29-42.
Laosirihongthong, T., Rahman, S. and Saykhun, K. (2006), “Critical success factors of Six-Sigma
implementation”, International Journal of Innovation and Technology Management, Vol. 3
No. 3, pp. 303-19.
Lee, K.-C. and Choi, B. (2006), “Six Sigma management activities and their influence on corporate
competitiveness”, Total Quality Management and Business Excellence, Vol. 17 No. 7,
pp. 893-911.
Lee-Mortimer, A. (2006), “Six Sigma: effective handling of deep rooted quality problems”,
Assembly Automation, Vol. 26 No. 3, pp. 200-4.
Lee-Mortimer, A. (2007), “Leading UK manufacturer probes the potential of Six Sigma”,
Assembly Automation, Vol. 27 No. 4, pp. 302-8.
Li, M.-H., Al-Refaie, A. and Yang, C.-Y. (2008), “DMAIC approach to improve the capability of
SMT solder printing process”, IEEE Transactions on Electronics Packaging
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Li, M.-S. and Al-Refaie, A. (2008), “Improving wooden parts’ quality by adopting DMAIC
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Li, Y., Cui, Z., Ruan, X. and Zhang, D. (2006), “CAE-based Six Sigma robust optimization for
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Manufacturing Technology, Vol. 30 Nos 7/8, pp. 631-7.
Lin, J., Tien, S. and Hsu, C. (2008), “The adoption of Six Sigma methodology to close
learning-doing gap”, Journal of Statistics and Management Systems, Vol. 11 No. 1,
pp. 49-64.
Linderman, K., Schroeder, R. and Choo, A. (2006), “Six Sigma: the role of goals in improvement
teams”, Journal of Operations Management, Vol. 24, pp. 779-90.
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perspective”, Journal of Operations Management, Vol. 21, pp. 193-203.
quality
Lipscomb, B. and Lewis, A. (2004), “The principles of Six Sigma”, Risk Management, Vol. 51
No. 2, pp. 30-4.
Little, B. (2003), “Six Sigma techniques improve the quality of e-learning”, Industrial and
Commercial Training, Vol. 35 No. 3, pp. 104-8.
Liu, X., Wang, S., Qiu, J., Zhu, J., Guo, Y. and Lin, Z. (2008), “Robust optimization in HTS cable 305
based on design for Six Sigma”, IEEE Transactions on Magnetics, Vol. 44 No. 6, pp. 978-81.
Lloréns-Montes, F. and Molina, L.M. (2006), “Six Sigma and management theory: processes,
content and effectiveness”, Total Quality Management and Business Excellence, Vol. 17
No. 4, pp. 485-506.
Lloyd, D. II and Holsenbach, J. (2006), “The use of Six Sigma in health care operations: application
and opportunity”, Academy of Health Care Management Journal, Vol. 2, pp. 41-50.
Lok, P., Rhodes, J., Diamond, A. and Bhatia, N. (2008), “The Six Sigma approach in performance
management to improve safety culture at work”, International Journal of Six Sigma and
Competitive Advantage, Vol. 4 No. 2, pp. 151-71.
Lucier, G. and Seshadri, S. (2001), “GT takes Six Sigma beyond the bottom line”, Strategic
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Lupan, R., Bacivarof, I., Kobi, A. and Robledo, C. (2005), “A relationship between Six Sigma and
ISO 9000:2000”, Quality Engineering, Vol. 17 No. 4, pp. 719-25.
McAdam, R. and Evans, A. (2004a), “Challenges to Six Sigma in a high technology
mass-manufacturing environment”, Total Quality Management and Business Excellence,
Vol. 15 No. 5, pp. 699-706.
McAdam, R. and Evans, A. (2004b), “The organisational contextual factors affecting the
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International Journal of Six Sigma and Competitive Advantage, Vol. 1 No. 1, pp. 29-43.
McAdam, R. and Lafferty, B. (2004), “A multilevel case study critique of Six Sigma: statistical
control or strategic change?”, International Journal of Operations & Production
Management, Vol. 24 No. 5, pp. 530-49.
McAdam, R., Hazlett, S. and Henderson, J. (2005), “A critical review of Six Sigma: exploring the
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McCarty, T. and Fisher, S. (2007), “Six Sigma: it is not what you think”, Journal of Corporate Real
Estate, Vol. 9 No. 3, pp. 187-96.
McClusky, R. (2006), “The rise, fall and revival of Six Sigma”, Measuring Business Excellence,
Vol. 4 No. 2, pp. 6-17.
Mahanti, R. (2005), “Six Sigma for software”, Software Quality Professional, Vol. 8 No. 1,
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Mahanti, R. and Antony, J. (2005), “Confluence of Six Sigma, simulation and software
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Mahanti, R. and Antony, J. (2006), “Six Sigma in software industries: some case studies and
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pp. 263-90.
Mahesh, M., Wong, Y., Fuh, J. and Loh, H. (2006), “A Six Sigma approach for benchmarking of
RP&M processes”, The International Journal of Advanced Manufacturing Technology,
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IJQRM Maleyeff, J. and Kaminsky, F. (2002), “Six Sigma and introductory statistics education”,
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Maleyeff, J. and Krayenvenger, D. (2004), “Goal setting with Six Sigma: mean shift
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Malhan, I. and Rao, S. (2005), “Application of Six Sigma in libraries”, Managing Information,
306 Vol. 12 No. 8, pp. 48-50.
Malliga, P. and Srinivasan, S. (2007), “The stock service improvement by the deployment of Six
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pp. 103-19.
Man, J. (2002), “Six Sigma and lifelong learning”, Work Study, Vol. 51 No. 4, pp. 197-201.
Manikandan, G., Kannan, S. and Jayabalan, V. (2008), “Six Sigma-inspired sampling plan design
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Manual, D. (2006), “Six Sigma methodology: reducing defects in business processes”, Filtration
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Markarian, J. (2004a), “Six Sigma: quality processing through statistical analysis”, Plastics,
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Marti, F. (2005), “Lean Six Sigma method in phase 1 clinical trials: a practical example”, Quality
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Martin, D., Juras, P. and Aldhizer, G. III (2006), “Taming SOX costs with Six Sigma”, Journal of
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Mekki, K. (2006), “Robust design failure mode and effects analysis in designing for Six Sigma”,
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Miles, E. (2006), “Improvement in the incident reporting and investigation procedures using
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Mitra, A. (2004), “Six Sigma education: a critical role for academia”, The TQM Magazine, Vol. 16
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Moorman, D. (2005), “On the quest for Six Sigma”, The American Journal of Surgery, Vol. 189
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Morgan, S. and Cooper, C. (2004), “Shoulder work intensity with Six Sigma”, Nursing
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Magazine, Vol. 16 No. 4, pp. 273-83. quality
Mukhopadhyay, A. and Ray, S. (2006), “Reduction of yarn-packing defects using Six Sigma
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Murugappan, M. and Keeni, G. (2003), “Blending CMM and Six Sigma to meet business goals”,
IEEE Software, Vol. 20 No. 2, pp. 42-8. 307
Naslund, D. (2008), “Lean, Six Sigma and lean Sigma: fads or real process improvement
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Neagu, R. and Hoerl, R. (2005), “A Six Sigma approach to predicting corporate defaults”, Quality
and Reliability Engineering International, Vol. 21 No. 3, pp. 293-309.
Neri, R., Mason, C., Demko, L. and Mazer, S. (2008), “Application of Six Sigma/CAP methodology:
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Ng, E., Tsung, F., So, R., Li, T. and Lam, K. (2005), “Six Sigma approach to reducing fall hazards
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Nonthaleerak, P. and Hendry, L. (2006), “Six Sigma: literature review and key future research
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Nonthaleerak, P. and Hendry, L. (2008), “Exploring the Six Sigma phenomenon using multiple
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Pandey, A. (2007), “Strategically focused training in Six Sigma way: a case study”, Journal of
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International Journal of Six Sigma and Competitive Advantage, Vol. 2 No. 3, pp. 313-33.
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Ravichandran, J. (2007), “Cost-based process weights for DPMO and the overall performance of
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Ravichandran, J. (2008), “The performance of treatments in single-factor experiments using Six
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Rylander, D. and Provost, T. (2006), “Improving the odds: combining Six Sigma and online
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27,3
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International Journal of Six Sigma and Competitive Advantage, Vol. 4 No. 1, pp. 48-59.
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IJQRM Appendix
27,3
Journal No. of articles

International Journal of Six Sigma and Competitive Advantage 72

The TQM Journal (Previously, The TQM Magazine) 27
314 Total Quality Management & Business Excellence 27
Quality Engineering 23
Quality and Reliability Engineering International 18
International Journal of Product Development 8
International Journal of Production Research 7
International Journal of Quality & Reliability Management 7
Journal of Validation Technology 6
The Quality Management Journal 6
Journal of Healthcare Management 5
Journal of Manufacturing Technology Management 5
Journal of Organizational Excellence 5
Measuring Business Excellence 5
International Journal of Health Care Quality Assurance 4
International Journal of Productivity and Quality Management 4
Journal of Operations Management 4
Research Technology Management 4
Strategic Finance 4
Assembly Automation 3
Business Process Management Journal 3
IEEE Engineering Management Review 3
IEEE Software 3
International Journal of Management 3
International Journal of Productivity and Performance Management 3
Journal for Healthcare Quality 3
Journal for Quality and Participation 3
Managerial Auditing Journal 3
Managing Service Quality 3
The International Journal of Advanced Manufacturing Technology 3
Asia Pacific Management Review 2
Benchmarking: An International Journal 2
Global Business and Organizational Excellence 2
IEEE Transactions on Automation Science and Engineering 2
IEEE Transactions on Electronics Packaging Manufacturing 2
International Journal of Advanced Manufacturing Technology 2
International Journal of Logistics 2
International Journal of Operations & Production Management 2
International Journal of Process Management and Benchmarking 2
International Journal of Production Economics 2
International Journal of Services Technology and Management 2
Journal of American Academy of Business 2
Journal of Change Management 2
Journal of Corporate Accounting & Finance 2
Journal of Facilities Management 2
Journal of Materials Processing Technology 2
Table AI. Journal of Quality in Maintenance Engineering 2
List of reviewed journals Journal of the Operational Research Society 2
for Six Sigma articles (continued)
Journal No. of articles
Six Sigma
quality
Leadership in Health Services 2
Organization Development Journal 2
Production and Inventory Management journal 2
Project Management Journal 2
Quality Management in Health Care 2
SAM Advanced Management Journal 2
315
Software Quality Professional 2
Work Study 2
Academy of Health Care Management Journal 1
Aircraft Engineering and Aerospace Technology: An International Journal 1
American Journal of Surgery 1
Annual Reviews in Control 1
AORN 1
Applied Soft Computing 1
Best Practice and Research Clinical Anaesthesiology 1
Construction Management and Economics 1
Customer Management 1
Education þ Training 1
Employment Relations Today 1
Engineering Failure Analysis 1
Environmental Quality Management 1
European Journal of Operational Research 1
Expert Systems with Applications 1
Filtration and Separation 1
Gen. Intern. Med. 1
Global Journal of Flexible Systems Management 1
Harvard Business Review 1
Home Healthcare Nurse 1
Human Resource Development Quarterly 1
IEEE Control Systems Magazine 1
IEEE Spectrum 1
IEEE Transactions on Magnetics 1
Industrial and Commercial Training 1
Industrial Management & Data Systems 1
Information Management Journal 1
International Journal of Agile Systems and Management 1
International Journal of Applied Management Science 1
International Journal of Business and Systems Research 1
International Journal of Healthcare Technology and Management 1
International Journal of Information Systems and Change Management 1
International Journal of Innovation and Technology Management 1
International Journal of Internet and Enterprise Management 1
International Journal of Logistics Systems and Management 1
International Journal of Management Science and Engineering
Management 1
International Journal of Manufacturing Research 1
International Journal of Manufacturing Technology and Management 1
International Journal of Organizational Analysis 1
International Journal of Retail & Distribution Management 1
International Journal of Services and Operations Management 1
International Journal of Technology Management 1
(continued) Table AI.
IJQRM Journal No. of articles
27,3
International Statistical Review 1
JOM 1
Journal of Air Transport Management 1
Journal of Applied Statistics 1
Journal of Computer Information Systems 1
316 Journal of Construction Engineering and Management 1
Journal of Corporate Real Estate 1
Journal of Education for Business 1
Journal of European Industrial Training 1
Journal of Hazardous Materials 1
Journal of Healthcare Information Management 1
Journal of High Technology Management Research 1
Journal of Infection Control 1
Journal of Marketing Management 1
Journal of Nursing Administration 1
Journal of Organizational Change Management 1
Journal of Pharmaceutical and Biomedical Analysis 1
Journal of Quality Technology 1
Journal of Revenue and Pricing Management 1
Journal of Scientific and Industrial Research 1
Journal of Statistics and Management Systems 1
Journal of the American College of Surgeons 1
Knowledge Management Review 1
Leadership & Organization Development Journal 1
Management and Labour 1
Management of Environmental Quality: An International Journal 1
Managing Information 1
Metal Finishing 1
Neonatal Network 1
Nurse Leader 1
Nursing Management 1
Operations Management Research 1
Otolaryngology – Head and Neck Surgery 1
Performance Improvement 1
Plastics, Additives and Compounding 1
Production Planning and Control 1
Program: Electronic Library & Information Systems 1
Public Money & Management 1
Quality and Quantity 1
Quality Assurance Journal 1
Quality Management & Business Excellence 1
Reinforced Plastics 1
Risk Management 1
Software Quality Journal 1
Strategy & Leadership 1
Supply Chain Management: An International Journal 1
Technovation 1
The American Statistician 1
The Health Care Manager 1

Table AI. Notes: Total number of journals ¼ 147; Total number of articles ¼ 417
About the author Six Sigma
M.G. Aboelmaged is an Associate Professor of Business Administration in Ain Shams
University, Cairo, Egypt and Ajman University of Science and Technology, United Arab quality
Emirates. He has a PhD in Management Science from Lancaster University, UK, and an MA in
Public Policy and Administration from Institute of Social Studies (ISS), The Hague, The
Netherlands. His research interests include the adoption and implementation of information
technologies, enterprise systems, quality systems, e-business, and supply chain management
information quality. His work has been published in international conference proceedings 317
including IEEE International Conference on Management of Innovation and Technology,
Information Quality Conference at the Massachusetts Institute of Technology (MIT), British
Academy of Management Annual Conference, The Operational Research Society Annual
Conference, Annual Global Information Technology Management World Conference, and the
Annual Conference on Crisis and Disaster Management. He has also published in Economic and
Business Review Journal, International Journal of Business Science and Applied Management and
International Journal of Enterprise Network Management. M.G. Aboelmaged can be contacted at:
gaboelmaged@yahoo.com

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IJQRM
27,3
318
Received April 2009
Revised August 2009
Accepted September 2009
International Journal of Quality &
Reliability Management
Vol. 27 No. 3, 2010
pp. 318-332
q Emerald Group Publishing Limited
0265-671X
DOI 10.1108/02656711011023302
The current issue and full text archive of this journal is available at
www.emeraldinsight.com/0265-671X.htm
Normal approximation through
data replication when estimating
DisPMO, DePMO, left-side and
right-side Sigma levels from
non-normal data
Djoko Setijono
Division of Production Economics, Linköping University, Linköping, Sweden
Abstract
Purpose – This paper seeks to present a way of estimating DisPMO, DePMO, left-side and right-side
Sigma levels (as the “mutations” of DPMO and Sigma level when applied on customer satisfaction
measurements), where all critical attributes (CTQs) contain data sets that are non-normally distributed.
Design/methodology/approach – The calculation of DisPMO, DePMO, left-side and right-side
Sigma levels is based on dynamic-multiple CTQs without the need for assuming 1.5 Sigma shift from
the mean. Using step-wise multiple regression, CTQs are then the attributes that significantly
influence overall customer satisfaction. This further developed method no longer takes normality
assumption for granted, which means that, prior to calculating DisPMO, DePMO, left-side and
right-side Sigma levels, the data should be proven as being normally distributed. To fulfil the
assumption of normality, the primary data are being “replicated” by first generating random numbers
that follow normal standard distribution and then adjusting (re-calculating) these random numbers
with the mean, standard deviation, and the skewness of the primary data. Simulation technique is then
applied to generate a larger amount of secondary data as the basis for estimating DisPMO, DePMO,
left-side and right-side Sigma levels.
Findings – The application of the method in a Swedish house-building construction project suggests
that: the use of multiple CTQs may reduce the risk for under-/overestimation of Sigma levels, and
DisPMO and DePMO are each other’s “mirror” and both of them should be considered when
calculating Sigma levels. The calculated Sigma levels suggest that the developer’s performance is still
quite far below Six Sigma level of performance.
Originality/value – Using the replica of the primary data as a way of approaching normality may be
regarded as the main contribution of the paper in addressing one of the challenges in Six Sigma theory.
Keywords Six Sigma, Data analysis, Construction operations
Paper type Research paper
1. Introduction
Most of Six Sigma publications are written by consultants and practitioners, while very
few academic scholars have interest on developing the theoretical basis of Six Sigma
(Schroeder et al., 2008). These conditions may provide explanations regarding “varieties”
and “deviations” in the applications of Six Sigma concept and method. A clear example is
that when calculating defects-per-million-opportunities (DPMO), an assumption of 1.5
Sigma shift from the process average is allowed, which cannot really be theoretically or
empirically justified (Antony, 2004). In Six Sigma, a defect can be defined as failure to
conform certain specifications on critical-to-quality (CTQ) attributes. However, the
specifications are seldom connected to the idea of Six Sigma control limits. Besides, CTQ Normal
is often defined subjectively, where single CTQ dominates. One of the underlying approximation
assumptions in Six Sigma is normally distributed data. However, this assumption is
usually “taken for granted” without a proper check whether this assumption has been
fulfilled or not. One of the difficulties in applying Six Sigma concept and method is data
limitation (Antony, 2004). Another scrutiny regarding Six Sigma concept and method is
that DPMO and Sigma level as the main Six Sigma metrics are often applied in the 319
context of manufacturing and not so much applied in, e.g. the market (Behara et al. (1995)
is an exception). This creates a “gap” between the application of DPMO and Sigma level
within and outside the boundaries of a firm.
Setijono (2008, 2009) attempt to address the aforementioned limitations in Six
Sigma, i.e. the assumption of 1.5 Sigma shift from the average, taking the assumption
of normality for granted, as well as the consistency of applying DPMO and Sigma level
within and outside the organisational boundaries (by modifying these metrics and
make them applicable for customer satisfaction measurements).
Although Six Sigma is much more than a statistical method/tool (Schroeder et al.,
2008; Zu et al., 2008), the focus of this paper is on the “narrow” definition of Six Sigma,
i.e. from statistical point of view. This paper aims to offer a further developed method
for calculating DPMO and Sigma level based on the “authentic” Six Sigma’s
assumptions. To be more specific, this paper presents a way of estimating DisPMO,
DePMO, left-side and right-side Sigma levels where the fulfilment of normality
assumption is statistically confirmable (verifiable). This means that when one or more
CTQ contain data that are not normally distributed, normal approximation – in this
case, through data replication – ought to be conducted.
The remainder of the paper is organised as follows: after presenting the logic of
DPMO and Sigma level, a further development of the logic is presented. The new logic
challenges/questions the existing Six Sigma assumptions (e.g. 1.5 Sigma shift,
identification of CTQ, normality assumption, etc.) and then proposes alternative
algorithms. After the methodological description, the next section presents the results
and analysis of a case study where the further developed method of calculating DPMO
and Sigma level has been applied to convert customer satisfaction on the attributes
related to the apartments they bought into Six Sigma metrics reflecting the developer’s
performance. The paper ends with discussion and conclusion.

2. The logic of DMPO and Sigma level

The term Six Sigma is a measure indicating the deviation of a characteristic (or a
variable) from its mean. Thus, Six Sigma limits (SL) are the distance of six times
standard deviation (S) from the average (m), both to the left and to the right, which can
be expressed as:
SL ¼ m ^ 6S ð1Þ
According to normal standard distribution, the probability that a measurement is
outside these limits is approximately 1:97 £ 1029 . However, in the manufacturing
context, Six Sigma limits allow 1.5 Sigma shifts from the average (see, e.g. Lucas, 2002).
Thus, the probability that a measurement is outside the Six Sigma limits is
approximately 3:4 £ 1026 . In other words, there are 3.4 defects out of a million
opportunities. Expressing the defects in terms of “per million opportunities” is thus the
IJQRM logic behind DPMO. The relevance of assuming 1.5 Sigma shift from the average has
been critically reviewed, especially in service or other non-manufacturing contexts (see,
27,3 e.g. Antony, 2004), that the “assumption of 1.5 Sigma shift for all services processes
does not make much sense because a small shift in Sigma could lead to erroneous
defect calculation” (p. 304).
According to Harry and Schroeder (2000), DPMO is a ratio between defect rate and
320 number of CTQs, and then multiplied by 1,000,000. Hence:
1 d
DPMO ¼ £ 1; 000; 000 ¼ £ 1; 000; 000 ð2Þ
h N £h
where:
.
1: Defect rate.
.
h: Number of CTQs.
.
d: Number of defects.
.
N: Number of outputs.

If we define:
DPMO 1
c¼ ¼ ð3Þ
1; 000; 000 h
then, Sigma level is calculated as the inverse (returned) value of normal standard
distribution at F (cumulative density function, cdf ) ¼ 1 2 c, with an adjustment of 1.5.
In this case, we estimate Sigma level (L) from the right (upper) side of a normal
standard distribution (Z). Thus:

L ¼ Z þ 1:5 ¼ F 21 ð1 2 cÞ þ 1:5 ¼ 2F 21 ðcÞ þ 1:5 ð4Þ

Alternatively, Sigma level is approximated as the negative inverse (returned) value of a
normal standard distribution at F (cumulative density function, cdf ) ¼ c, with an
adjustment of 1.5. In this case, we estimate the Sigma level from the left (lower) side of a
normal standard distribution (2 Z). Hence:


L ¼ 21 £ ð2Z 2 1:5Þ ¼ 21 £ F 21 ðcÞ 2 1:5 ¼ 2F 21 ðcÞ þ 1:5 ð5Þ

3. Applying the logic of DMPO and Sigma level on customer satisfaction

measurements
Although defect per million opportunities (DPMO) is a well-known Six Sigma metric to
indicate the level of quality performance, the application of DPMO is still relatively
limited in the manufacturing context and rarely applicable in non-manufacturing
contexts (George, 2002), for example, to measure a company’s performance
(effectiveness) in the market through customer satisfaction measurements.
Behara et al. (1995) attempt to adapt the logic of DPMO in the market by defining a
defect as a customer’s dissatisfaction on each quality attribute, where dissatisfaction is
defined as a performance rating of 5 or less on a 1-10 scale. Hence, DPMO is the
proportion of dissatisfied customers, convened to per million customers.
3.1 Redefining the concept of “defect” Normal
The definition of a defect as a customer’s dissatisfaction (or anything which could lead approximation
to customer dissatisfaction (Antony, 2004)) and the conversion of the proportion of
dissatisfied customers into DPMO seem to be the strengths of the model presented by
Behara et al. (1995). However, the weakness of model is apparently on the definition of
dissatisfaction (i.e. performance score of 5 or lower) if the importance and satisfaction
dimensions of customer satisfaction survey are considered simultaneously (Chen et al., 321
2007), which is in line with SERVQUAL model that simultaneously considers the
expectation and perception dimensions (Parasuraman et al., 1985, 1988), and
performance-importance analysis (Garver, 2003).
Tools that are often used in the customer satisfaction analysis, such as SERVQUAL
model, importance-satisfaction model, and importance-performance model share one
basic principle, i.e. that these tools identify customers’ perceptions regarding the
importance (or the expectation) level and the performance (or the satisfaction) level of
product’s or service’s attributes using, e.g. a 1-10 scale. The scores are then plotted in a
diagram, as shown in Figure 1. Based on Kano (2001) model of customer satisfaction, a
customer is dissatisfied when the performance score (P) is significantly lower than the
importance score (I), a customer is satisfied when P is equal to I, and delighted when P
is significantly higher than I.
Therefore, for each customer and each attribute, the difference between
performance and importance is calculated as:

Dij ¼ P ij 2 I ij ð6Þ

where:
.
Dij: The difference between a customer’s performance score and importance
score.
.
Pij: The performance score of customer i on attribute j.
.
Iij: The importance score of customer i on attribute j.

Figure 1.
Performance-importance
diagram (featuring Kano
model)
IJQRM .
i: 1, 2, . . . , n.
27,3 .
n: Number of customers.
.
j: 1, 2, . . . , m.
.
m: Number of attributes.

322 3.2 Identifying dynamic-multiple CTQs

Another weakness in the existing logic of DMPO and Sigma level is that the
calculation of DPMO is often based on a single critical-to-quality attribute (CTQ). It
is not uncommon that this CTQ is “static”. Goh (2002) suggests that CTQs should
reflect the dynamic of the market, meaning that the CTQs of today may not
necessarily be meaningful for tomorrow. Hence, CTQs are not fixed but variable,
where CTQs can be determined by conducting (for example) stepwise multiple
regression analysis. As pointed by Evans and Lindsay (2005) that the selected CTQs
should have vital influence on customer satisfaction, then it seems reasonable to
define overall customer satisfaction as the dependent variable, while the
attribute-related (dis)satisfaction (Dj) are the independent variables. Attribute in
which its difference (Dj) have significant influence on the dependent variable are
thus assigned as the CTQs.

3.3 Normality assumption

A general (basic) assumption in Six Sigma that data follow normal distribution is both
an advantage and a disadvantage. The normality assumption is advantageous in the
sense that it simplifies the calculation. However, normality assumption is not always
realistic although it can, on the other hand, be argued that:
.
non-normal distribution can be transformed into normal distribution; and
.
the sum of independent random variables will be approximately normally
distributed (central limit theorem).

According to Antony (2004), “the calculation of defect rates for non-normal situations is
not yet properly addressed in the current literature of Six Sigma” (p. 304), which thus
implies that the normality assumption in Six Sigma is not supposed to be “taken for
granted”. This is an important issue because in the service sector, normal distribution is
not as commonplace as in the manufacturing industry (Antony et al., 2007; Perry and
Barker, 2006). A normality test (Kolmogorov-Smirnov and/or Saphiro-Wilk) can be
performed using SPSS, where the following hypotheses are formulated:
H0. Data follow normal distribution.
H1. Data do not follow normal distribution.

3.4 Approaching normal distribution

Normal transformation can be very “tricky” since there are many alternative ways to
approach normal distribution, such as: data transformation (logarithmic, natural
logarithmic, Box-Cox, etc.), exclusion of outliers, etc. The appropriate method to be
used is very much dependent on the data as well as other factors such as practicality
(the level of complexity) and the implications of the method used on the data properties.
Hence, there may be no “best” method to be used. Other ways of approaching normal
distribution have also been presented by Shore (2000), where the basic idea (or the Normal
underlying concept) of approaching normal distribution is by using a predictive approximation
variable ( y), which is defined as:
8
 9
< m þ S ð1 2 0:4177SkÞz 2 13 Sk ; z , 0 =
y¼
 ð7Þ
: m þ S ð1 þ 0:4177SkÞz 2 13 Sk ; z . 0 ; 323

where:
.
y: A predictive variable.
.
m: Mean.
.
S: Standard deviation.
.
Sk: Skewness.
.
z: A normal-standard random variable.

It can be interpreted that, instead of transforming the primary data, this method
“copies” or “duplicates” the primary data by re-calculating random variables that
follow normal-standard distribution (z) into variables that share the properties of the
primary data. In this case, the mean, standard deviation, and skewness become the
“blueprint”. Since the new variables accommodate normal standard distribution, it can
be expected that these new variables are normally distributed. This approach may be
more preferable when “ordinary” data transformation methods (e.g. logarithmic) are
not suitable due to, e.g. the existence of data that are less than or equal to zero. Based
on equation (7), Shore (2000) further developed three approaches to approach normal
distribution:
(1) Modified normal approximation.
(2) New four-parameter quantile function.
(3) Inverse normalising transformation.

Further details regarding these approaches, as well as their advantages and

disadvantages can be found in Shore (2000).

3.5 Defining Six Sigma limits

The logic of Six Sigma in the manufacturing context defines that any measurement
outside the Six Sigma limits is a defect. Thus, DPMO is the sum of defect opportunities
on both lower and upper sides. However, this logic of DPMO allows 1.5 Sigma shift
from the process average.
The same logic also applies when estimating DPMO based on customer satisfaction
measurements, that satisfaction interval is within Six Sigma limits from the average
difference of performance and importance scores. Without allowing 1.5 Sigma shift
from the process average, the lower and upper Six Sigma limits are:

sj
DL ¼ Dj 2 6 pffiffiffi ð8Þ
n
IJQRM sj
DU ¼ Dj þ 6 pffiffiffi ð9Þ
27,3 n

.
DL: Lower Six Sigma limit of attribute j.
.
DU: Upper Six Sigma limit of attribute j.
324 .
Dj: Average difference (D) of attribute j.
. sj: Standard deviation of attribute j.
.
n: Sample size of primary data.

3.6 DisPMO, DePMO, left-side and right-side Sigma levels

The logic of DPMO is generally valid when the calculation is based on (non-conforming)
output, thus can not be applied per se if the calculation of DPMO is based on outcome, i.e.
perception or satisfaction of customers, because a measurement above the upper limit is
not an indication of failure in performance. On the contrary, it indicates “perfection”.
Therefore, two “new” metrics: dissatisfaction per million opportunities (DisPMO) and
delight per million opportunities (DePMO) are suggested as the equivalence of DPMO
when the basis of calculation is customer satisfaction measurements.
Consistent with equation (2), DisPMO is the ratio between the defects and the
opportunities. Defects are the total number of customers who are dissatisfied (i.e. the
difference between the performance and importance score is smaller than the lower Six
Sigma limit) in each CTQ attribute for all CTQ attributes. Opportunities are the total
number of customers multiplied by the number of CTQ attributes. Similarly, DePMO is
the ratio between the perfections, defined as the total number of customers who are
delighted (i.e. the difference between the performance and importance score is higher
than the upper Six Sigma limit) in each CTQ attribute for all CTQ attributes, and the
opportunities, defined as the total number of customers multiplied by the number of
CTQ attributes.
þ
By first defining dummy variables x2 ij and xij as:

(
1 ifDij , DL
x2
ij ¼ ð10Þ
0 otherwise

(
1 ifDij . DU
xþ
ij ¼ ð11Þ
0 otherwise

then, DisPMO and DePMO can be expressed as:

X
n X
m *
x2
ij
i¼1 j¼1
DisPMO ¼ 1; 000; 000 ð12Þ
n*m
 X
n X
m * Normal
xþ
ij approximation
i¼1 j¼1
DePMO ¼ 1; 000; 000 ð13Þ
n*m
To illustrate the logic of DisPMO and DePMO, let’s take a look at Table I, where there
are ten (10) samples of customer and four (4) CTQs. If dissatisfaction is represented by 325
“†” and delight is symbolised by “V”, then the fraction of dissatisfaction is 2=ð10 £
4Þ ¼ 5percent and the fraction of delight is 4=ð10 £ 4Þ ¼ 10percent. Consequently, the
DisPMO and DePMO are 50,000 and 100,000 respectively.
In the “conventional” DPMO term that allows 1.5 Sigma shift, DisPMO at 50,000 is
equal to 3.14 Sigma – we may call this left-side Sigma level. This type of Sigma level may
indicate organisational effectiveness which is determined from a “negative” side, i.e. the
extent a manufacturing or service organisation dissatisfies/disappoints the customers.
A similar reasoning can be used to approximate the equivalence Sigma level of the
DePMO although a slight adjustment in the calculation is needed. First, we identify the
Sigma level of 100,000 DePMO (which is approximately 2.78 Sigma), then subtract the
“ideal” Sigma level (i.e. 6 Sigma) with the approximated Sigma level (i.e. 2.78). Hence,
DePMO at 100,000 is calculated as 3.22 Sigma (¼ 6 2 2:78), which may be called as the
right-side Sigma level. This type of Sigma level may indicate organisational effectiveness
which is determined from a “positive” side, i.e. the extent to which a manufacturing or
service organisation delights the customers.

4. Methodology
The case company, MIDROC, is a property developer in Sweden. In summer 2007, the
company was in an early stage of the construction project LIMNOLOGEN to build
apartments in Växjö municipality (which becomes the scope of this study) and the
company had the intention to identify and measure customer satisfaction on the
attributes that are related to the apartments they bought.
In early spring 2008, two 8-storey apartment buildings were nearly completed and
the selling process began. The apartments were sold primarily as standard apartments
but the customers had the possibility to customise or upgrade the apartments they
bought (for example selecting another design of window from the available product
range/option) at additional costs. The study was further limited by focusing on
customers who have decided to buy apartments in the two buildings above.

Sample CTQ 1 CTQ 2 CTQ 3 CTQ 4

1
2 †
3
4 †
5 V
6 V
7 Table I.
8 V V An illustrative example
9 for calculating DisPMO
10 and DePMO
IJQRM There were 59 customers who have bought the apartments and to whom the
27,3 questionnaires were sent. Since there are 66 built apartments, the selling rate (at the
time when the questionnaires were sent) was then equal to 89 per cent. They were
asked to give score (1-10 scale) on how they perceived the importance (Iij) and the
performance (Pij) of each attribute in Table II. Expectation-perception model can be
used in the study/measurement of customer satisfaction in residential construction
326 (Forsythe, 2007), which thus confirms the relevance of using importance-performance
model. The customers were also asked to rate their overall satisfaction. A 1-10
measurement scale was used in this survey because, in general, customer satisfaction
measurements tend to favour the choice of a 1-10 scale (Coelho and Esteves, 2007). In
total, 22 customers answered and returned the questionnaires, which gave response
rate about 37 per cent.
The use of customers’ self-stated importance score in the importance-performance
analysis has been questioned by, e.g. Deng et al. (2008). However, since we are
identifying defect in the “eyes” of customers, it may be relevant and necessary to use
customers’ self-stated importance score. Another reason to use self-stated importance
score is that customer satisfaction is viewed as individually perceived phenomena
(Forsythe, 2007). Hence, the focus here is on the importance scores as indicated by each
customer him/herself instead of deriving overall importance weights from the
performance scores.
The limited number of buyers and response rate thus explain the limited amount of
empirical data but it becomes a “perfect” empirical context to apply the new metrics
modified/derived from DPMO and Sigma level because in the algorithm of modified
DPMO and Sigma level, limited amount of data is not a constraint.

5. Results and analysis

A stepwise regression analysis on the 16 attributes produced the following regression
model (p 2 value ¼ 0; R 2 ¼ 45:4percent):
S ¼ 7:783 þ 0:412D6 ð14Þ
Hence, it is suggested that customer (dis)satisfaction on the “outside view from
inside the apartment” (D6) is a critical-to-quality attribute (CTQ) that influences
overall customer satisfaction (S). Since multiple CTQ is theoretically more
preferable. Therefore, it was considered as necessary to expand the search to find
more variables that are significantly correlated with overall customer satisfaction. It
was found that the performance dimension of attributes A1, A3, A6, and A12 are
correlated with S. Based on this finding, A1, A3, and A12 are then additionally
assigned as the CTQs.
The result of the normality tests (Table III) conducted on the four CTQ attributes
suggest that (at a ¼ 5percent) these data sets are not normally distributed. Therefore,
it is necessary to find ways to approach normal distribution.
Approaching normality for each data set was conducted by first generating four
sets of data where each data set contains 22 random numbers (the same amount as the
sample size of the primary data) that follow normal standard distribution. Each
random number is then re-calculated according to equation (7), where the mean (m),
Sigma (S), and the skewness (Sk) are estimated from the primary (empirical) data –
assuming that these parameters are the “true” representation of the population. These
Attribute Description Mean (D) St. deviation (D) Skewness (D) Min (D) Max (D)

A1 Ratio investment-rent 21.1364 1.1668 2 0.1070 23 1

A2 Floor utilisation 20.8636 1.2834 2 1.0210 24 1
A3 Apartment size 0.6364 2.1722 1.1300 23 7
A4 Extent of fulfilling the criteria of “standard
apartment” 20.7143 1.3093 2 1.9170 25 1
A5 Rooms’ height 2.3182 2.4763 0.3430 21 7
A6 Outside view (from inside the apartment) 20.1364 1.4895 2 0.6960 24 3
A7 Ventilation 22.1905 2.4417 2 0.8720 28 1
A8 Heating 22.1176 2.3152 2 0.9340 27 0
A9 Placement of electricity plugs 22.2727 1.8563 2 0.5430 26 0
A10 Layout (rooms planning) 20.4091 1.9919 0.3890 24 4
A11 Rooms’ size 0.2727 2.9469 1.0200 24 8
A12 Material of building frames 1.7727 2.5991 0.2740 24 7
A13 Parking spaces 23.9500 2.9464 2 0.5890 29 0
A14 Wardrobe and compartments 22.0455 2.0812 2 0.7360 27 1
A15 Common (shared) spaces 1.2500 2.8814 2 0.4980 24 5
A16 Options (selection) for upgrade 22.2000 2.6872 2 1.3730 29 1
approximation

their descriptive statistics

Listed attributes and
Normal

327

Table II.
IJQRM generated data sets thus represent the transformed primary data to approach normal
27,3 distribution (see Table IV) – that is, we directly went to normal approximation without
identifying the “exact” non-normal distribution that each data set follows. In order to
be consistent with the fact that a 1-10 measurement scale was applied to collect the
primary data, any transformed number in each data set should be between 2 9 and 9.
The normality test (shown in Table V) confirms that these generated (replicated) data
328 sets are normally distributed.
Since the mean and the standard deviation between primary and secondary data
show no difference (Table VI), it is recommended to use the secondary data sets
because these secondary data provide a “guarantee” that normality assumption has
been fulfilled. Once normality assumption has been fulfilled, the Sigma limits can be
determined according to equation (8) and (9). Table VII shows the Sigma limits of each
attribute.

Kolmogorov-Smirnov Saphiro-Wilk
Attribute Statistic df Sig Statistic df Sig

D1 0.199 22 0.024 0.905 22 0.037

Table III. D3 0.206 22 0.016 0.910 22 0.047
Normality test on the D6 0.309 22 0.000 0.865 22 0.006
primary data sets D12 0.192 22 0.033 0.936 22 0.161

Attribute Mean (D) St. dev (D) Skewness (D)

1 21.5432 1.1625 0.236

Table IV. 3 0.8821 2.4775 0.986
The parameters of the 6 20.0157 1.2701 2 0.418
generated samples 12 0.7140 2.8765 0.267

Kolmogorov-Smirnov Saphiro-Wilk
Statistic df Sig Statistic df Sig

D1 0.118 22 0.200 0.957 22 0.425

Table V. D3 0.150 22 0.200 0.927 22 0.106
Normality test on the D6 0.153 22 0.198 0.943 22 0.223
generated samples D12 0.109 22 0.200 0.953 22 0.356

Equality of variance
Equality of mean (t-test) (Levene’s test)
t Sig. F Sig.

D1 1.158 0.253 0.266 0.608

Table VI. D3 20.350 0.728 0.766 0.386
The equality tests on D6 20.289 0.774 0.048 0.828
mean and variance D12 1.281 0.207 0.495 0.485
Prior to determining the DisPMO and DePMO, a simulation has been conducted by Normal
generating 22 random numbers (that follow normal standard distribution) for all CTQs approximation
and then recalculates these random numbers according to equation (7). In order to be
consistent with the fact that a 1-10 measurement scale was used to collect the primary

Lower Six Sigma limit Upper Six Sigma limit

329
D1 23.0303 20.0561
D3 22.2871 4.0513 Table VII.
D6 21.6404 1.6090 The Six Sigma limits of
D12 4.3936 22.9656 each CTQ

Figure 2.
Plot of average DisPMO
after each simulation run

Figure 3.
Plot of average DePMO
after each simulation run
IJQRM data, any recalculated number in each data set should be between 2 9 and 9. After ten
27,3 simulation runs, it may be apparent that the results have reached a steady state (shown
in Figures 2 and 3). The simulation results (Tables VIII and IX) suggest that the
DisPMO and DePMO are approximately 72,000 and 122,000 respectively. These
numbers are equivalent to left-side Sigma level ¼ 2.96 and right-side Sigma
level ¼ 3.33. These figures are certainly still far below if Sigma level ¼ 6 becomes
330 the performance target.
Comparing the above figures with a previous study on the service effectiveness in
the selling process of the same case company (Setijono, 2009) may prove the
consistency of the above results, in the sense that the company’s performance from
both product and service perspectives (stated in terms of Sigma level) consistently refer
to a certain range of Sigma level.

6. Discussion and conclusion

Tables VIII and IX indicate that attributes A1, A3, and A12 have more proportion of
positive difference (D . 0) than negative. On the contrary, attribute A6 has more
proportion of negative D than positive. This can be interpreted that customers are more
satisfied on attributes A1, A3, and A12 than on attribute A6.
Figures 2 and 3 reveal that DisPMO and DePMO is actually each other’s “mirror”,
which can be explained through the following phenomenon: attribute A1 and A12 have

Run A1 A3 A6 A12 Overall

1 0 45,455 227,273 0 68,182

2 0 22,727 204,545 0 56,818
3 0 30,303 196,970 0 56,818
4 0 68,182 215,909 0 71,023
5 9,091 54,545 227,273 9,091 75,000
6 15,152 53,030 219,697 15,152 75,758
7 12,987 51,948 220,779 12,987 74,675
Table VIII. 8 11,364 45,455 221,591 11,364 72,443
The average DisPMO 9 10,101 45,455 217,172 10,101 70,707
after each simulation run 10 18,182 40,909 204,545 9,091 68,182

Run A1 A3 A6 A12 Overall

1 363,636 90,909 90,909 227,273 193,182

2 250,000 113,636 113,636 181,818 164,773
3 242,424 106,061 106,061 196,970 162,879
4 215,909 90,909 90,909 181,818 144,886
5 181,818 100,000 100,000 154,545 134,091
6 159,091 90,909 90,909 136,364 119,318
7 162,338 90,909 90,909 142,857 121,753
Table IX. 8 164,773 96,591 96,591 147,727 126,420
The average DePMO 9 151,515 101,010 101,010 131,313 121,212
after each simulation run 10 154,545 95,455 95,455 136,364 120,455
lower DisPMO level compared with A3 and A6; it is the exact opposite if we look at Normal
Figure 3, where attribute A1 and A12 have higher DePMO level than A3 and A6. approximation
If only A6 is assigned as the CTQ, the DisPMO and DePMO are 218,000 and 94,000
respectively. These lead to left-side Sigma level ¼ 2.28 and right-side Sigma
level ¼ 3.18. Then, there is difference in the Sigma levels when we use single CTQ and
multiple CTQs. A careful interpretation of this condition is that multiple CTQs seem to
be more advantageous to use than single CTQ, in the sense that it may reduce the risk 331
for “miscalculation” (over-/underestimation).
The normal approximation in this paper is something that could have been
improved, in the sense that:
.
equation (7) is Shore’s
 (2000) simplified
 version of the “ideal” normal
approximation y ¼ f m; S; A; C; z; h; Sk (Shore, 2000, p. 279); and
. the parameters (m, S, and Sk) of equation (7) are estimated from samples of
“unknown” non-normal distribution.

Hence, this “imperfections” leave opportunities and challenges for further research.
Perhaps Shore’s (2000) third approach of normal approximation, i.e. inverse
normalising transformation will be ideal to address this challenge.
DisPMO, DePMO, left-side and right-side Sigma levels imply that the logic of
DPMO and Sigma level is applicable whether the basis of measurements is internal or
external indicators. These modified metrics are based on dynamic-multiple CTQs
without the need to assume 1.5 Sigma shift from the average. Prior to the calculation of
DisPMO, DePMO, and Sigma levels, the assumption that data are normally distributed
should be properly checked and verified. The simulation results suggest that the
developer’s performance level is still far below Six Sigma level. It is also shown that the
right-side Sigma level is generally higher than the left-side. Therefore, both sides
should be taken into account because assessment based only on one side tend to either
overestimate or underestimate the level of performance.

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Corresponding author
Djoko Setijono can be contacted at: djoko_setijono@yahoo.com

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Quality
Using net present value methods improvement
to evaluate quality improvement projects
projects
333
Valerie G. Caryer Cook and Ahad Ali
Lawrence Technological University, Southfield, Michigan, USA Received November 2008
Revised October 2009
Accepted October 2009
Abstract
Purpose – This paper aims to propose the use of net present value methods to derive the quality
costs of quality improvement projects. The proposed methodology is then demonstrated in a case
study of a quality improvement to an inspection process in an automobile assembly plant.
Design/methodology/approach – The approach takes the form of application of accounting net
present value methods to the cost of quality methods.
Findings – Quality improvements in the manufacture of durable goods do not usually have
instantaneous results in warranty cost reductions, customer satisfaction or revenue expansion. The
net present value method proposed gives a more accurate accounting of the expected results of quality
improvement projects by considering the temporal effects of the change and the time value of money.
Research limitations/implications – The case study presented contains fictitious data to protect
the confidentiality of the source. While it is useful in demonstrating the application of the net present
value method, it should not be used as an indication of actual costs of plant operations.
Originality/value – The paper provides a unique approach to cost of quality analysis that is
particularly useful in the assessment of quality improvement projects for durable goods. While much
research is focused on cost of quality methods and philosophies, only a little provides the level of detail
in the actual application of the methods found in the case study.
Keywords Quality costs, Inspection, Capital equipment, Automotive industry
Paper type Research paper

1. Introduction
In the pursuit of product quality improvement, companies are often faced with the
challenge of assessing the feasibility of large quality improvement investments in
economic terms. Often these strategic assessments are limited to tangible costs such as
rework and warranty – ignoring significant costs effects on unit sales due to customer
satisfaction (Schiffauerova and Thomson, 2006; Weller, 1996; Tatikonda and
Tatikonda, 1996). Most firms measuring cost of quality (COQ) use adaptations of the
original 1956 Feigenbaum prevention-appraisal-failure (PAF) model (Schiffauerova
and Thomson, 2006). If the reduction in the failure costs exceeds that of the prevention
and appraisal costs needed to implement the change, the project is deemed infeasible.
PAF does not take into account the opportunity for revenue expansion associated with
quality improvements, which although difficult to measure, may be quite significant.
When considering investment in strategic quality systems, both the benefits of cost International Journal of Quality &
reduction, as well as revenue expansion effects must be considered. Reliability Management
Vol. 27 No. 3, 2010
More recently, return-on-quality (RoQ) models have enabled revenue expansion to pp. 333-350
be considered in the strategic assessment of projects. The revenue expansion benefits q Emerald Group Publishing Limited
0265-671X
are hard to estimate for two reasons: the magnitude of the resulting benefits is hard to DOI 10.1108/02656711011023311
IJQRM predict for small changes in product quality; and the realization of those benefits
27,3 usually lags the initial capital investment in the quality improvement (Superville and
Gupta, 2001). Like return on investment accounting analysis, RoQ calculations do not
take the time value of money into consideration, a prime consideration for large capital
investments (Moriarity and Allen, 1986). While a number of researchers have
investigated the behavior of quality systems, the models are primarily static in nature.
334 There is very little available literature focusing on the dynamic nature of quality costs
and their applications (Kim and Nakhai, 2008). This paper proposes a present value
approach to capital project assessment to capture the dynamic behavior of the response
to a quality improvement. In addition, the Kano model is suggested as a means for
determining the extent of the revenue opportunity associated with the project.
Although many publications are available on the theory of RoQ and other cost of
quality methods, there are few papers detailing a practical approach to assessing the
cost and benefit of quality improvement projects (Schiffauerova and Thomson, 2006;
Keogh et al., 2000). The case study presented in the second part of this paper, provides
some insight into the practical application of the proposed net present value of quality
index method.

2. Net present value of quality index (PVQI)

For most capital quality improvement projects, the effects of the investment may take
years to stabilize. Figure 1 shows a conceptual time line of the cost and benefits effects
of a typical quality improvement project. Traditional return-on-investment (and
return-on-quality) accounting methods evaluate the performance of investments over a
single period, often the first one. As such, they cannot account for the dynamic changes
in the costs and returns associated with a large project. For projects where the incurred

Figure 1.
The economic cost and
benefit of a quality
improvement investment
over time
costs and expected benefits cannot be reconciled within one accounting period, cost Quality
accounting texts recommend “present value index analysis” (Moriarity and Allen, improvement
1986). This approach makes sense in evaluating quality projects as well by providing
an assessment of the total value of a project over a period of time. projects
Present value index methods consider the performance of investments over multiple
accounting periods. The present value index is defined as the ratio of the sum of the
present value benefits to the present value of the costs used to generate the benefits: 335
P
PVbenefit
PVIndex ¼ P ð1Þ
PVcost
This is very similar to the return on quality equation, but includes the time value of
money in the assessment. Rewriting the present value index equation as a function of
quality input and output components, the present value of quality index is:
P
PVQbenefits
PVQI ¼ P ð2Þ
PVQcosts
When using PVQI to compare different investment options, it is important to be
consistent in the definition of the time value of money (i.e. inflation or interest) and the
time period and increments over which the alternatives are to be considered.

2.1 Benefits
The benefits included in the analysis of a quality improvement project can include
warranty reduction or a net variable cost reduction, as well as intangible benefits such
as sales increases:
PVQbenefit ¼ PVQvc þ PVQwar þ PVQsales ð3Þ
Benefit components are shown above the x-axis in Figure 1. Variable cost savings can
be assessed as annuities for present value, because they produce a relatively constant
flow of cost savings from period to period, beginning at project implementation:


1 2 ð1 þ rÞ2n
PVQvc ¼ £ VC ð4Þ
r
where:
. VC is the combined variable cost savings per period;
.
r is the interest rate per period; and
.
n is the number of periods.
The warranty cost savings attributed to the improvement is expected to become
noticeable when the improved products reach a time in service equal to the previous
point of attribute failure (mean-time-to-failure). For instance, if a product before the
improvement usually fails at four months in service, warranty cost benefits will not
occur until the improved product reached four months in service and does not require
repair. If assuming that the warranty benefit will be fully experienced in one
accounting period, the present value becomes an annuity with a delayed start:


IJQRM 1 2 ð1 þ rÞ2n 1 2 ð1 2 rÞ2nf
PVQwar ¼ 2 £ Cwar ð5Þ
27,3 r r
where:
.
Cwar is the expected warranty cost savings per period;
336 .
r is the interest rate per period;
.
n is the total number of periods assessed; and
.
nf is the MTTF in periods for the attribute.

The more variable the time to failure is for the product population, the longer it will take
for the full warranty cost benefit to be reached. If probability distribution of failure
function F(t) is available, a cumulative failure rate f(i ) may be created to estimate the
time effect of the warranty cost benefit, using piece-wise methods (Ebeling, 1997):
Xn ð f ði Þ £ CwarÞ
PVQwar ¼ ð6Þ
0 ð1 þ rÞi
where:
.
f(i ) is the percent of products expected to fail in period (i ) based on F(t);
.
Cwar is the maximum possible warranty cost savings per period;
. r is the interest rate per period; and
.
n is the total number of periods assessed.
Often the benefits of quality improvements are under-reported because only
tangible benefits are considered; although significant, intangible benefits are
difficult to measure and often overlooked (Schiffauerova and Thomson, 2006;
Kume, 1985; Freiesleben, 1986; Freiesleben, 2006; Juran, 1989). Intangible benefits,
such as sales increases due to increased quality (PVQsales), may take much longer
than tangible benefits to be realized; but their potential magnitude demands
consideration.
2.1.1 Kano’s model and assessing the value of quality. It may seem obvious that
customer satisfaction occurs naturally when quality is improved, but this is not
always the case. Some improvements result in a higher magnitude of customer
satisfaction response than others. In evaluating an investment in quality
improvement, the attribute being improved will determine the significance of a
potential sales increase benefit. This relationship is detailed by Kano in his 1984
model customer satisfaction versus product performance (Busacca and Padula,
2005). According to Kano’s model (see Figure 2), customer response to quality
improvements will vary depending on the type of attribute being improved.
Product attributes in the performance (one-dimensional) categories should be given
highest priority for quality improvement projects, as they have the strongest
relationship between performance, or quality, and customer satisfaction (Yadav
and Goel, 2008).
Attributes in the “performance” category of the Kano model elicit a satisfaction level
proportional to the performance level perceived by the customer and often contain
adjectives such as fast, quiet, and well-built. Craftsmanship attributes such as lack of
 Quality
improvement
projects

337

Figure 2.
Kano model of satisfaction
vs basic needs

annoying noises and quality of fit and finish, are in this category. Quality of these
attributes is often used as a means of product differentiation among products in the
same market segment (Williams et al., 2005). Quality improvement projects targeting
these attributes are expected to have the most significant and proportional effect on
customer satisfaction, hence potential sales increase benefit.
Improvements to attributes in the “basic” category are not expected to influence
sales unless there is currently a significant amount of dissatisfaction with this product
attribute. Excitement attributes are difficult to analyze relative to profitability because
the relationship between the quality of execution and sales is also a function of the
market response to the feature itself. For calculating the present value benefit of
increased sales, the market response U(i ) to the change must be estimated before
present value may be calculated:
Xn ðmPU ði ÞÞ
PVQsales ¼ ð7Þ
0 ð1 þ rÞi
where:
.
m is the margin or percent profit per unit sold;
.
P is the average price per unit;
.
U(i ) is the predicted number of additional sales in period (i );
.
r is the interest rate per period; and
.
n is the total number of periods assessed.

2.2 Costs
The costs enabling the previously discussed benefits may include capital equipment
costs, variable costs and transition costs, as well as internal failure and prevention
costs (see Figure 1, below the x-axis):

PVQcost ¼ PVQcap þ ðPVQvc‘ þ PVQtransÞ þ ðPVQif þ PVQprevÞ ð8Þ

IJQRM After the project is approved, there is an initial outlay of capital project funds to
purchase equipment and have it installed (PVQcap). The present value of these capital
27,3 funds is equal to the amount, since the investment occurs in the present.
After equipment installation and prove-out, there is a period of transition required
to train the personnel and adjust the process to achieve a stable system. The transition
duration will depend on the complexity of the change and the amount of training
338 required. If the cost is only experienced over one period at implementation, the amount
may be folded into the capital cost of the project. More lengthy transitions may be
handled as an annuity:


1 2 ð1 þ rÞ2nt
PVQtrans ¼ £ Ctrans ð9Þ
r

where:
.
Ctrans is the average combined cost of transition per period;
.
r is the interest rate per period; and
.
nt is the number of transition periods.

Eventually, the system will stabilize and a consistent flow of products at the new
quality level will be released from the plant. The additional cost of operating using the
new process is expected to be stable over the period of assessment and is also valued as
an annuity. The British Standards Institute has published a checklist of potential cost
elements in BS 6143: Part 2 (1990) (Giakatis and Rooney, 2000). This is a useful guide
for completing a comprehensive list:


1 2 ð1 þ rÞ2n
PVQvc‘ ¼ £ VC‘ ð10Þ
r

where:
.
VC’ is the combined variable cost per period;
.
r is the interest rate per period; and
.
n is the number of periods.

Internal failure costs may be affected in different ways, depending on the nature of the
improvement project. Prevention focused projects improve the quality of the product
before it is inspected resulting in an immediate decrease in the cost of internal repairs.
This savings would be calculated as part of the variable cost savings included with the
benefits.
Improvements to an inspection process do not change the actual quality of the
products reaching the inspection station; therefore, internal failure costs will increase
as repairs once done externally (i.e. warranty) are now being done in the plant prior to
shipment. Repair costs may be significant; therefore response preventative strategy
projects should be expected in the analysis. Since inspection system improvements
create a fluctuating symbiotic response in prevention and internal failure costs, a
piece-wise approach is recommended:
 Xn ðCrepRÞi Quality
PVQif ¼ ð11Þ
0 i
ð1 þ rÞ improvement
where: projects
.
Crep is the average cost per unit repaired;
.
R is the predicted number of additional repair in period (i );
339
.
r is the interest rate per period; and
.
n is the total number of periods assessed.

In order to consider a gradual reduction in internal repairs over time, there must be a
complementary increase in funds invested in preventative measures. An analyst may
want to allocate preventative project contingency (PVQprev) funds equivalent to a
percent of expected present value repair cost (fixed) if the nature of future preventative
projects is unknown. The following case study provides a practical example of using
net present value methods in assessing a quality improvement project.

3. Case study: improvement to an automotive sound quality inspection

system
An automotive manufacturer is considering a new inspection process to ensure
vehicles leaving the assembly plant have acceptable sound quality. The data presented
are fictitious, in an effort to demonstrate the method while maintaining the
confidentiality of the source. The analysis detail however, mirrors the thought
processes used in the actual project.
In this purely hypothetical case, the current process generates 50,000 vehicles per
quarter with an average of 30 defects per 100 vehicles. This output quality level could
result in about 10 percent of customers indicating dissatisfaction with the attribute in the
most recent JD Powers IQS3[1] Survey. Since the attribute being affected is sound quality,
APEAL[2] Survey data may show both positive and negative responses in customers. We
assume warranty claims for the sound quality issues are normally distributed with a
mean time to failure at six months (two quarters) in service, and a standard deviation of
three months, and average warranty cost per unit could be about $200.
The inspection process improvement being considered would require a $1.0 million
capital investment, and $0.50 additional variable cost per unit to cover maintenance
and calibration expenses for the new system. The improved process may result in 90
percent of the defects contained within three months of implementation, with no
significant effect on cycle time. The financial performance of this hypothetical project
will be assessed over a total of five years (20 quarters), in one-quarter period
increments. The discount rate may be estimated at 6 percent (1.5 percent per quarter).
An arbitrary margin of 5 percent may be assumed on an average unit price of $20,000,
resulting in $1,000 profit per unit sold.

3.1 Assessment of PVQBenefits

PVQbenefit ¼ PVQvc þ PVQwar þ PVQsales ð12Þ

This project is clearly aimed at reducing the warranty costs associated with sound
quality complaints. Table I provides a summary of the component benefits associated
 27,3

340

Table I.
IJQRM

hypothetical case
Benefits summary for
Benefit component Present value Equation Description

Variable cost savings $0 na Inspection system project does not reduce cost of
production
P ð f ði Þ£$9;000;000 max =qtrÞ
Warranty cost savings $141.3M PVQwar ¼ 20 0 ð1þ0:015Þi
where Maximum savings (per unit
f(i ) is the periodic Cumulative Failure Rate (based sold) ¼ $200 £ 90% ¼ $180 per unit sold
on F(t) with normal distribution, MTTF ¼ 2Q, and Maximum warranty cost
s ¼ 1Q), for 0 , i # 4: f ði Þ ¼ 0:6174 lnði Þ þ savings ¼ $180 £ 50,000 units per
0:1344 for i . 4, f ði Þ ¼ 1:0 quarter ¼ $9.0M per qtr
Assumes that the maximum warranty cost saving
rate will be reached in the 5th quarter
Assumes that all defects contribute equally to the
warranty cost
P ðU ði Þ£$1000profit=unit£648unit=qtrÞ
Revenue creation $3.8M PVQsales ¼ 20 0 ð1þ0:015Þi where Attribute type: Performance
U(i ) is the periodic increase in unit sales (based on mP ¼ 5% £ 20,000 ¼ $1,000 profit per unit
u(t) with normal distribution, mean¼ 12Q, and Dd ¼ 0.9 £ 30 ¼ 27 fewer defects per 100 vehicles
s ¼ 4Q), for i , 3, U ði Þ ¼ 0 for 4 , i # 15: DS ¼ 0.24 £ (27) ¼ 6.48 P/100
U ði Þ ¼ 0:0833ði Þ for i . 15, Uði Þ ¼ 1 DU(S) ¼ (6.48) £ 0.2% £ 50,000 ¼ 648 max
potential units per qtr in new sales
with this project. Although the variable cost savings and warranty cost savings Quality
components are relatively straight-forward calculations, the predicted revenue creation improvement
due to increased quality requires some explanation.
3.1.1 Unit sales effect prediction. Unit sales effect prediction may be approached projects
using a three-step process. First we consider the significance of the effect using Kano
classification. Based on the fictitious case introduction, 10 percent of customers have
indicated dissatisfaction with the sound quality of their vehicles using the automotive 341
industry metric for customer satisfaction, JD Powers IQS3 data. By reviewing APEAL
survey responses for sound quality in the segment, a wide distribution of responses is
evident (i.e. market responses are not clustered in the center of the 1-10 rating scale);
thus a Kano model “performance attribute” is assumed. This project improves a
“performance attribute”, therefore proportional increase in customer satisfaction is
expected, as well as a corresponding unit sales increase.
The second step is to determine the maximum potential unit sales induced by the
quality improvement. This was accomplished empirically by using data relating the
plant defect rate (d ) to the resulting customer satisfaction (S); then relating the change
in satisfaction to unit sales (U). Comparing defect rates for 13 plant/product
combinations to their corresponding product satisfaction ratings, an empirical
relationship was established as a model for this case (see Figure 3):

Sðd Þ ¼ 0:24d þ 2:63; R 2 ¼ 61% ð13Þ

where:
.
S(d ) is the subtotal JD. Power IQS3 rating in P/100 for sound quality defects; and
.
d is the defect rate in P/100.

Relating satisfaction to unit sales is not consistent among automotive manufacturers

(see Figure 4). This finding is consistent with others who identify customer satisfaction

Figure 3.
Empirical data showing
the relationship of in-plant
defects to J.D. Power IQS3
scores for hypothetical
case
IJQRM
27,3

342

Figure 4.
Relationship between JD
Power IQS customer
satisfaction scores and
unit sales by manufacturer
as a leading indicator of financial performance that varies in its influence both across Quality
industries, and within an industry (Gupta and Zeithaml, 2006). improvement
In this case, we use the overall relationship between satisfaction and sales at for the
specific manufacturer and adjust the function to reflect the relationship at the plant projects
level. From Figure 4, a maximum unit sales increase of 5,715 units (0.2 percent) for
every point reduction in the IQS3 score is provided for the firm. Expressed as a
fraction, the maximum response in increased unit sales would be: 343
DU ðSÞ ¼ 0:2%ðDSÞVplant ð14Þ

where:
.
U(S) is the expected potential change in unit sales due to JD. Power IQS3 rating
improvement;
.
S is the expected change in satisfaction P/100; and
.
Vplant is the current volume of the plant (50,000 units per qtr).

Once the improved process begins producing vehicles with fewer defects, the
satisfaction should be affected as soon as the improved vehicles are in the hands of
their new owners; but sales increases due to the increased satisfaction will not occur as
quickly. The third step in the prediction of unit sales response is to gauge the temporal
response. There is little research on the strategic estimation of the time lag between
product improvement and subsequent revenue creation. Therefore, the temporal effect
was estimated using average three years between household vehicle purchases (Mittal
and Kamakura, 2001), as the mid-point in the temporal response. A simple linear
response function was developed assuming three years to ramp-up to maximum
benefit of 648 units per quarter (see Table I).

3.2 Costs
The present value of the capital cost of completing the project is a fixed value
representing the entire cost of the equipment, installation and transition. In our case,
this is the contract value of $1.0 million. This is already a present value, so no
adjustment is necessary (see Table II).
Variable (appraisal) cost sub-components vary widely from situation to situation.
For our case study, we began with the BS6143 standard list of potential costs and
selected those significant to this project ($0.50 per vehicle).
Internal failure costs in this project are expected to rise over time then fall as
preventative measures are taken. In this hypothetical case, we assumed that the cost of
repairing the vehicle in the plant may be 50 percent of the cost to repair it at the
dealership or a maximum of $100 per unit sold at process implementation. Assuming
no change to the product coming into the inspection station, the number of repairs will
increase by the number of additional defects found, in our hypothetical case 27 per 100
vehicles. The internal failure cost is expected to reduce significantly in the first year as
the plant implements prevention methods to correct the upstream processes to a target
minimum value of $5 per unit. An exponential model was used to estimate the cost of
repairs over time.
Prevention costs include the costs of all upstream actions taken to prevent defects
from happening in the first place. Since this project is for an improvement to an
 27,3

344

Table II.
IJQRM

hypothetical case
Cost summary for
Cost component Present value Equation Description

Capital cost 1,000K na Cost of project $1.0M

Transition cost 0 na Training and ramp-up costs are contained in
capital project cost and experienced within first
quarter
h i
12ð1þ0:06Þ220
Variable cost (appraisal cost) 287K PVQvc‘ ¼ 25 0:06 VC ¼ vc £ U ¼ $25K per quarter
vc is the sum of all additional operating costs
needed to implement the improved
system ¼ $0.50
U is the units of vehicles produced
P
Internal failure cost PVQif ¼ n0 ðCrepRÞi
ð1þrÞi
Crep is avg expected cost of internal repair
where f(i ) is the periodic cumulative failure rate R ¼ Dd £ 0:01UðmaximumÞ ¼ 13; 500 is
(assuming a linear decline to a target average expected increase in number of repairs each
$5 failure cost per vehicle at 20Q, for quarter
0 , i # 20:
f ði Þ ¼ 100 2 4:75i
Prevention cost 338K PVQprev ¼ 25% £ $100 £ 13; 500 R1 ¼ the expected number of additional repairs
in the first quarter ¼ 13,500
inspection system, no prevention costs are included with in the initial project Quality
description. However, as the defects become more visible with the improved inspection improvement
process, the plant will respond with process improvements aimed at minimizing the
repair costs (Omachonu et al., 2004). In our study, we will assume a learning period of projects
three quarters during which the assembly plant will become used to the inspection data
output and develop the results into specific implemented prevention actions. We will
assume the project will assign a present value capital contingency of 25 percent of the 345
expected annual cost of repairs to be applied to future preventative actions. Figure 5
shows the expected cost and benefit nominal values over the 20 periods of interest
(note: appraisal costs are minimal and do not show on the chart).

3.3 Case study results

Once the component costs and benefits have been identified and described, standard
accounting procedures may be used to establish the net present value for the project.
Tables III and IV shows that for a period of five years, the present value benefits of the
quality project are 2.87 times greater than the present value of the costs. The present
value index indicates the project is feasible, but even more valuable is the ability to plot
the results over time. Figure 6 shows that the system will need to be in place for almost
two years before a break-even point is reached. The stack chart in Figure 5 shows the
benefits of this project are due primarily to warranty cost savings.
Return on quality calculated on the same data assuming assessment is made at the
end of the first year. Using this method, the project would not be feasible because only
96 cents are returned for every dollar invested.

4. Conclusion
The net present value of quality method proposed and demonstrated in this paper
enables more accurate and detailed assessment of expected project results than

Figure 5.
Cost versus benefit of
hypothetical inspection
process improvement
project over 20 quarters
 27,3

346
IJQRM

Table III.

calculations for net

Case study support

present value of quality

Calculation of net present
value Quarter
(These are arbitrary figures
for use in case study) Current 1 2 3 4 5 6 7 8 9 10

Benefits
Defects to customers (P/100) 30 3 3 3 3 3 3 3 3 3 3
Instantaneous satisfaction
level (P/100) 9.83 3.35 3.35 3.35 3.35 3.35 3.35 3.35 3.35 3.35 3.35
Increased sales due to
improved satisfaction 50,000 54 108 162 216 270 324 378
Response of market to
improvement (%) 0 0 0 8 17 25 33 42 50 58
Profit (increased sales) $53,978 $107,957 $161,935 $215,914 $269892 $323,870 $377,849
Warranty response (%) 13 56 81 99 100 100 100 100 100 100
Warranty cost saving per
unit sold $200.00 $24.19 $101.22 $146.28 $178.25 $180.00 $180.00 $180.00 $180.00 $180.00 $180.00
Warranty cost saving $1,209,600 $5,061,142 $7,314,149 $8,912,683 $9,000,000 $9,000,000 $9,000,000 $9,000,000 $9,000,000 $9,000,000
Variable costs benefit

Total period benefits $1,209,600 $5,061,142 $7,314,149 $8,966,662 $9,107,957 $9,161,935 $9,215,914 $9,269,892 $9,323,870 $9,377,849
Net present value of benefits $1,191,724 $4,912,657 $6,994,645 $8,448,247 $8,454,555 $8,378,976 $8,303,785 $8,228,986 $8,154,585 $8,080,585
Total PVQBenefits
(thousands) $147,363,549

Costs
Capital project cost $1,000,000 ($1,000,000)
Appraisal cost (per unit) $0.50 $0.50 $0.50 $0.50 $0.50 $0.50 $0.50 $0.50 $0.50 $0.50 $0.50
Appraisal cost ($25,000) ($25,000) ($25,000) ($25,027) ($25,054) ($25,081) ($25,108) ($25,135) ($25,162) ($25,189)
Internal failure cost (per
unit sold) $100.00 $90.50 $85.75 $81.00 $76.25 $71.50 $66.75 $62.00 $57.25 $52.50
Internal failure cost ($5,000,000) ($4,525,000) ($4,287,500) ($4,054,372) ($3,820,732) ($3,586,578) ($3,351,912) ($3,116,733) ($2,881,042) ($2,644,837)
Prevention (fixed
contingency amount) ($4,500,000)

Total costs (thousands) $10,525,000 $4,550,000 $4,312,500 $4,079,399 $3,845,786 $3,611,659 $3,377,020 $3,141,868 $2,906,204 $2,670,026
Net present value costs $10,369,458 $4,416,511 $4,124,117 $3,843,546 $3,569,890 $3,303,015 $3,042,786 $2,789,071 $2,541,743 $2,300,674
Total PVQCosts (thousands) $51,332,201

PVQIndex 2.87

RoQ
Year 1 profits $22,551,552
Year 1 cost $23,466,899

RoQ 0.96
Calculation of net present
value Quarter
(These are arbitrary figures for
use in case study) Current 11 12 13 14 15 16 17 18 19 20

Benefits
Defects to customers (P/100) 30 3 3 3 3 3 3 3 3 3 3
Instantaneous satisfaction
level (P/100) 9.83 3.35 3.35 3.35 3.35 3.35 3.35 3.35 3.35 3.35 3.35
Increase sales due to improved
satisfaction 50,000 432 486 540 594 648 648 648 648 648 648
Response of market to
improvement (%) 67 75 83 92 100 100 100 100 100 100
Profit (increased sales) $431,827 $485,806 $539,784 $593,762 $647,741 $648,000 $648,000 $648,000 $648,000 $648,000
Warranty response (%) 100 100 100 100 100 100 100 100 100 100
Warranty cost saving per unit
sold $200.00 $180.00 $180.00 $180.00 $180.00 $180.00 $180.00 $180.00 $180.00 $180.00 $180.00
Warranty cost saving $9,000,000 $9,000,000 $9,000,000 $9,000,000 $9,000,000 $9,000,000 $9,000,000 $9,000,000 $9,000,000 $9,000,000
Variable costs benefit

Total period benefits $9,431,827 $9,485,806 $9,539,784 $9,593,762 $9,647,741 $9,648,000 $9,648,000 $9,648,000 $9,648,000 $9,648,000
Net present value of benefits $8,006,992 $7,933,808 $7,681,040 $7,788,689 $7,716,760 $7,602,923 $7,490,565 $7,379,867 $7,207,805 $7,163,355
Total PVQBenefits (thousands) $147,363,549

Costs
Capital project cost $1,000,000
Appraisal cost (per unit) $0.50 $0.50 $0.50 $0.50 $0.50 $0.50 $0.50 $0.50 $0.50 $0.50 $0.50
Appraisal cost ($25,216) ($25,243) ($25,270) ($25,297) ($25,324) ($25,324) ($25,324) ($25,324) ($25,324) ($25,324)
Internal failure cost (per unit
sold) $47.75 $43.00 $38.25 $33.50 $28.75 $24.00 $19.25 $14.50 $9.75 $5.00
Internal failure cost ($2,408,120) ($2,170,890) ($1,933,147) ($1,694,891) ($1,456,123) ($1,215,552) ($974,974) ($734,396) ($493,818) ($253,240)
Prevention (fixed contingency
amount) ($15.00) ($20.00) ($25.00) ($25.00)

Total costs (thousands) $2,433,336 $2,196,133 $1,958,417 $1,720,188 $1,481,446 $1,240,876 $1,000,283 $759,700 $519,117 $278,539
Net present value costs $2,065,740 $1,863,818 $1,613,788 $1,396,533 $1,184,937 $977,849 $776,605 $581,103 $391,210 $206,807
Total PVQCosts (thousands) $51,332,201

PVQIndex 2.87

RoQ
Year 1 profits $22,551,552
Year 1 cost $23,466,899

RoQ 0.96
improvement
projects

present value of quality

Case study support
calculations for net
Quality

347

Table IV.
IJQRM
27,3

348

Figure 6.
Break-even of net present
value

current return on quality methods. Return on quality does provide for accounting of
expected revenue creation effects of projects, but does not use an assessment period
long enough to fully realize the benefits. In addition, the RoQ method does not allow
a temporal assessment of the cost versus benefit relationship over the duration of
the project use. The present value approach provides valuable tracking of project
costs and benefits over time, as well as illuminating the transient effects of
warranty cost savings, failure costs and revenue creation. The case study provides
some insight into the application of cost of quality methods. Although in this
particular case, the RoQ value is close to 1.0, the RoQ value would drop
significantly as the MTTF of the attribute warrant effect occurs further from the
project implementation. Without a temporal assessment of a project, it is possible to
reject projects capable of providing significant returns. This project underlines the
need for a greater understanding of the temporal effects of responses to quality
changes, in order to develop more accurate models. Each cost of quality model has a
limited shelf-life as conditions and assumptions supporting the model change. This
volatility makes corporate quality accounting challenging, but cost of quality
models are critical to any effective quality control program (Superville and Gupta,
2001). In the future, as more is learned about the complex relationships between
quality, satisfaction and sales; simulation methods may allow probabilistic
assessment of project risks and opportunities.

Notes
1. JD Power and Associates’ annual Initial Quality Survey (IQS3) is a recognized benchmark for
customer satisfaction in the automotive industry. The ratings are provided in terms of defect
P/100 (normalized percent of respondents indicating dissatisfaction with specific vehicle
attributes). Hence higher satisfaction is related to a lower IQS3 score (Oddes, 2007).
2. JD Power and Associates’ annual Automotive Performance, Execution and Layout Study
(APEAL) is a recognized indicator of early vehicle satisfaction using a one to ten scale rating.
References Quality
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performance and overall satisfaction: theory, measurement and implications”, Marketing
Intelligence & Planning, Vol. 23 No. 6, pp. 543-61. projects
Ebeling, C.E. (1997), An Introduction to Reliability and Maintainability Engineering, McGraw-Hill,
Singapore.
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About the authors

Valerie G. Caryer Cook is a Professor of Mechanical and Manufacturing Engineering at
350 Lawrence Technological University, Southfield, MI and was formerly a quality supervisor at
Chrysler, LLC Auburn Hills, MI. She is investigating objective inspection methods for sound
quality in fully assembled vehicles and their economic justification. Valerie Cook is the
corresponding author and can be contacted at: vcook@ltu.edu
Ahad Ali is a Professor of Mechanical and Manufacturing Engineering at Lawrence
Technological University.

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www.emeraldinsight.com/0265-671X.htm

Service quality
Comparative evaluation of critical of banks
factors in delivering service
quality of banks
351
An application of dominance analysis in
modified SERVQUAL model Received March 2009
Revised August 2009
Mukesh Kumar Accepted September 2009

CENTRUM Católica, Pontificia Universidad Católica del Perú,

Santiago de Surco, Peru
Fong Tat Kee
Management and Science University, Shah Alam, Malaysia, and
Vincent Charles
CENTRUM Católica, Pontificia Universidad Católica del Perú,
Santiago de Surco, Peru

Abstract
Purpose – This study aims to find the differences in the service quality (if any) between two types of
banks, namely conventional and Islamic, in terms of common critical factors after re-examining the
SERVQUAL model, originally pioneered by Parasuraman. Further, the technique of dominance
analysis is used to examine the relative importance of the critical factors in closing up the overall
service quality gap in these two types of banks.
Design/methodology/approach – The sample is made up of 308 bank customers, consisting of the
customers from both Islamic and conventional banks from different parts of Malaysia. The data have
been collected by using the structured questionnaire, which consists of three parts. Part 1 deals with
consumers’ usage of banking channels and their banking behaviour. Part 2 contains 26 statements
related to service quality dimensions based on past literature. Finally, Part 3 contains the questions
related to the socio-demographic profiles of respondents.
Findings – The modified SERVQUAL model consists of four critical factors (dimensions) as detected by
factor analysis: tangibility, reliability, competence, and convenience. The results reveal that the
expectations on competence and convenience are significantly different between conventional banks and
Islamic banks, whereas the perceptions on tangibility and convenience are found to be significantly
different between these two types of banks. The application of dominance analysis in the SERVQUAL
model indicates that the difference between the two types of banks is in terms of degree and not pattern.
Competence and convenience are found to be the relatively more dominating factors in both the types of
banks. These two dimensions together can help to reduce the overall service quality gap to an extent of 72
per cent in the case of conventional banks and 85 per cent in the case of Islamic banks.
Originality/value – The application of dominance analysis in the SERVQUAL model could be more
meaningful in determining the relative importance of the factors when dimensions are interdependent. It
permits direct comparison of measures and allows one to predict the level of influence of one factor in
comparison with other factors. The study could be quite useful from the policy perspective in providing International Journal of Quality &
the guidelines to develop proper strategies and acknowledge the changes in customers’ banking Reliability Management
behaviour more quickly. Vol. 27 No. 3, 2010
pp. 351-377
Keywords SERVQUAL, Factor analysis, Banks q Emerald Group Publishing Limited
0265-671X
Paper type Research paper DOI 10.1108/02656711011023320
IJQRM Introduction
27,3 In the aftermath of globalisation, the operating environment for banking industry has
become more dynamic and competitive. In search of competitive advantage, banks are
placing more focus on service quality. As the banks compete in the market place with
generally undifferentiated products, service quality becomes a primary competitive
weapon. Banks that excel in quality service can have distinct marketing edge in terms
352 of higher revenues, increased cross-sell ratios, higher customer retention (Bennett and
Higgins, 1988) and expanded market share (Brown and Hedges, 1993).
The aggressive and fierce marketing strategies adopted by either traditional or
non-traditional financial institutions have resulted in decline of customer loyalty
(Beckett et al., 2000; Wisner and Corney, 2001; Caruana, 2002; Corelli, 2002; Estell, 2002;
Humenick, 2002). Hence, attracting new customers has become as crucial as retaining
existing customers (Wisner and Corney, 2001; Jones et al., 2002). Therefore,
understanding the customers’ perception of banks’ service quality dimensions is
vital and important for banks. As society progresses, customers will demand greater
convenience and efficiency. There is also greater demand for more personalised
services or products that are specifically tailored and customised to the individual
customer and business requirements. Banking institutions therefore need to be more
responsive to these changing demands and the expectations for more differentiated
high quality services in order to fulfil the quality expectation of customers.
Malaysia is the first nation to have successfully adopted a dual banking system,
where a fully fledged Islamic system operates side by side with the conventional
banking system (Deloitte Kassim Chan, 2003). Although Islamic banking is relatively
new compared with conventional banking, it has spread well to all corners of the globe
and received wide acceptance by both Muslims and non-Muslims communities (Iqbal
and Molyneux, 2005).
Though the Islamic banks perform very similar functions to that of conventional
banks, their approach is different (Ahmad, 2000; Chapra, 2000; Warde, 2000; Henry and
Wilson, 2004; Iqbal and Molyneux, 2005; Iqbal and Mirakhor, 2007).
Islamic banking is distinct and unique from conventional banking because of some
of its salient features: first, the guiding principles for an Islamic bank, in particular and
Islamic financial system, in general are a set of rules and laws, collectively referred to
as Shariah, governing economic, social, political and cultural aspects of Islamic
societies. There is a moral filter based on the definitions of halal (permissible) and
haram (prohibited and undesirable) operating at different levels, dividing the
conscience of entrepreneur and firm, promoting a positive social climate for society,
and providing an expedient legal framework (Chapra, 1992). Accordingly, Islamic
banks cannot finance any project which conflict with the moral value system of Islam
such as financing a brewery factory, a casino, a night club or any other activity clearly
prohibited by Islam or known to be detrimental to society (Ahmad, 2000). Second,
Islamic banking strives for a just, fair and balanced society as envisioned by the
Islamic economics (Mirakhor, 2000; Warde, 2000). Accordingly, the many prohibitions
(e.g. interest, gambling, excessive risks, etc.) are to provide a level playing field to
protect the interests and benefits of all parties involved in market transactions and to
promote social harmony (Ahmad, 2000; Chapra, 2000). Thirdly, Islamic banking is
constructed on the principle of brotherhood and cooperation, which stands for a system
of equity sharing, risk sharing and stake taking. It promotes such sharing and
cooperation between the provider of funds (investor) and the user of funds Service quality
(entrepreneur) (Ahmad, 2000; Iqbal and Molyneux, 2005). of banks
In spite of differences in these two types of banks, both conventional and Islamic
banks operate in a globally integrated banking industry that is characterised by strong
competition and rapid changes in technology. Since the products and services provided
by both banks are generally undifferentiated, Islamic banks are expected to compete on
the basis of high quality of products and services offered to their customers if they want 353
to gain a competitive edge against their rivals. However, evaluating the service quality of
Islamic banks independently might not give much input to the policy makers unless a
comparison is made with their peers. A number of studies have been conducted on the
measurement of service quality of banks either for conventional banks (Gerrard and
Cunningham, 2001; Sureshchandar et al., 2003) or Islamic banks (IShahril et al., 2004; Izah
and Wan Zulqurnain, 2005; Othman and Owen, 2001) independently. Hardly, any work
has been undertaken, particularly in the Malaysian context which makes a comparative
evaluation of service quality of the above two types of banks.
One of the major criticisms of SERVQUAL model is that there is high degree of
intercorrelation among the various dimensions (Gilmore, 2003). Most of the past
literatures have treated the SERVQUAL dimensions as independent factors and the
relative importance of these factors are derived by taking the absolute mean
differences between perception and expectation. In the presence of interdependency of
the factors, the dominance analysis could be used in SERVQUAL model to derive the
relative importance of critical factors on the overall service quality gap (Kumar et al.,
2009). One may think of multiple linear regression models to derive the absolute
importance of these factors. However, the multiple regression analysis may become
unstable when two or more predictor variables are strongly related to one another.
Moreover, multiple regression produces parameter estimates that have ordinal-level
properties. That is, we can only make inferences concerning their rank order of
covariation with the dependent variable. The dominance analysis approach permits
the direct comparison of measures within a model and permits inferences concerning
an attribute’s direct effect (i.e. when considered by itself), total effect (i.e. when
considered with other attributes), and partial effect (i.e. when considered with various
combinations of other predictors). More importantly, it permits direct comparison of
measures and allows us to predict the level of influence of one attribute in comparison
with other attributes. In this paper, we re-examine the SERVQUAL model to determine
the critical factors of service quality for the banking sector in Malaysia. Further, a
comparison is made between the above two types of banks in terms of common critical
factors by using the technique of dominance analysis in modified SERVQUAL model.

Literature review
It is difficult to define service quality as opposed to the quality of goods. “Quality” is
defined as “satisfying customer’s requirements” or “fitness for purpose” (Ghobadian
et al., 1994). The definitions of quality put forward by Deming (1986), Juran et al. (1974),
Feigenbaum (1986) and Ishikawa (1985) fall within this category. This approach relies
on the ability of the organisation to determine customers’ requirements and then meet
these requirements. The quality of services performed can only be assessed during or
after consumption (Audhesh et al., 2005). The more complex and personal the service,
the more “detective” work customers are likely to do (Berry et al., 2006). The primary
IJQRM source of value creation for a service (service quality) is performance by the service
27,3 provider. It is often the small things that influence a customer’s overall perception of
service quality, be it the tangibility associated with the service or the behaviour or
technical performance by the service provider.
Many researchers have recognised the need to develop distinct and valid measures
of service quality. This development has led to the rise of service development in the
354 past few decades. In management literature, different models[1] (technical and
functional quality model by Grönroos (1984); GAP model by Parasuraman et al. (1985);
attribute service quality model by Haywood-Farmer (1988); synthesised model of
service quality by Brogowicz et al. (1990); attribute and overall affect model by
Dabholkar (1996); the P-C-P attributes model by Philip and Hazlett (1997); internal
service quality model by Frost and Kumar (2000) etc.) have been developed in order to
find the determinants of the concept of service quality as well as the appropriate
quality measurement techniques.
However, one of the most popular assessment tools of service quality is
SERVQUAL, originally pioneered by Parasuraman et al. (1985, 1988, 1990, 1991, 1994).
According to Brown and Bond (1995), their GAP model is one of the best received and
most heuristically valuable contributions to the service literature.
The pioneer study of Parasuraman et al. (1985) has been a major driving force in
developing an increased understanding of and knowledge about service quality
(Gerrard and Cunningham, 2001). They defined service quality as the gap between
customers’ expectation of service and their perception of the service experience. The
various gaps visualised in the model are:
(1) Gap 1: Difference between consumers’ expectation and management’s
perceptions of those expectations, i.e. not knowing what consumers expect.
(2) Gap 2: Difference between management’s perceptions of consumers’ expectations
and service quality specifications, i.e. improper service-quality standards.
(3) Gap 3: Difference between service quality specifications and service actually
delivered i.e. the service performance gap.
(4) Gap 4: Difference between service delivery and the communications to
consumers about service delivery, i.e. whether promises match delivery.
(5) Gap 5: Difference between consumers’ expectation and perceived service. This
gap depends on size and direction of the four gaps associated with the delivery
of service quality on the marketer’s side.

Parasuraman et al. (1988) refined the exploratory research with their subsequent scale
named SERVQUAL for measuring customers’ perceptions of service quality. At this
point the original ten dimensions of service quality collapsed in to five dimensions,
namely tangibility, reliability, responsiveness, assurance, and empathy. Appearance of
physical facilities, equipment, personnel, printed and visual materials are under
tangibility. Reliability is about the ability to perform the promised service dependably
and accurately, whereas responsiveness concerns the staff or employees’ initiative and
willingness to help customers and to provide prompt service. Knowledge and courtesy
of employees and their ability to inspire trust and confidence among customers are
under the assurance dimension. The last dimension, empathy deals with caring,
customisation and individual attention given by a firm to their customers, in other
words, how a firm appreciates their customers. Later SERVQUAL was revised in 1991 Service quality
by replacing the word “should” by “would” and in 1994 by reducing the total number of of banks
items to 22, while five dimensional structure remaining the same.
Numerous studies and investigations on service quality have been carrying out
across various industries after the pioneering work by Parasuraman et al. (1985) such
as medical services (Brown and Swartz, 1989), car retailing (Carman, 1990), dental
services (Carman, 1990), travel and tourism (Fick and Ritchie, 1991), hospitality (Saleh 355
and Ryan, 1992; Johns, 1993), higher education (Ford et al., 1993), accounting firms
(Freeman and Dart, 1993), construction professionals (Hoxley and Measuring, 2000),
public services (Wisniewski, 2001; Brysland and Curry, 2001; Agus et al., 2007), and
mobile communications (Kung et al., 2009; Negi, 2009).
Research literature on service quality in Malaysian electronic banking is
comparatively rich and varied. Some of the important studies are Vijayan and Bala
(2003), Goi (2005), Yeap and Cheah (2005), Guru et al. (2000) etc. However, these studies
emphasise the impact of technology on service delivery in Malaysia banking sector.
Banking channels like internet banking, auto teller machine (ATM), mobile banking
and other forms of electronic banking are being discussed in detail.
Other research literatures (Asyraf and Nurdianawarti, 2007; Izah and Wan
Zulqurnain, 2005; Ramayah et al., 2003) on banks service quality focus either on just
conventional banking or Islamic banking alone. Izah and Wan Zulqurnain (2005)
focused on service quality in the financial services industry in Malaysia, particularly in
Islamic banks and insurance. Ramayah et al. (2003) had done research on service
quality of a foreign bank. They focus on one foreign bank in the northern region of
Peninsular Malaysia and their study population consists of working and non-working
people from the same region. However, there is a need to see service quality of the
Malaysian banking sector as a whole. Further, it could be useful from the policy
perspective to study whether there are any differences in the service quality of
conventional banks and Islamic banks.

Research methodology
The data
There are 32 major banks in Malaysia including conventional as well as Islamic banks.
Kuala Lumpur (KL), the capital city of Malaysia and the state of Selangor, both situated in
the heart and centre of Malaysia where most businesses, people, leisure and entertainment
and as well as advanced infrastructures such as broadband, wireless, high concentration
of internet usage are involved in the most branches of banks. The target population for
the study is the bank customers from both Islamic as well as conventional banks. The
sampling units consist of customers residing in major cities around Klang Valley,
Malaysia particularly in Kuala Lumpur and Shah Alam, the capital of Selangor State. The
people in this region have access to all kinds of banking channels and thus can be
considered as greatly representative of the target population for the evaluation of banks’
service quality in Malaysia. The respondents are the customers from both conventional
and Islamic banks with different demographic profiles with the aged 21 and above.
The primary data used for the current study have been collected through survey
method by using the structured questionnaire, which consists of three sections; section
1 deals with customers’ usage of banking channels and their banking behaviour.
Section 2 contained the original 26 questions or statements related to service quality
IJQRM dimensions based on past literatures. The respondents are asked to rate each statement
27,3 using the balanced Likert scale of 1 to 7 with mid point (1 – strongly disagree, 7 –
strongly agree). Finally, section 3 contains the questions related to socio-demographic
profiles of respondents. The secondary data are collected from internet, government
agencies and Central Bank of Malaysia to support the primary data analysis.
The sample size is chosen based on the general guidelines for sample size that
356 depends on the number of variables involved in the study. As the instrument used in this
study has 26 items (statements), the required sample size should be approximately 260
subjects, i.e. ten times of total number of items (Nunnally, 1978). However, Hair et al.
(1992, 1995) cautioned that, if the sample size exceeds 400, the goodness of fit is poor
because almost any difference is detected. Therefore, by considering the constraints of
the research setting and theoretical aspect of this study, the targeted sample size was set
at 300 (n ¼ 300). The primary data have been collected using the convenience sampling
method that serves the basis for SERVQUAL analysis. A total of 400 questionnaires
were distributed by the researchers themselves among customers of both conventional
as well as Islamic banks. They were targeted at different bank branches, shopping malls
and universities located in Kuala Lumpur and Shah Alam. The response rate was quite
encouraging, i.e. 77 per cent. Two questionnaires were rejected due to excessive missing
data and thus, the total valid sample size was restricted to 308. As expected, some of the
customers deal with both conventional and Islamic banks. They were asked to access
either of the banks based on their first preference in terms of frequency of dealing with
their banks. Out of 308 customers, 231 customers are the frequent users of domestic
conventional banks whereas, 56 respondents use Islamic banks in their day-to-day
transactions. The rest of the customers use either foreign banks or other banks. Because
of limitation of the sample in foreign banks, the comparison has been made strictly
between domestic conventional banks and Islamic banks.

Theoretical framework
In the current study the original five dimensions, namely tangibility, reliability,
responsiveness, assurance, and empathy, consisted of 22 statements taken from the
SERVQUAL model due to Parasuraman et al. (1985). An additional dimension,
convenience, consisting of four statements, is added. The convenience is one of major
concern for the bank customers particularly in Malaysia. The perception of service
“convenience” may affect customers’ overall evaluation of the service, including
satisfaction with the service and perceived service quality and fairness (Berry et al.,
2006). Therefore, this study is based on the modified SERVQUAL model which is
assumed to contain six dimensions with 26 statements (Figure 1).
The respondents are asked to rate all 26 statements each on expectation and as well
as perception. A brief description of these statements can be seen in Table I. All 26
statements are being reshuffled to make sure that questions related to one dimension
are not grouped together. This is just to avoid pre-determined assumptions made by
the respondents on each dimension that might result in similar ratings for all
statements under the same dimension.

Techniques of analysis
The descriptive statistics has been used to find out the mean and standard deviation of
each SERVQUAL statement on both perception and expectation. The mean difference
 Service quality
of banks

357

Figure 1.
Measuring service quality
using SERVQUAL

between perception and expectation on each statement, dimension and overall

SERVQUAL has been tested using the paired sample t-test. Further, the differences in
the service quality between two types of banks are tested with independent sample t-test.
While the dependent models describe how an outcome variable is related to a set of
predictor variables, multivariate interdependence models reveal how we naturally
group variables into conceptually distinct sets. The factor analysis technique has been
used to extract relevant dimensions from the 26 statements on service-quality. The
purpose of using the factor analysis in this context is to first determine the dimensions
of service quality of banking sector in the context of Malaysia and second, to reduce the
number of independent variables for the dependent model for measuring the relative
importance of these dimensions by using the dominance analysis technique.
The dominance analysis has been used to measure the relative importance of different
dimensions, extracted by the factor analysis for both conventional and Islamic banks.
Typically, the relative importance of predictors is assessed by simply comparing their
standardised regression coefficients. However, when the predictors are correlated, it is
recognised that the regression coefficients cannot be used to unambiguously explain
variance shared by two or more predictors. The dominance analysis has been recognised
as a better approach and used by many researchers in recent years to measure the
relative importance of predictor variables (Block, 1995; Weinberger, 1995; Suh et al., 1998;
Johnson, 2000; Behson, 2002; Nickerson et al., 2003). It provides a general methodological
framework to access the contribution each variable makes to the prediction of a
dependent variable considering both its unique contribution and its contribution when
combined with other predictors (Budescu and Azen, 2004; Azen and Budescu, 2003;
Budescu, 1993). It is particularly useful and yields different results with compared
standardised regression coefficients when the following conditions are present:
.
there is a large number of predictors;
.
the predictors having high level of multicollinearity; and
.
the predictors collectively explain a medium and large proportion of the variance
in the dependent variable.
 27,3

358

Table I.
IJQRM

and gap score

Comparison of
expectation, perception
Mean Mean
expectation perception Gap score
Variable
D no. Attributes CB IB CB IB CB IB

Tangibility 1 Modern looking-equipment 5.571 5.393 4.957 4.750 2 0.615 2 0.643

2 Appealing physical facilities 5.606 5.339 4.931 4.625 2 0.675 2 0.714
3 Neat appearance of staff 5.710 5.875 5.039 4.714 2 0.671 2 1.161
4 Materials associated with the service are visually appealing 5.372 5.732 4.935 4.857 2 0.437 2 0.875
Reliability 5 Staff keeping promise 5.377 5.143 4.896 4.750 2 0.481 2 0.393
6 Sincere interest in solving customers’ problems 5.861 6.018 4.991 5.000 2 0.870 2 1.018
7 Staff performing service right the first time 5.957 6.321 4.974 4.982 2 0.983 2 1.339
8 Provide services at the time they promise to do so 6.048 6.250 5.069 4.839 2 0.978 2 1.411
9 Insists on error-free records 5.797 6.071 4.892 4.929 2 0.905 2 1.143
Competence 10 Staff telling customers exactly when services will be performed 5.831 6.196 4.810 4.893 2 1.022 2 1.304
11 Prompt service 6.026 6.321 4.952 4.804 2 1.074 2 1.518
12 Staff willingness to help 6.160 6.429 5.022 4.946 2 1.139 2 1.482
13 Prompt response from staff 5.753 6.196 4.623 4.893 2 1.130 2 1.304
14 Behaviour of staff instils confidence in customers 5.996 6.482 4.866 5.054 2 1.130 2 1.429
15 Customers feel safe in their transactions 6.152 6.482 5.147 5.357 2 1.004 2 1.125
16 Friendliness and courtesy of staff 6.013 6.232 4.844 4.946 2 1.169 2 1.286
17 Staff having knowledge to answer questions 6.043 6.232 5.030 5.196 2 1.013 2 1.036
18 Individual attention given by staff 5.567 6.143 4.580 4.714 2 0.987 2 1.429
19 Convenient operating hours 5.935 6.429 4.481 4.232 2 1.455 2 2.196
20 Staff giving customers best interest at heart 5.511 6.268 4.416 4.554 2 1.095 2 1.714
21 Personal attention given 5.723 6.179 4.571 4.661 2 1.152 2 1.518
22 Understand the specific needs of customers 5.680 6.375 4.537 4.696 2 1.143 2 1.679
23 Able to conduct transaction immediately or after a short waiting period 6.212 6.482 4.879 4.554 2 1.333 2 1.929
Convenience 24 ATM conveniently located 6.251 6.607 5.199 4.018 2 1.052 2 2.589
25 Special services or counters for elderly/disabled 6.139 6.339 4.563 3.964 2 1.576 2 2.375
26 Clear guidance and information sign on how to use the banks’ services and
facilities 6.134 6.339 4.935 4.679 2 1.199 2 1.661
Note: D ¼ Dimensions; CB ¼ Conventional banks; IB ¼ Islamic banks
These characteristics are often present in a variety of application areas including the Service quality
customer satisfaction studies. of banks
The dominance analysis, originally pioneered by Budescu (1993), meets three
important criteria for measuring relative importance. First, it has the ability to reduce the
error in predicting the outcome variable. Second, it permits direct comparison of
measures within the model (one can say X1 is twice as important as X2). Finally, it
permits inferences concerning an attribute’s direct effect (i.e. when considered by itself), 359
total effect (i.e. when considered with other attributes), and partial effect (i.e. when
considered with various combinations of other predictors). Rather than considering all
permutations of variable combinations relative to an outcome variable, Budescu’s
approach considers only pairs of attributes and their contributions to the squared
multiple correlation (R 2). The notion of “pairwise dominance” involves the pairing of all
variables and consideration of how each pair affects the dependent variable.

Empirical findings
The sample characteristic and banking behaviour
From a total of 308 respondents, 231 are users of conventional banks in their
day-to-day transactions, 56 are frequent users of Islamic banks and the remaining
respondents are using either foreign banks or other specialised government banks in
their daily transactions. The comparison used in this study is strictly based on the
sample of 231 from conventional banks and 56 from Islamic banks. The demographic
characteristics of the sample can be observed from Table II.

Demographic Categories Frequency (CB) (%) Frequency (IB) (%)

Gender Male 49.35 35.71

Female 50.65 64.29
Race Malay 40.69 94.64
Chinese 44.59 5.36
Indian 13.42 0.00
Others 1.30 0.00
Age group Age 21-30 58.01 55.36
Age 31-40 22.08 30.36
Age 41-50 12.12 10.71
. Age 50 7.79 3.57
Monthly income Below RM1,000 8.97 1.79
RM 1,001-2,000 30.04 41.07
RM 2,001-3,000 29.15 21.43
RM 3,001-4,000 14.80 21.43
Above RM 4,000 17.04 14.29
Education background Diploma 21.43 28.57
Degree 53.57 39.29
Postgraduate 18.30 32.14
Professional 3.13 0.00
Others 3.57 0.00
Table II.
Note: CB ¼ Conventional banks, IB ¼ Islamic banks Sample characteristic
IJQRM The percentages of male and female customers are almost equally distributed in
27,3 conventional banks, whereas 64 per cent of Islamic bank users are female. The
percentages of conventional bank users with three major races – Malay, Chinese and
Indian – are 41, 45, and 14 per cent respectively. On the other hand, as expected, 95
per cent of the Islamic banks’ users are Malays who are the followers of Islam. This
shows that the concept of Islamic banking is still not well accepted by other races in
360 Malaysia.
Most of the customers from conventional banks as well as Islamic banks belong to
the age group of 21 to 40. Similarly, more than 70 per cent of the customers of
conventional banks and more than 80 per cent of the customers of Islamic banks
belong to the income range of RM 1,001-RM 4,000. More than 50 per cent of the
customers of conventional banks have degree qualification, followed by 21 per cent
customers with diploma and 18 per cent customers with postgraduate qualification.
Among the Islamic bank customers, the customers with diploma, degree and
postgraduate qualifications are respectively 29, 39, and 32 per cent.
Table III describes the banking behaviour of the customers’ frequency in terms of
percentages. Among all the banking channels, auto teller machine (ATM) is the most
popular channel. The number of customers who use this channel is 92 per cent from
conventional banks users and 100 per cent from Islamic banks users. The next most
popular channel among conventional as well as Islamic banks users is branch banking,
followed by internet banking. Despite technological advancement and the introduction
of internet banking, most customers still choose to conduct their banking transactions
through ATMs and branch banking. ATMs are preferred because it is fast, automated
and the machines are conveniently located for certain banks. Branch banking is also
preferred partly due to the fact that most of the difficult and sophisticated transactions
cannot be solved at other banking channels, for example, opening a savings or current
account, withdrawing money beyond certain limit etc. (Kumar et al., 2009). The phone
banking channel is the least popular in Malaysia and only about 21 per cent of the
customers from both conventional and Islamic banks use this channel. Among the
conventional banks’ customers, it is observed that convenience is the most essential
factor affecting the choice of a bank. On the contrary, “requirement of the company”
and “convenience” are the most important factors for customers to choose Islamic
banking.

Determining the critical factors of SERVQUAL and reliability of measures

Following Parasuraman et al. (1990), most of the past studies used five dimensions
namely; tangibility, reliability, responsiveness, assurance and empathy in the
SERVQUAL model that comprised 22 statements for expectation as well as perception.
In this study, we added another dimension namely, convenience into the original model
because of its relevance and importance in the Malaysian context. It has been ranked as
one of the most important factors affecting the decision of the customers on making the
choice of the bank in Malaysia (see Table III). Thus an additional four statements were
added into the SERVQUAL model.
The factor analysis has been used to test whether the dataset exactly detects the
said dimensions. The output of factor analysis (see Tables IV-VI) was obtained by
using principal components analysis with varimax rotation. Table III shows the final
statistics comprising the communality for all the 26 statements on perception. The
 Service quality
Frequency Frequency
Items Categories (CB) (%) (IB) (%) of banks
Banking transaction(s) using Branch banking Yes 77.06 78.57
nðCBÞ ¼ 231 No 22.94 21.43
nðIBÞ ¼ 56 Auto teller machine Yes 92.21 100.00
(ATM) No 6.93 – 361
No response 0.87 –
Phone banking Yes 20.78 21.43
No 76.62 76.79
No response 2.60 1.79
Internet/online banking Yes 54.98 23.21
No 45.02 75.00
No response – 1.79
Ranking on banking Branch banking Rank 1 28.57 23.21
channels Rank 2 31.17 48.21
nðCBÞ ¼ 231 Rank 3 29.87 14.29
nðIBÞ ¼ 56 Rank 4 7.36 14.29
No response 3.03 0.00
Auto teller machine Rank 1 57.14 67.86
(ATM) Rank 2 33.33 26.79
Rank 3 4.33 5.36
Rank 4 0.00 0.00
No response 5.19 0.00
Phone banking Rank 1 0.87 1.79
Rank 2 6.49 8.93
Rank 3 25.11 30.36
Rank 4 59.31 53.57
No response 8.23 5.36
Internet/online banking Rank 1 23.38 12.50
Rank 2 22.94 14.29
Rank 3 28.57 42.86
Rank 4 16.88 25.00
No response 8.23 5.36
Factor(s) affecting the choice Branding 22.51 14.29
of a bank Convenience 90.91 76.79
nðCBÞ ¼ 231 Recommended by peers 11.26 10.71
nðIBÞ ¼ 56 Required by the 48.48 80.36
company
Variety of products and 36.80 23.21
services
Rate charges 21.65 14.29
Flexibility in accounts 37.23 32.14
handling
Customer-friendly 47.62 23.21 Table III.
environment Banking behaviour

factor analysis could detect only four components which together account for 65 per
cent of the total variance (information contained in the original 26 statements). The
scree plot, given in Figure 2, also clearly depicts the said claim.
From the un-rotated factor matrix (Table V) and rotated factor matrix (Table VI), we
then decide what these four extracted components represent.
 27,3

362
IJQRM

Table IV.
Total variance explained
Initial Eigen values Extraction sums of squared loadings Rotation sums of squared loadings
Percentage of Cumulative Percentage of Cumulative Percentage of Cumulative
Component Total variance % Total variance % Total variance %

1 12.059 46.381 46.381 12.059 46.381 46.381 7.007 26.950 26.950

2 2.114 8.129 54.510 2.114 8.129 54.510 4.834 18.593 45.543
3 1.668 6.414 60.924 1.668 6.414 60.924 2.617 10.065 55.608
4 1.043 4.012 64.936 1.043 4.012 64.936 2.425 9.328 64.936
5 0.828 3.183 68.119
6 0.760 2.924 71.042
7 0.727 2.797 73.839
8 0.723 2.782 76.622
9 0.640 2.461 79.083
10 0.594 2.285 81.368
11 0.549 2.112 83.480
12 0.517 1.990 85.470
13 0.430 1.653 87.123
14 0.396 1.522 88.644
15 0.385 1.481 90.126
16 0.338 1.299 91.425
17 0.309 1.190 92.615
18 0.294 1.130 93.745
19 0.276 1.061 94.806
20 0.235 0.903 95.709
21 0.231 0.890 96.599
22 0.214 0.822 97.421
23 0.204 0.786 98.207
24 0.175 0.674 98.881
25 0.165 0.633 99.514
26 0.126 0.486 100.000
Note: Extraction method: principal component analysis with Varimax rotation
 Service quality
Component
Variable no. 1 2 3 4 of banks
1 0.420 0.501 0.395 2 0.241
2 0.451 0.349 0.532 2 0.311
3 0.499 0.322 0.418 2 0.077
4 0.540 0.048 0.260 2 0.194 363
5 0.630 0.411 20.143 0.322
6 0.667 0.406 20.271 0.092
7 0.761 0.365 20.214 2 0.087
8 0.780 0.360 20.154 2 0.034
9 0.581 0.439 20.072 0.233
10 0.809 0.181 20.141 0.072
11 0.828 2 0.012 20.070 0.171
12 0.812 2 0.079 20.152 0.086
13 0.709 2 0.281 20.172 2 0.003
14 0.789 2 0.094 20.268 0.003
15 0.741 2 0.081 20.051 0.081
16 0.783 2 0.201 20.071 2 0.043
17 0.683 2 0.120 20.206 2 0.072
18 0.764 2 0.205 20.022 2 0.310
19 0.641 2 0.400 0.101 0.034
20 0.734 2 0.312 20.031 2 0.348
21 0.763 2 0.233 20.032 2 0.127
22 0.775 2 0.286 20.042 2 0.173
23 0.441 2 0.427 0.381 0.366
24 0.785 2 0.053 0.135 0.112 Table V.
25 0.474 2 0.174 0.522 0.122 Un-rotated component
26 0.517 2 0.081 0.410 0.434 matrix

Looking at rotated factor matrix in Table VI, it can be observed that variables no. 1 to 4
have comparatively high loading on component 3. These four variables are related to
the physical appearance and the dataset captures exactly what factor we intended to
measure, i.e. tangibility.
The variables no. 5 to 10 have comparatively higher factor loading on component 2.
When we look at the characteristics of these variables, we found that variables no. 5 to
9 discuss the reliability of the banking system. The variable no. 10 does not actually fit
into this component as it reflects about the competency of the system. The un-rotated
factor matrix table in Table V confirms that the variable no. 10 should be included in
component 1 instead of component 2. Therefore, variables no. 5 to 9 have been grouped
together and named as reliability.
The largest set of variables belongs to component 1. As can be seen from rotated
factor matrix, the variables no. 11 to 22 are having comparatively higher factor loading
in component 1. These are the statements related to responsiveness, assurance and
empathy in the theoretical framework described above. Hence, looking further into the
characteristics of these statements carefully, all these can be grouped together into one
dimension, i.e. competence.
Finally, variables no. 23 to 26 are having comparatively higher factor loading in
component 4, except for variable no. 24 which has comparatively higher factor loading
IJQRM
Component
27,3 Variable no. 1 2 3 4

1 0.036 0.284 0.748 0.025

2 0.132 0.125 0.810 0.122
3 0.116 0.277 0.623 0.234
364 4 0.374 0.143 0.457 0.173
5 0.144 0.786 0.138 0.178
6 0.294 0.757 0.173 2 0.036
7 0.439 0.687 0.308 2 0.078
8 0.420 0.693 0.325 2 0.001
9 0.111 0.712 0.227 0.136
10 0.489 0.638 0.207 0.149
11 0.548 0.544 0.121 0.330
12 0.625 0.490 0.071 0.244
13 0.697 0.280 20.027 0.213
14 0.678 0.478 0.019 0.120
15 0.553 0.410 0.118 0.279
16 0.699 0.314 0.120 0.240
17 0.630 0.349 0.052 0.083
18 0.782 0.171 0.275 0.088
19 0.630 0.080 0.060 0.419
20 0.832 0.076 0.227 0.087
21 0.726 0.233 0.166 0.214
22 0.782 0.192 0.160 0.199
23 0.302 2 0.016 0.012 0.751
Table VI. 24 0.512 0.391 0.254 0.412
Rotated component 25 0.255 0.001 0.354 0.594
matrix 26 0.141 0.256 0.186 0.715

in component 1. The un-rotated factor matrix confirms that variable no. 24 is the part
of component 1. These are the additional statements added in the SERVQUAL model
for the dimension convenience. So, component 4 consists of variables no. 23, 25 and 26.
The factor analysis helped us to identify four critical components (dimensions) in
stead of six dimensions as presumed earlier in the model (see Table I). To determine the
reliability of the scale, item analysis and the internal consistency coefficients were
estimated. Internal consistencies of the total scores were assessed through Cronbach’s
alpha coefficients.
Though the factor analysis has been conducted only with the perception on a set
of 26 statements, the validity of the extracted components is tested on both
perception and expectation. The reliabilities for all the components are calculated
and presented in Table VII for both expectation and perception. As is shown, all
reliabilities are adequate since the Cronbach’s Alpha value for each is significantly
greater than the prescribed 0.7 threshold. The values varied from 0.710 for
perception on convenience to 0.949 for perception on competence. Similarly, the
values varied from 0.730 for expectation on tangibility to 0.935 for expectation on
competence. The adequate reliabilities on both perception and expectation for all the
four extracted factors indicate that the modified SERVQUAL instruments are
sufficiently reliable.
 Service quality
of banks

365

Figure 2.
Scree plot

Dimension No. of item Mean score SD Cronbach Alpha

Expectation Tangibility 4 5.569 1.008 0.730

Reliability 5 5.853 1.008 0.809
Competence 14 5.988 0.927 0.935
Convenience 3 6.222 0.908 0.801
Perception Tangibility 4 4.95 0.857 0.739
Reliability 5 4.967 0.994 0.887
Competence 14 4.763 1.027 0.949 Table VII.
Convenience 3 4.746 1.252 0.710 Reliability test

Overall service quality gap: conventional banks vs Islamic banks

Table VIII shows the overall perception and expectation on service quality along with
SERVQUAL gap of both conventional and Islamic banks. The SERVQUAL gap is
calculated by subtracting the mean score of expectation from perception. A negative
value indicates a shortfall in service quality. The paired sample t-test shows that there is
IJQRM significant difference between overall perception and overall expectation, indicating that
27,3 the SERVQUAL gap exists in both the banks. However, the SERVQUAL gap for Islamic
banks is significantly higher than that of conventional banks. This is mainly because of
the fact that customers are having higher expectation from Islamic banks compared with
customers’ expectation from conventional banks. As can be observed from Table IX, the
overall expectation from Islamic banks is significantly higher than that of conventional
366 banks by 0.211. On the other hand, the overall perception on Islamic banks is
significantly lower than that of conventional banks by 0.229.

Examining the critical factors of SERVQUAL: conventional banks vs Islamic banks

Table X shows the mean perception and mean expectation of four critical factors of
service quality along with SERVQUAL gap on each factor for both conventional and

Overall Overall Overall SERVQUAL

expectation perception gap t-value
Types of banks (E) (P) (P-E) (Sig. 2 two-tailed)
Table VIII. Conventional banks * 5.862 4.899 20.963 217.910 (0.000)
Difference between Islamic banks * 6.073 4.670 21.403 214.441 (0.000)
overall perception and
expectation: paired Note: *Indicates that the difference between overall perception and overall expectation is statistically
sample t-test significant at 99 per cent level of confidence

Types of banks Mean Mean difference SD t-value (Sig. 2two-tailed)

Table IX.
Differences in overall Expectation * Conventional banks 5.862 0.607 22.451 (0.015)
expectation and Islamic banks 6.073 20.211 0.539
perception on service Perception * Conventional banks 4.899 0.675 2.415 (0.016)
quality between Islamic banks 4.670 0.229 0.676
conventional and Islamic
banks: independent Note: *Indicates that mean rating on the “overall expectation or perception” differs significantly
sample t-test between Conventional and Islamic Banks at 95 per cent level of confidence

Expectation Perception Gap t-value

Dimension (E) (P) (P-E) (Sig. 2two-tailed)

Conventional banks Tangibility * 5.565 4.965 2 0.600 210.597 (0.000)

Reliability * 5.808 4.965 2 0.843 213.661 (0.000)
Competence * 5.900 4.768 2 1.132 217.010 (0.000)
Convenience * 6.175 4.899 2 1.276 216.112 (0.000)
Islamic banks Tangibility * 5.585 4.737 2 0.848 28.495 (0.000)
Table X. Reliability * 5.961 4.900 2 1.061 29.075 (0.000)
Differences between Competence * 6.318 4.822 2 1.496 211.142 (0.000)
perception and Convenience * 6.429 4.220 2 2.209 214.431 (0.000)
expectation on critical
factors: paired sample Note: *Indicates that difference between perception and expectation is statistically significant at 99
t-test per cent level of confidence
Islamic banks. The difference between perception and expectation on each factor is Service quality
found to be statistically significant for both the banks. In the conventional banks, of banks
SERVQUAL gap varies from 2 0.600 for the factor tangibility to 2 1.276 for the factor
convenience. On the other hand, the SERVQUAL gap in Islamic banks varies from
2 0.848 for the factor tangibility to 2 2.209 for the factor convenience.
As can be observed, the expectations of the customers from Islamic banks on all the
four factors are comparatively higher than that of conventional banks. On the other 367
hand, the perceptions of the customers on conventional banks for all the factors, except
competence, are higher than that of Islamic banks. This results in higher SERVQUAL
gap for Islamic banks compared with conventional banks on each critical factor.
Table XI reports the findings of paired sample t-test to statistically verify the
differences in the expectation as well as perception of each factor between conventional
banks and Islamic banks. As can be observed, the expectations on the factors competence
and convenience significantly differ between conventional bank and Islamic bank users
respectively at 99 and 95 per cent level of confidence. On the other hand, the perceptions
on the two factors namely, tangibility and convenience, significantly differ between
conventional and Islamic banks respectively at 95 and 99 per cent level of confidence.
Table XII reports the findings of paired sample t-test to statistically verify whether
a difference exists in the SERVQUAL gap on each factor between conventional and
Islamic banks. As can be observed, the SERVQUAL gap on each critical factor is
significantly higher in Islamic banks compared with conventional banks, except for the
factor reliability.
Examining each statement under various critical factors will give more insights on
the differences in the service quality between conventional and Islamic banks. Table I
presents the mean expectation, mean perception and the SERVQUAL gap on all the 26
statements for both conventional and Islamic banks.

Dimension Types of banks Mean SD t-value (Sig. 2two-tailed)

Expectation Tangibility Conventional banks 5.565 0.771 2 0.175 (0.862)

Islamic banks 5.585 0.763
Reliability Conventional banks 5.808 0.751 2 1.381 (0.168)
Islamic banks 5.961 0.710
Competence * Conventional banks 5.900 0.689 2 4.176 (0.000)
Islamic banks 6.318 0.591
Convenience * * Conventional banks 6.175 0.801 2 2.223 (0.027)
Islamic banks 6.429 0.606
Perception Tangibility * * Conventional banks 4.965 0.656 2.435 (0.016)
Islamic banks 4.737 0.514
Reliability Conventional banks 4.965 0.782 0.546 (0.585)
Islamic banks 4.900 0.836
Competence Conventional banks 4.768 0.766 2 0.455 (0.649) Table XI.
Islamic banks 4.822 0.848 Differences in expectation
Convenience * Conventional banks 4.899 0.934 4.851 (0.000) and perception of critical
factors between
Islamic banks 4.220 0.960
conventional banks and
Notes: * and * * indicate that mean rating on the dimension differs significantly between Islamic banks:
conventional and Islamic banks at 99 and 95 per cent level of confidence respectively independent sample t-test
IJQRM It can be observed that the largest gap occurs for the variable no. 25 “special services or
27,3 counters for elderly/disabled” for conventional banks, followed by the variable no. 25
“ATM conveniently located” where, for Islamic banks, the largest gap falls under the
variable no. 25 “ATM conveniently located”, followed by the variable no. 24 “special
services or counters for elderly/disabled”. The above two statements fall under the
dimension convenience.
368 On the other hand, the smallest gap in conventional banks is found in the variable
no. 4 “materials associated with the service are visually appealing” which falls under
the dimension tangibility, followed by variable no. 5 “staff keeping promise” under the
dimension reliability. In the Islamic bank, the smallest gap is observed in the variable
no. 5 “staff keeping promise” under the dimension reliability, followed by the variable
no. 1 “modern looking equipment” under dimension tangibility. The result above
indicated that Islamic banks are lagging behind on certain infrastructures, especially
on ATM which has been ranked the most important banking channel. In fact, Islamic
banks recorded a higher gap score in all the statements compared with conventional
banks except for the variable no. 5.

Relative importance of critical factors: conventional vs Islamic banks

Dominance analysis is used to derive the relative importance of the four critical factors
in closing up the SERVQUAL gap of both conventional and Islamic banks. The
SERVQUAL gap of both types of banks is taken as a dependent variable and is
measured against the independent variables, which is the mean score of perception on
each dimension.
Tables XIII and XIV summarise the effects of four dimensions (independent
variables) – tangibility (X1), reliability (X2), competent (X3), and convenience (X4) on
the overall SERVQUAL gap (dependent variable) for conventional banks and Islamic
banks respectively. Column 1 is composed of the four variables individually and then
in unique pairings. The column labelled R 2 presents the squared multiple correlation
for each model. Thus simple linear regression composed of X1 and the dependent
variable yields a squared multiple correlation of 0.178 and 0.025 respectively for the
above two types of banks. Similarly, the multiple linear regression of the dependent
variable on X1 and X2 were associated with the R 2 of 0.282 in the case of conventional

Dimension Types of bank Service quality gap SD t-value (Sig. 2two-tailed)

Tangibility * * Conventional banks 20.599 0.860 1.989 (0.048)

Islamic banks 20.848 0.747
Reliability Conventional banks 20.843 0.938 1.576 (0.116)
Islamic banks 21.061 0.875
Table XII. Competence * * Conventional banks 21.132 1.011 2.423 (0.016)
Differences in service Islamic banks 21.496 1.005
quality gap of critical Convenience * Conventional banks 21.276 1.203 5.252 (0.000)
factors between Islamic banks 22.208 1.145
conventional banks and
Islamic banks: Notes: * and * * indicate that the “service quality gap on dimension” differs significantly between
independent sample t-test conventional and Islamic banks at 99 and 95 per cent level of confidence respectively
 Service quality
Variable(s) R2 X1 X2 X3 X4
of banks
– 0.178 0.261 0.525 0.341
X1 0.178 – 0.104 0.349 0.179
X2 0.261 0.021 – 0.264 0.169
X3 0.525 0.002 0.000 – 0.027
X4 0.341 0.016 0.089 0.211 – 369
X1 X 2 0.282 – – 0.245 0.149
X1 X 3 0.527 – 0.000 – 0.033
X1 X 4 0.357 – 0.074 0.203 –
X2 X 3 0.525 0.002 – – 0.027
X2 X 4 0.430 0.001 – 0.122 – Table XIII.
X3 X 4 0.552 0.008 0.000 – – Marginal R 2
contribution:
Note: X1 ¼ Tangibility; X2 ¼ Reliability; X3 ¼ Competence; X4 ¼ Convenience conventional banks

Variable(s) R2 X1 X2 X3 X4

– 0.025 0.201 0.573 0.482

X1 0.025 – 0.176 0.548 0.470
X2 0.201 0.000 – 0.394 0.386
X3 0.573 0.000 0.022 – 0.076
X4 0.482 0.013 0.105 0.167 –
X1 X 2 0.201 – – 0.395 0.386
X1 X 3 0.573 – 0.023 – 0.077
X1 X 4 0.495 – 0.092 0.155 –
X2 X 3 0.595 0.001 – – 0.054
X2 X 4 0.587 0.000 – 0.062 – Table XIV.
X3 X 4 0.649 0.001 0.000 – – Marginal R 2
contribution: Islamic
Note: X1 ¼ Tangibility; X2 ¼ Reliability; X3 ¼ Competence; X4 ¼ Convenience banks

banks and 0.201 in case of Islamic banks. The correlations between each independent
variable and the dependent measure of conventional banks are r Y :X 1 ¼ 0:422,
r Y :X 2 ¼ 0:511, r Y :X 3 ¼ 0:725 and r Y :X 4 ¼ 0:584. Similarly, the correlations between
each independent variable and dependent measure of Islamic banks are observed as
r Y :X 1 ¼ 0:158, r Y :X 2 ¼ 0:448, r Y :X 3 ¼ 0:757 and r Y :X 4 ¼ 0:694. These correlations
squared made up the first row of Tables XIII and XIV.
The final four columns of the Tables XIII and XIV present the change in model R 2
that occurs when each variable was added to the models implied by the first column of
the table. For example, consider the marginal contribution to the squared multiple
correlation when X1 is added to the model: Y ¼ f ðX 2 ; X 4 Þ. Tables XIII and XIV show
that the addition of X1 will yield a marginal increase of 0.001 and 0.00 to the R 2
respectively. The largest increase occurs when X3 is added to the simple linear
regression of Y on X1. An addition of X3 to the model Y ¼ f ðX1 Þ results in increase in
R 2 by 0.349 and 0.573 respectively for conventional and Islamic banks.
By examining the marginal increases shown in Tables XIII and XIV, it is possible to
begin developing an idea of relative dominance of independent variables on the outcome
variable. Tables XV and XVI present a means of understanding the relative importance
IJQRM of each critical factor in conventional banks and Islamic banks respectively. The first
27,3 row presents the squared (multiple) correlation for each variable with dependent
variable. Successive rows present the average marginal increase in R 2 when each
variable is added to an existing model composed of one or two variables.
The row corresponding to M ðC x Þ presents each variable’s marginal contribution
averaged over all regression combinations. The last row converts each variable’s average
370 marginal contribution to the squared multiple correlation to a proportion of the total.
As can be observed from Tables XV and XVI, X3 (competence) exerts the greatest
marginal influence followed by X4 (convenience). The competence and convenience are
found to be the relatively more dominating dimensions in both types of banks. These
two dimensions together can help to reduce the overall service quality gaps to an
extent of 71 per cent in the case of conventional banks and to an extent of 83 per cent in
the case of Islamic banks. The application of dominance analysis to predict the
SERVQUAL gap indicates that the difference between the two types of banks is in
terms of degree and not in terms of pattern. The factors that need to be given as most
important by the management are competence, followed by convenience, reliability
and tangibility for both conventional and Islamic banks.

Managerial implications
Consistently examining the level of service quality will provide insights to the banks as
to what are the areas that need to be improved/maintained. Thus, it can help the banks
to develop dynamic strategies and implement faster to fulfil the customers’ need. The
findings of the present study reveal that, out of four critical factors of SERVQUAL
identified, both competence and convenience are the major shortfall faced by both
conventional banks and Islamic banks. Competence is a standardised requirement for
an individual/employee to properly perform a specific job task. It is a combination of
knowledge, skills and behaviour. A competent employee will ensure that his or her

K X1 X2 X3 X4

0 0.178 0.261 0.439 0.381

1 0.054 0.114 0.337 0.179
Table XV. 2 0.004 0.025 0.190 0.070
Summary of dominance M(Cx) 0.079 0.133 0.322 0.210
analysis relative Per cent 11 18 43 28
importance metrics:
conventional banks Note: X1 ¼ Tangibility; X2 ¼ Reliability; X3 ¼ Competence; X4 ¼ Convenience

K X1 X2 X3 X4

0 0.025 0.201 0.439 0.381

1 0.010 0.126 0.421 0.354
Table XVI. 2 0.001 0.038 0.204 0.172
Summary of dominance M(Cx) 0.012 0.122 0.355 0.302
analysis relative Per cent 2 15 45 38
importance metrics:
Islamic banks Note: X1 ¼ Tangibility; X2 ¼ Reliability; X3 ¼ Competence; X4 ¼ Convenience
customers get a warm, friendly and prompt response, thus making the customers Service quality
confident of their ability in carrying out the service. In other words, it is the customers’ of banks
feeling of responsiveness, assurance and empathy that influences the level of service
quality.
Two variables under competence have very high service quality gap for both types
of banks. They are “convenient operating hours” and “ability to conduct transaction in
a short waiting period”. However, the gaps on the above two statements are relatively 371
much higher in Islamic banks than those of conventional banks. The banks’ working
hours (9.30 a.m. to 4.30 p.m.; Monday to Friday) and waiting time cause dissatisfaction
among customers. Failing to improve will result in loss of customers’ loyalty and the
opportunities of cross-selling. Further ignorance will affect customer retention to a
large extent.
On the other hand, convenience is the easy way of getting the service in accordance
with the customers’ need, which in turn results in saving customers time and effort,
both physical or services. Perceptions of service convenience affect customers’ overall
evaluation of the service, including satisfaction with the service and perceived service
quality and fairness (Berry et al., 2006). The study has shown that not just the physical
aspect, but also the banks are not sensitive enough in providing service conveniently.
There are no clear guidance and information signs on how to use the banks’ services
and facilities and no special services or counters for elderly/disabled are among the
shortfall highlighted.
One of the ways to increase competency is through maintaining a good management
information system by gathering as much information as possible about the customers
and their expectation from the banks. This would help the employees to anticipate
customers’ specific needs and requirements. Through management information system,
the banks can provide precisely the service of needs; thus, eliminate waste of resources
and waiting time for either end. Therefore, the information can be used to anticipate,
design and customise services for various groups of customers.
Besides, training and retraining of employees also play an important role in
enhancing competency especially for the front liners. However, this is not enough.
They (employees, especially the front liners) must carry out their tasks competently
and innovatively in providing the service to the customers at their convenience. Banks
should constantly provide not just on-job-related training but also on other soft skills
like effective communication skills, service recovery or handling objections seminars.
The idea of having various ways to provide service, including the use of self-service
technologies like ATMs, internet banking or phone banking, is welcome but banks
should further educate their customers on the said technologies.
Banks must be innovative in creating more types of channels by riding on
technological advancement; reducing customers’ waiting time and effort should be
their main priority and objective. The banks struggle to distinguish themselves from
competition by offering attractive banking products. Studying the pitfalls of the
current queuing system will help the banks to come out with an enhancement in timely
and extended service by means of implementing a revised queuing system or
additional counters or off-time services. The findings of the research can be used to
differentiate and customise services, where management needs to focus on
improvement in the dimensions of convenience and competence in order to further
enhance the overall service quality of the Malaysian banking sector.
IJQRM The operations of Islamic banks are based on Islamic Law that is different in terms
27,3 of spirit, cultural background and practice from conventional banks. However, both
conventional and Islamic banks operate in a globally integrated banking industry that
is characterised by strong competition and rapid changes in technology. Since the
products and infrastructures provided by both banks are generally undifferentiated,
Islamic banks will have to catch up faster in terms of quality of products and services
372 offered to their customers if they want to gain a competitive edge against their rivals,
as well as to attract the non-Islamic customers.

Conclusion
The overall SERVQUAL gap for Islamic banks is significantly higher than that of
conventional banks mainly as a result of relatively high expectation of customers on
the service of Islamic bank. The expectations on the factors competence and
convenience are significantly higher in Islamic banks compared with conventional
banks. On the other hand, the perception on the factors tangibility and convenience are
significantly higher in conventional banks compared with Islamic banks. This results
in SERVQUAL gap on each individual factor, except that the factor reliability is
significantly higher in Islamic banks. The application of dominance analysis to predict
the SERVQUAL gap indicates that the difference between the two types of banks is in
terms of degree and not in terms of pattern. The competence and convenience are found
to be the relatively more dominating critical factors in both types of banks. These two
dimensions together can help to close up the overall SERVQUAL gaps to an extent of
more than 70 per cent and 80 per cent respectively in conventional and Islamic banks.
These dimensions are very much related with human factors such as the ability for
banks to understand and give individualised attention, willingness to help customers
and provide prompt services. For example, the majority of the customers felt that
banks are not having convenient operating hours as they operate only from Monday to
Friday between 9.30 a.m. to 4.00 p.m. Another worrying issue is that banks are not
sensitive enough in providing special services or having special counters for elderly or
disabled customers. In addition to that, long waiting times and poor understanding of
the specific needs of the customers are some of the major drawbacks of Islamic banks
in particular.

Note
1. The detailed literature review on service quality models can be found in Seth et al. (2005).

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About the authors

Mukesh Kumar received his PhD (Economics) from Indian Institute of Technology, Kharagpur
(India). At present he is affiliated to CENTRUM Católica, Pontificia Universidad Católica del
Perú, Santiago de Surco, Peru as a Professor of Management. He has more than nine years of
experience in teaching various courses at both undergraduate and postgraduate levels in India
and abroad. His current area of research interest includes application of DEA in performance
measurement and interdisciplinary areas with application of multivariate data analysis. He has
authored and co-authored a number of research papers in refereed Journals and presented
research articles in numerous national and international conferences. Some of his most recent
contributions can be seen in International Journal of Productivity & Performance Management,
Managing Service Quality, Journal of Centrum Cathedra, and International Journal of Operations
and Quantitative Management. He was the founder-consulting editor of ICFAI Journal of
Industrial Economics published from ICFAI University and currently he is serving as an editorial
board member of a few refereed journals. Mukesh Kumar is the corresponding author and can be
contacted at: mkumar@pucp.edu.pe
Fong Tat Kee is currently an Academic Counselor in the Department of Counseling and
Communication, Management and Science University (MSU), Malaysia. He obtained his Master’s
degree in Business Management from MSU, Malaysia in March 2008 and a Bachelor’s degree in
Business Administration with specialisation in Marketing from the University of Hertfordshire,
UK in 2000. He has more than eight years of experience in marketing for higher educational Service quality
institutions. His current area of research interest includes services marketing and service quality
management. of banks
Vincent Charles received both his BSc (Stats) and MSc (Stats) from the Loyola College, India
and PhD (Maths-OR) from the National Institute of Technology, Warangal, India. He is a Fellow
of the Centre for Maritime Studies, National University of Singapore. At present he is affiliated to
CENTRUM Católica, Pontificia Universidad Católica del Perú, Santiago de Surco, Peru as a
Professor of Management. His research interests are stochastic and fractional programming 377
theory and applications, stochastic data envelopment analysis (SDEA), financial optimisation
and multivariate data modelling. He has published over 36 research papers in journals and
proceedings of repute. Some of his contributions can be seen in Annals of Operations Research,
Asia-Pacific Journal of Operational Research, European Journal of Operational Research, South
African Journal of Science, and Stochastic Analysis and Applications.

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IJQRM
27,3 Cost analysis for a deteriorating
system using monotone processes
with warranty
378
Sarada Yedida and Mubashir Unnissa Munavar
Department of Mathematics, College of Engineering, Anna University Chennai,
Received January 2009
Revised May 2009 Chennai, India
Accepted June 2009

Abstract
Purpose – The purpose of this paper is to investigate preventive-repair warranty policies for
repairable deteriorating systems using Zhang’s geometric process repair model.
Design/methodology/approach – The paper aims to establish the importance of preventive repair
during warranty. Three cost models have been developed using the average cost rate for the system as
the objective function, employing N-policy for two models therein.
Findings – The models have practical applications in warranty cost analysis, as product warranty is
an important factor in designing an optimal maintenance policy.
Originality/value – The paper observes that product warranty has not been considered in the study
of maintenance policies for repairable deteriorating systems using monotone processes. The numerical
example given illustrates that a preventive repair during warranty with N-policy is preferable
compared with a non-warranted product or a warranted product without preventive repair.
Keywords Cost benefit analysis, Reliability management, Maintenance
Paper type Research paper

1. Notations
Xn Working time of the system after (n-1)th preventive repair, n ¼ 1; 2; 3 . . .
Yn Preventive repair time of the system after nth working time, n ¼ 1; 2; 3 . . .
Pn
Un i¼1 X i ; U 0 ¼ 0.
Pn
Vn j¼1 Y j ; V 0 ¼ 0.

W Fixed warranty period.

International Journal of Quality &
Reliability Management
Vol. 27 No. 3, 2010
pp. 378-397
q Emerald Group Publishing Limited
0265-671X
DOI 10.1108/02656711011023348
a1 ; b 1 Ratio of the geometric processes a1 $ 1; 0 , b1 # 1.
t Fixed length of time between consecutive preventive repairs.
Fn(t) Cdf {Xn}
Jn(t) Cdf {Un}
The authors would like to thank the Department of Science and Technology, India for their
financial support # DST/MS/156/01, under which the present work has been carried out. Also,
the authors are grateful to the anonymous referees and Editor for their very valuable comments
and suggestions that greatly enhanced the clarity of the article.
 Hn(t) Cdf {Yn} Cost analysis
Gn(t) Cdf {Vn}
l1 E[X1]
m1 E[Y1]
cP Preventive repair cost of the system. 379
cr Reward rate of the system.
cf Failure replacement cost of the system.
cw Warranty cost of the system.
c1 Repair cost of the system.
c Replacement cost of the system.
c1 Expected preventive repair cost.
c2 Expected failure replacement cost.
c3 Expected warranty replacement cost.
c4 Expected reward rate.
c5 Expected repair cost.
C(t,W) Average cost rate for the system in Model I.
C(t,N,W) Average cost rate for the system in Model II.
C(N,W) Average cost rate for the system in Model III.
L Length of a cycle, where a cycle is the time between installation of the
system and a replacement.
E[L] Expected length of a cycle.

2. Introduction
Warranties have become an inevitable segment of today’s market. A warranty is a
contractual obligation incurred by a manufacturer in connection with the sale of a
product. Often, manufacturers use it as a means of advertising the quality of a product
to improve sale and at other times it is imposed on the manufacturer, by some
legislative process, to protect the purchaser’s interest. The literature on warranty is
vast as a variety of warranty policies have been formulated, refer Blischke and Murthy
(1994). Two common types of warranty policies used are Free replacement warranty
and Pro-rata warranty. Under a free replacement warranty policy a manufacturer pays
the entire cost of replacement if the product fails before the expiration of warranty.
While in the latter case, the manufacturer takes only a partial responsibility of the
replacement cost, which depends on the age of the product at the time of failure.
Warranty cost modelling has received a lot of attention in the literature (refer Nguyen
and Murthy, 1984; Blischke and Murthy, 1994). Also the development of optimal
IJQRM strategies for warranty policies has been extensive. In general, the evaluation of
27,3 warranty cost depends on the failure processes, repair processes, reliability of the
product and also on the preventive maintenance for the system. The higher the product
reliability, the smaller is the expected warranty cost and hence Hussain and Murthy
(1998, 2000) dealt with optimal redundancy in the perspective of warranty.
Majority of the existing studies deal only with product replacement during the
380 warranty period. (refer Nguyen and Murthy, 1989; Pascual and Ortega, 2006; Jung et al.,
2008) This assumption is mathematically convenient as successive replacements can
be modelled as a renewal process or some point process. Yeh et al. (2007) investigated
the effects of free repair warranty on periodic replacement policy. Iskander and Sandoh
(1999) have considered a preventive replacement policy during warranty. However, in
practical situations a more realistic option would be to consider a repair instead of a
replacement upon failure during the warranty period. A minimal repair, which restores
the failed system to its functioning state just prior to failure, is a commonly employed
repair policy for deteriorating systems. There is a vast literature on minimal repair
(Nakagawa, 1988). In order to increase the availability or to decrease the operating
costs of repairable systems, preventive maintenance has been widely used (see Chun,
1992). Further Djamaludin et al. (2001) developed a framework to study preventive
maintenance models and proposed a model involving continuous preventive
maintenance. In some practical applications such as aviation, communication, and
power-station, as for safety measures, it would be preferable to spend more for a
preventive maintenance to avoid the occurrence of catastrophic accidents.
Yeh (1988, 1990) proposed an alternative repair and replacement framework for
repairable deteriorating systems using geometric processes. In these models,
successive working times become shorter and shorter while the consecutive failure
repair times become longer and longer such that the system becomes non-repairable.
Zhang (2002) generalized Yeh’s (1988) model with a good-as-new preventive repair to
obtain optimal policy. To the best of our knowledge geometric degradation has not
been studied from warranty viewpoint.
In the present article we consider a geometric process maintenance model with
preventive repair and warranty using an objective function defined as the average cost
per unit of working time. A preventive repair is a planned repair of scheduled
inspections to perform a required corrective action. By a preventive repair the
operating life and efficiency of the system can be extended, but it does not return the
system to “as good as new” state. Preventive repairs are widely used in maintenance of
military equipments, jet planes, marine radios etc. to improve the longevity of the
systems. We observe that most of the existing models deal with instantaneous
preventive maintenance/repairs, restricted to a replacement that restores the system to
as good as new condition within warranty. However, a more realistic option would be
to consider non-negligible repair times instead of an instantaneous replacement/repair
during warranty. The paper proposes three cost models: with/without preventive
repair during warranty period and employing N-policy. Numerical illustrations are
provided to indicate the importance of preventive repair during warranty while
employing N-policy. The outline of the paper is as follows. In section 3 formulation
details of the models considered are presented. Section 4 gives a detailed cost analysis,
while numerical illustrations along with sensitivity analysis have been discussed in
section 5.
3. Mathematical formulation Cost analysis
Definition: let f X n ; n ¼ 1; 2; 3:::g be a sequence

of independent non-negative
random variables with Cdf f X n g ¼ F n ðt Þ ¼ F a1n21 t for some a1 . 0, n ¼ 1; 2; 3
. . . then f X n ; n ¼ 1; 2; 3:::g is a geometric process. If a1 . 1 then
f X n ; n ¼ 1; 2; 3:::g is stochastically decreasing and if 0 , a1 , 1 then
f X n ; n ¼ 1; 2; 3:::g is stochastically increasing. When a1 ¼ 1 the geometric
process is known as a renewal process. 381

3.1 Model I
Consider a repairable deteriorating system, where deterioration can occur due to an
internal cause such as aging and accumulated wear of the system, or an external
cause such as an environmental factor. For such systems, it is reasonable to assume
that the successive working times after repair are stochastically decreasing and the
consecutive repair times are stochastically increasing geometric processes.
Specifically, for every n $ 1; X n has the same distribution as a1 X 1 ; a1 . 1, given
by Fða1n21 xÞ; x $ 0, while Y n has the same distribution as b1 Y 1 ; 0 , b1 , 1, given
by H ðb1n21 yÞ; y $ 0. Also, with the assumption of geometric processes, E ½ X n
¼
ln ¼ aln21
1
is a monotonically non-increasing sequence and E ½Y n
¼ mn ¼ bmn211
; b1 #
1 1
1 is a monotonically non-decreasing sequence. Further a preventive repair, which
has an effect of controlling the failures of the system, is done when the system is
operating.
A warranty cost model for a deteriorating system, with non-negligible preventive
repair times and a non-renewing warranty period W, is considered by means of the
following assumptions:
(1) At the beginning, a new system is put into operation and is replaced by a new
and identical one at the expiration of warranty period W or at failure, whichever
occurs first; a warranty replacement is done at W.
(2) A preventive repair is adopted whenever a working time of the system reaches t
and the system is still working. Preventive repair is not as good as new.
(3) The successive working times and consecutive preventive repair times are
independent geometric processes, with parameters a1 and b1 respectively.
(4) The system is replaced at the end of a working period if warranty expires
during that operating period.
(5) If the expiration of warranty occurs during a preventive repair period then the
repair is completed and the system is replaced at the end of the next working
time.

Figure 1 illustrates a possible representation of a system.

3.2 Model II
In this model while retaining the assumptions of model I, we also consider the
replacement of the system, by a new one, at the end of the ð N þ 1Þth working time with
no further preventive repairs.
IJQRM 3.3 Model III
27,3 We consider a new repairable deteriorating system without preventive repair. The
system is put into operation at time t ¼ 0. On failure it is sent for repair that takes
a non-negligible amount of time and is not as good as new. The successive working
times and consecutive repair times are monotonically non-increasing and
non-decreasing geometric processes respectively. The system is replaced at the
382 time of the nth failure or at the expiration of the warranty period W, whichever
occurs first.
For all the models considered, the time interval between installation and a
replacement is a cycle. The objective is to determine optimal replacement policies t *
and N * for the appropriate models such that the average cost rate for the system is
minimized.

4. Warranty cost analysis

4.1 Cost analysis for model I
In this section we explicitly obtain an expression for the average cost rate for the
system using the assumptions of model I, as given below:

 E ½cost in a cycle
c þ C1 þ C2 þ C3 þ C4
C t; W ¼ ¼
E ½length of a cycle
E ½ L

In what follows we give the details of various expected costs incurred in a cycle.
4.1.1 Expected length of a cycle
8
>
> ðU nþ1 þ V n Þ I ðU nþ1 þ V n , W ; X 1 . t; X 2 . t; :::X n . t; X nþ1 , tÞ
>
>
>
> for failure replacement
>
>
>
>
>
< ðU nþ1 þ V n Þ I ðU n þ V n , W , U nþ1 þ V n ; X 1 . t; X 2 . t; :::X n . tÞ
L¼
>
> for warranty replacement during working time
>
>
>
>
>
> ðU nþ1 þ V n Þ I ðU n þ V n21 , W , U n þ V n ; X 1 . t; X 2 . t; :::X n . tÞ
>
>
>
: for warranty replacement during preventiverepair time

where I ð · Þ is the indicator function and n ¼ 1; 2; 3. . .Thus the expected length of a

cycle is given by:

Figure 1.
Representation of a
system
 E ½ L
¼
X
1
E ½ðU nþ1 þ V n Þ I ðU nþ1 þ V n , W ; X 1 . t; X 2 . t; :::X n . t; X nþ1
Cost analysis
n¼1

X
1
, tÞ
þ E ½ðU nþ1 þ V n ÞI ðU n þ V n , W , U nþ1 þ V n ; X 1 . t; X 2 . t; :::X n
n¼1

X
1
383
. tÞ
þ E ½ðU nþ1 þ V n Þ I ðU n þ V n21 , W , U n þ V n ; X 1 . t; X 2 . t; :::X n . tÞ

n¼1

X
1 Z t 1 Z
X t
¼ nt Gn ðW 2 nt 2 tÞdF nþ1 ðtÞ þ tGn ðW 2 nt 2 tÞdF nþ1 ðtÞ
n¼1 0 n¼1 0

1 Z
X t Z W 2nt2t X
1 Z W 2nt
þ vdGn ðvÞdF nþ1 ðtÞ þ nt F
nþ1 ðW 2 nt 2 vÞdGn ðvÞ
n¼1 0 t n¼1 t

1 Z
X W 2nt Z W 2ðn21Þt2v 1 Z
X W 2nt
þ t dF nþ1 ðtÞdGn ðvÞ þ vF
nþ1 ðW 2 nt 2 vÞdGn ðvÞ
n¼1 t W 2nt2v n¼1 t

X
1 Z W 2ðn21Þt 1 Z
X W 2ðn21Þt Z t
þ nt H
n ðW 2 nt 2 vÞdGn21 ðvÞ þ tdF nþ1 ðtÞH
n ðW 2 nt
n¼1 t n¼1 t 0

1 Z
X W 2ðn21Þt
2 vÞdGn21 ðvÞ þ vH
n ðW 2 nt 2 vÞdGn21 ðvÞ
n¼1 t

1 Z
X W 2ðn21Þt Z 1
þ yhn ð yÞdydGn21 ðvÞ
n¼1 t W 2nt2v

4.1.2 Expected preventive repair cost

X
1
Let c1 ¼ cp E½V n I ðU nþ1 þ V n , W ; X 1 . t; X 2 . t; :::X n . t; X nþ1
n¼1

X
1
, tÞ
þ cp E½V n I ðU n þ V n , W , U nþ1 þ V n ; X 1 . t; X 2 . t; :::X n
n¼1

X
1
. tÞ
þ cp E½V n I ðU n þ V n21 , W , U n þ V n ; X 1 . t; X 2 . t; :::X n . tÞ

n¼1

1 Z
X t Z W 2nt2t 1 Z
X W 2nt
¼ cp vdGn ðvÞdF nþ1 ðtÞ þ cp vF
nþ1 ðW 2 nt 2 vÞdGn ðvÞ
n¼1 0 t n¼1 t

1 Z
X W 2ðn21Þt
þ cp vH
n ðw 2 nt 2 vÞdGn21 ðvÞ
n¼1 t

1 Z
X W 2ðn21Þt Z 1
þ cp yhn ð yÞdydGn21 ðvÞ
n¼1 t W 2nt2v
IJQRM 4.1.3 Expected failure replacement cost
27,3 X
1  
Let c2 ¼ E cf I ðU nþ1 þ V n , W ; X 1 . t; X 2 . t; :::X n . t; X nþ1 , tÞ
n¼1

1 Z
X t
384 ¼ cf Gn ðW 2 nt 2 tÞdF nþ1 ðtÞF
1 ðtÞF
2 ðtÞ:::F
n ðtÞ
n¼1 0

4.1.4 Expected warranty replacement cost

X
1
Let c3 ¼ cw I ðU n þ V n , W , U nþ1 þ V n ; X 1 . t; X 2 . t; :::X n
n¼1

X
1
. tÞ þ cw I ðU n þ V n21 , W , U n þ V n ; X 1 . t; X 2 . t; :::X n . tÞ
n¼1

1 Z
X w2nt 1 Z
X W 2ðn21Þt
¼ cw F
nþ1 ðW 2 nt 2 vÞdGn ðvÞF
1 ðtÞF
2 ðtÞ:::F
n ðtÞ þ cw H
n ðW
n¼1 t n¼1 t

2 nt 2 vÞdGn21 ðvÞF
1 ðtÞF
2 ðtÞ:::F
n ðtÞ

4.1.5 Expected reward rate

X
1  
Let c4 ¼ ð2cr ÞE U nþ1 IðU nþ1 þ V n , W ; X 1 . t; X 2 . t; :::X n . t; X nþ1 , tÞ
n¼1

X
1  
þ ð2cr ÞE U nþ1 I ðU n þ V n , W , U nþ1 þ V n ; X 1 . t; X 2 . t; :::X n . tÞ
n¼1

X
1  
þ ð2cr ÞE U nþ1 I ðU n þ V n21 , W , U n þ V n ; X 1 . t; X 2 . t; :::X n . tÞ
n¼1

X
1 Z t 1 Z
X t
¼ 2cr nt Gn ðW 2 nt 2 tÞdF nþ1 ðtÞ 2 cr tGn ðW 2 nt 2 tÞdF nþ1 ðtÞ
n¼1 0 n¼1 0

X
1 Z W 2nt
2 cr nt F
nþ1 ðW 2 nt 2 vÞdGn ðvÞ
n¼1 t

1 Z
X W 2nt Z W 2ðn21Þt2v X
1 Z W 2ðn21Þt
2 cr t dF nþ1 ðtÞdGn ðvÞ 2 cr nt H
n ðW 2 nt
n¼1 t W 2nt2v n¼1 t

1 Z
X W 2ðn21Þt Z t
2 vÞdGn21 ðvÞ 2 cr tdF nþ1 ðtÞH
n ðW 2 nt 2 vÞdGn21 ðvÞ
n¼1 t 0


t * can be found by analytic or numerical methods such that C t; W is minimized.
4.2 Cost analysis for model II Cost analysis
The average cost rate for the system under model II is given by:

 E ½cost in a cycle
c þ C1 þ C2 þ C3 þ C4
C t; N ; W ¼ ¼
E ½length of a cycle
E ½ L

4.2.1 Expected length of a cycle
8
385
>
> ðU N þ1 þ V N ÞI ðU N þ1 þ V N , W ; X 1 . t; X 2 . t; :::X N . t; X N þ1 . tÞ
>
>
>
> forreplacementafterðN þ 1Þth workingtime
>
>
>
>
>
> ðU nþ1 þ V n Þ I ðU nþ1 þ V n , W ; X 1 . t; X 2 . t; :::X n . t; X nþ1 # tÞ
>
>
>
>
>
< n ¼ 0; 1; 2:::N for failure replacement
L¼
>
> ðU nþ1 þ V n Þ I ðU n þ V n , W # U nþ1 þ V n ; X 1 . t; X 2 . t; :::X n . tÞ
>
>
>
>
>
> n ¼ 0; 1; 2; :::N for warrantyreplacement during working time
>
>
>
> ðU nþ1 þ V n Þ I ðU n þ V n21 , W # U n þ V n ; X 1 . t; X 2 . t; :::X n . tÞ
>
>
>
>
>
: n ¼ 1; 2; :::N for warranty replacement during preventiverepair time

where I ð · Þ is the indicator function. Thus the expected length of a cycle is given by:

E ½ L
¼ E½ðU Nþ1 þ V N ÞI ðU N þ1 þ V N , W ; X 1 . t; X 2 . t; :::X N . t; X N þ1

X
N
. tÞ þ E½ðU nþ1 þ V n ÞI ðU nþ1 þ V n , W ; X 1 . t; X 2 . t; :::X n . t; X nþ1
n¼0

X
N
# tÞ
þ E½ðU nþ1 þ V n ÞI ðU n þ V n , W # U nþ1 þ V n ; X 1 . t; X 2
n¼0

X
N
. t; :::X n . tÞ
þ E½ðU nþ1 þ V n ÞI ðU n þ V n21 , W # U n þ V n ; X 1
n¼1

. t; X 2 . t; . . .X n . tÞ

Z W 2ðN þ1Þt Z W 2ðN þ1Þt X
N Z t
¼ ðN þ 1Þt dGN ðvÞ þ vdGN ðvÞ þ nt Gn ðW 2 nt
t t n¼0 0

N Z
X t
2 tÞdF nþ1 ðtÞ tGn ðW 2 nt 2 tÞdF nþ1 ðtÞ
n¼0 0

N Z
X t Z W 2nt2t
þ vdGn ðvÞdF nþ1 ðtÞ
n¼0 0 t
IJQRM XN Z W 2nt N Z
X W 2nt Z W 2nt2v

27,3 þ nt F
nþ1 ðW 2 nt 2 vÞdGn ðvÞ þ tf nþ1 ðtÞdtdGn ðvÞ

n¼0 t n¼0 t W 2ðnþ1Þt2v

N Z
X W 2nt X
N Z W 2ðn21Þt
þ vF
nþ1 ðW 2 nt 2 vÞdGn ðvÞ þ nt H
n ðW 2 nt
n¼0 t n¼1 t
386
N Z
X W 2ðn21Þt Z t
2 vÞdGn21 ðvÞ þ tdF nþ1 ðtÞH
n ðW 2 nt 2 vÞdGn21 ðvÞ
n¼1 t 0

N Z
X W 2ðn21Þt
þ vH
n ðW 2 nt 2 vÞdGn21 ðvÞ
n¼1 t

N Z
X W 2ðn21Þt Z 1
þ yhn ð yÞdydGn21 ðvÞ
n¼1 t W 2nt2v

4.2.2 Expected preventive repair cost

Let c1 ¼ cp E½V N I ðU N þ1 þ V N , W ; X 1 . t; X 2 . t; :::X N . t; X N þ1

X
N
. tÞ
þ cp E½V n I ðU nþ1 þ V n , W ; X 1 . t; X 2 . t; :::X n . t; X nþ1
n¼0

X
N
# tÞ
þ cp E½V n I ðU n þ V n , W # U nþ1 þ V n ; X 1 . t; X 2 . t; :::X n
n¼0

X
N
. tÞ
þ cp E½V n I ðU n þ V n21 , W # U n þ V n ; X 1 . t; X 2 . t; :::X n
n¼1

. tÞ

Z W 2ðN þ1Þt N Z
X t Z W 2nt2t
¼ cp vdGN ðvÞ þ cp vdGn ðvÞdF nþ1 ðtÞ
t n¼0 0 t

N Z
X W 2nt N Z
X W 2ðn21Þt
þ cp vF
nþ1 ðW 2 nt 2 vÞdGn ðvÞ þ cp vH
n ðw 2 nt
n¼0 t n¼1 t

N Z
X W 2ðn21Þt Z 1
2 vÞdGn21 ðvÞ þ cp yhn ð yÞdydGn21 ðvÞ
n¼1 t W 2nt2v
4.2.3 Expected failure replacement cost Cost analysis
X
N  
Let c2 ¼ E cf I ðU nþ1 þ V n , W ; X 1 . t; X 2 . t; :::X n . t; X nþ1 # tÞ
n¼0

N Z
X t
¼ cf Gn ðW 2 nt 2 tÞdF nþ1 ðtÞF
1 ðtÞF
2 ðtÞ:::F
n ðtÞ 387
n¼0 0

4.2.4 Expected warranty replacement cost

X
N
Let c3 ¼ cw I ðU n þ V n , W # U nþ1 þ V n ; X 1 . t; X 2 . t; :::X n
n¼0

X
N
. tÞ þ cw IðU n þ V n21 , W # U n þ V n ; X 1 . t; X 2 . t; :::X n . tÞ
n¼1

N Z
X w2nt N Z
X W 2ðn21Þt
¼ cw F
nþ1 ðW 2 nt 2 vÞdGn ðvÞF
1 ðtÞF
2 ðtÞ:::F
n ðtÞ þ cw H
n ðW
n¼0 t n¼1 t

2 nt 2 vÞdGn21 ðvÞF
1 ðtÞF
2 ðtÞ:::F
n ðtÞ

4.2.5 Expected reward rate
Let c4 ¼ 2cr E½U N þ1 I ðU N þ1 þ V N , W ; X 1 . t; X 2 . t; :::X N . t; X N þ1

X
N  
. tÞ
þ ð2cr ÞE U nþ1 U nþ1 þ V n , W ; X 1 . t; X 2 . t; :::X n . t; X nþ1 # tÞ
n¼0

X
N  
þ ð2cr ÞE U nþ1 I ðU n þ V n , W # U nþ1 þ V n ; X 1 . t; X 2 . t; :::X n . tÞ
n¼0

X
N  
þ ð2cr ÞE U nþ1 I ðU n þ V n21 , W # U n þ V n ; X 1 . t; X 2 . t; :::X n . tÞ
n¼1

Z W 2ðN þ1Þt X
N Z t
¼ 2cr ðN þ 1Þt dGN ðvÞ 2 cr nt Gn ðW 2 nt 2 tÞdF nþ1 ðtÞ
t n¼0 0

N Z
X t X
N Z W 2nt
2 cr tGn ðW 2 nt 2 tÞdF nþ1 ðtÞ 2 cr nt F
nþ1 ðW 2 nt 2 vÞdGn ðvÞ
n¼0 0 n¼0 t

N Z
X W 2nt Z W 2nt2v X
N Z W 2ðn21Þt
2 cr tf nþ1 ðtÞdGn ðvÞdt 2 cr nt H
n ðW 2 nt
n¼0 t W 2ðnþ1Þt2v n¼1 t

N Z
X W 2ðn21Þt Z t
2 vÞdGn21 ðvÞ 2 cr tdF nþ1 ðtÞH
n ðW 2 nt 2 vÞdGn21 ðvÞ
n¼1 t 0


IJQRM (N *,t *), can be found by analytic or numerical methods such that C t; N; W is
minimized.
27,3
4.3 Cost analysis for model III
In this section we give details of the average cost rate for a system under model III.

388
 E ½cost in a cycle
c þ C3 þ C4 þ C5

C N; W ¼ ¼
E ½length of a cycle
E ðLÞ

4.3.1 Expected length of a cycle

8
>
> ðU N þ V N 21 ÞI ðU N þ V N 21 # W Þ
>
>
>
> for replacement at N th failure
>
>
>
>
>
< ðU k þ V k21 ÞI ðU k21 þ V k21 , W # U k þ V k21 Þ
L¼
>
> k ¼ 1; 2; 3:::N for warranty replacement
>
>
>
>
>
> ðU k þ V k21 ÞI ðU k21 þ V k22 , W # U k21 þ V k21 Þ
>
>
>
: k ¼ 2; 3; 4:::N for warranty replacement

where I ð · Þ is the indicator function. Thus the expected length of a cycle is given by:

X
N
E ½ L
¼ E½ðU N þ V N 21 ÞI ðU N þ V N 21 # W Þ
þ E½ðU k þ V k21 ÞI ðU k21 þ V k21
k¼1

X
N
, W # U k þ V k21 Þ
þ E½ðU k þ V k21 ÞI ðU k21 þ V k22 , W
k¼2

# U k21 þ V k21 Þ

Z W Z W
¼ uGN 21 ðW 2 uÞdJ N ðuÞ þ vJ N ðW 2 vÞdGN 21 ðvÞ
0 0

N Z
X W Z W
þ uF
k ðW 2 u 2 vÞdGk21 ðvÞdJ k21 ðuÞ
k¼1 0 W 2u

N Z
X W Z W Z W
þ tdF k ðt ÞdGk21 ðvÞdJ k21 ðuÞ
k¼1 0 W 2u W 2u2v

N Z
X W Z W
þ vF
k ðW 2 u 2 vÞdGk21 ðvÞdJ k21 ðuÞ
k¼1 0 W 2u
 N Z
X W Z W Cost analysis
þ uH
k21 ðW 2 u 2 vÞdGk22 ðvÞdJ k21 ðuÞ
k¼2 0 W 2u

N Z
X W Z W
þ lk H
k21 ðW 2 u 2 vÞdGk22 ðvÞdJ k21 ðuÞ
k¼2 0 W 2u
389
N Z
X W Z W
þ vH
k21 ðW 2 u 2 vÞdGk22 ðvÞdJ k21 ðuÞ
k¼2 0 W 2u

N Z
X W Z W Z W
þ hdH k21 ðhÞdGk22 ðvÞdJ k21 ðuÞ
k¼2 0 W 2u W 2u2v

4.3.2 Expected warranty replacement cost

X
1 X
1
Let c3 ¼ cw I ðU k21 þ V k21 , W # U k þ V k21 Þ þ cw I ðU k21 þ V k22 , W # U k21 þ V k21 Þ
n¼1 n¼1

N Z
X W Z W
¼ cw F
k ðW 2 u 2 vÞdGk21 ðvÞdJ k21 ðuÞ
k¼1 0 W 2u

N Z
X W Z W
þ cw H
k21 ðW 2 u 2 vÞdGk22 ðvÞdJ k21 ðuÞ
k¼2 0 W 2u

4.3.3 Expected reward rate

X
N
Let c4 ¼ 2cr E½U N IðU N þ V N 21 # W Þ
2 cr E½U k I ðU k21 þ V k21 , W
k¼1

X
N
# U k þ V k21 Þ
2 cr E½U k I ðU k21 þ V k22 , W # U k21 þ V k21 Þ

k¼2

Z W N Z
X W Z W
¼ 2cr uGN21 ðW 2 uÞdJ N ðuÞ 2 cr uF
k ðW 2 u 2 vÞdGk21 ðvÞdJ k21 ðuÞ
0 k¼1 0 W 2u

N Z
X W Z W Z W
2 cr tdF k ðt ÞdGk21 ðvÞdJ k21 ðuÞ
k¼1 0 W 2u W 2u2v

N Z
X W Z W
2 cr uH
k21 ðW 2 u 2 vÞdGk22 ðvÞdJ k21 ðuÞ
k¼2 0 W 2u

N Z
X W Z W
2 cr lk H
k21 ðW 2 u 2 vÞdGk22 ðvÞdJ k21 ðuÞ
k¼2 0 W 2u
IJQRM 4.3.4 Expected repair cost
27,3 X
N
Let c5 ¼ c1 E½V N 21 I ðU N þ V N 21 # W Þ
þ c1 E½V k21 I ðU k21 þ V k21 , W
k¼1

X
N 21
390 # U k þ V k21 Þ
þ c1 E½V k21 I ðU k21 þ V k22 , W , U k21 þ V k21 Þ

k¼1
Z W
¼ c1 vJ N ðW 2 vÞdGN 21 ðvÞ
0

N Z
X W Z W
þ c1 vF
k ðW 2 u 2 vÞdGk21 ðvÞdJ k21 ðuÞ
k¼1 0 W 2u

N Z
X W Z W
þ c1 vH
k21 ðW 2 u 2 vÞdGk22 ðvÞdJ k21 ðuÞ
k¼2 0 W 2u

N Z
X W Z W Z W
þ c1 hdH k21 ðhÞdGk22 ðvÞdJ k21 ðuÞ
k¼2 0 W 2u W 2u2v

N * can be found by analytic or numerical methods such that C(N, W) is minimized.


W t* C t*; W

9,000 2,900 2 2.7166

13,500 3,600 2 2.7089
Table

I.
 18,000 4,300 2 2.6890
C t; W for various 22,500 5,100 2 2.6844
warranties 27,000 5,900 2 2.6587

t N* Cðt; N * ; W Þ t N* Cðt; N * ; W Þ

1,000 8 21.9192 12,000 2 26.1470

1,600 8 22.5311 13,000 2 25.9980
2,850 4 22.6974 15,000 2 25.5942
4,000 3 22.7053 17,000 2 25.0181
5,000 3 22.7705 20,000 1 22.7140
6,000 3 22.7764 21,000 1 22.7917
7,000 3 22.7814 25,000 1 22.8850
8,000 3 22.7861 35,000 1 22.8248
9,000 2 26.4609 40,000 1 22.8097
Table II. 10,000 2 26.3739 45,000 1 22.8035
Cðt; N ; W Þ for various t 11,000 2 26.2694 50,000 1 22.8012
5. Numerical illustration and sensitivity analysis Cost analysis
In this section, a numerical example is given to illustrate the importance of a preventive
repair during warranty for various models discussed earlier. Let the distributions of X n
and Y n be exponential respectively with parameters ln and mn :

391
W N* CðN * ; W Þ

9,000 8 22.8023
13,500 8 22.8018
18,000 7 22.8018
 Table III.
22,500 7 22.7994 C N ; W for various
27,000 7 22.7989 warranties

a1 ¼ 1:03
 a1 ¼ 1

b1 t* C t*; W t* C t*; W

0.81 4,300 22.7988 4,350 2 2.7989

0.85 4,150 22.7985 4,250 2 2.7987
0.87 4,050 22.7982 4,150 2 2.7986
0.91 3,950 22.7981 4,100 2 2.7983 Table IV.
0.95 3,800 22.7976 4,050 2 2.7982 Sensitivity analysis for b1
0.97 3,750 22.7971 4,000 2 2.7981 in model I

b1 ¼ 0:95
 b1 ¼ 1

a1 t* C t*; W t* C t*; W

1.01 3,750 22.7970 3,860 2 2.7985

1.03 3,800 22.7976 3,920 2 2.7989
1.05 4,000 22.7989 4,010 2 2.7992
1.07 4,000 22.7990 4,050 2 2.7994 Table V.
1.10 4,000 22.7991 4,070 2 2.7995 Sensitivity analysis for a1
1.20 4,000 22.7994 4,100 2 2.7999 in model I

a1 ¼ 1:03
 a1 ¼ 1

b1 N* C t*; N *; W N* C t*; N *; W

0.81 2 2 7.1832 2 26.9139

0.85 2 2 7.0336 2 26.7737
0.87 2 2 6.9619 2 26.7067
0.91 2 2 6.8243 2 26.5783 Table VI.
0.95 2 2 6.6941 2 26.4572 Sensitivity analysis for b1
0.97 2 2 6.6317 2 26.3993 in model II
  n21 
IJQRM
 2a1
F n ðt Þ ¼ F a1n21 t ¼ 1 2 exp t t $ 0; l1 $ 0; a1 . 1; n
27,3 l1
!
  2b1n21
n21
¼ 1; 2; 3; ::: and Gn ðt Þ ¼ G b1 t ¼ 1 2 exp t t $ 0; m1 $ 0; 0
m1
392
, b1 , 1; n ¼ 1; 2; 3; :::

We choose a1 ¼ 1.0005, l1 ¼ 4500, b1 ¼ 0.95, m1 ¼ 1/8000, cf ¼ 450, cr ¼ 2.8, cp ¼ 300,

c ¼ 1080, c1 ¼ 450,cw ¼ 7000. The numerical results are summarized in Tables

I-IX.
From Table I, we observe that the average cost rate for the system C t * ; W and
optimal preventive repair time (t * ) are non-decreasing as the warranty increases. As
observed by Zhang (2002) when the preventive repair is adopted, the availability of the
system and hence the benefit obtained therein are also increasing.

b1 ¼ 0:95
 b1 ¼ 1

a1 N* C t*; N *; W N* C t*; N *; W

1.01 2 26.5326 2 26.3871

1.03 2 26.6941 2 26.5412
1.05 2 26.8699 2 26.7088
Table VII. 1.07 2 27.0538 2 26.8875
Sensitivity analysis for a1 1.10 2 27.3379 2 27.1657
in model II 1.20 2 27.8350 2 27.7164

a1 ¼ 1:03 a1 ¼ 1
b1 N* CðN * ; W Þ N* CðN * ; W Þ

0.81 9 22.7702 10 22.7765

0.85 9 22.7540 10 22.7623
0.87 9 22.7480 10 22.7505
Table VIII. 0.91 9 22.7119 10 22.7172
Sensitivity analysis for b1 0.95 8 22.1076 10 22.8000
in model III 0.97 8 21.9372 10 22.8000

b1 ¼ 0:95 b1 ¼ 1
a1 N* CðN * ; W Þ N* CðN * ; W Þ

1.01 8 21.4034 10 21.9337

1.03 8 22.1076 10 22.6651
1.05 8 22.4759 10 22.7792
Table IX. 1.07 8 22.7395 10 22.7958
Sensitivity analysis for a1 1.10 8 22.7617 10 22.7997
in model III 1.20 7 22.7853 9 22.8000
Figure 2 plots the warranty costs and t for various warranties. We observe that there is Cost analysis
an increase in the optimal preventive repair time as warranty increases. Further,
Figure 3 gives a comparison of model I with and without warranty. It indicates the
importance of preventive repair during warranty as the optimal cost is higher for a
non-warranted product when compared to model I.
In Table II, the
bold value shows the optimal t and N for which the average cost rate
for the system C t; N * ; W is non-increasing. 393

Figure 2.
Cost comparison of model
I for various warranties
IJQRM
27,3

394

Figure 3.
Comparison of model I
with and without
warranty

Figure 4 illustrates the optimal average cost rate for the system with a fixed warranty.
We see from
the plotted
 surface as N and t increase the average cost rate
for the
system C t; N ; W decreases and t * ¼ 9000; N * ¼ 2 for which the cost C t; N ; W
is minimum.
From Table III, we see that N * is non-increasing and CðN * ; W Þ is non-decreasing
for optimal values as warranty increases. Comparing Tables I, II and III, for a fixed
warranty period W ¼ 9000, we see that the average cost rate for the system Cðt; N ; W Þ
is the least, indicating Model II is the best. Further it also conforms with the importance
of preventive repair together with N-policy in optimisation problems.
Figure 5 shows the average cost rate for the system and N * for various warranties.
It depicts the conclusions made for Table III.
In what follows the results of the sensitivity analysis for the three models have been
summarized in Tables IV to IX.
When b1 ; 0 , b1 , 1 varies with a1 $ 1 and other parameters are invariant
Tables IV, VI and VIII illustrate an increasing trend in the average cost rate. In other
words an increase in b1 results in increasing mean repair times leading to a
non-increasing t * (in Table IV) and N * (in Table VIII).
 Cost analysis

395

Figure 4.
Optimal cost for model II

Figure 5.
Optimal cost for model III

Similarly when a1 . 1 varies with b1 ; 0 , b1 # 1 and other parameters are invariant

Tables V, VII and IX illustrate a decreasing trend in the average cost rate since an
increase in a1 reflects increasing mean operating times leading to non-decreasing t * (in
Table V) and non-increasing N * (in Table IX).
Thus we observe that optimal t * ; N * and the average cost rates for the system are
sensitive to small changes in a1 and b1 . The sensitivity analysis carried out for the three
cost models supplements the conclusions made from Tables I-III. The average cost rate
in the case of geometric degradation ða1 . 1; 0 , b1 , 1Þ is higher when compared to
a1 ¼ 1 (in Tables IV and VIII) and b1 ¼ 1 (in Tables V and IX) as expected. However,
IJQRM the lesser average cost rate in Model II (in Tables VI and VII) explains the significance
27,3 of preventive repair with N-policy during warranty.

6. Concluding remarks
In this paper we have studied a preventive repair – replace strategy for a repairable
396 deteriorating system using monotonic geometric processes and warranty. We observe
that product warranty has not been considered in such modelling. To investigate the
effect of preventive repair during warranty, three cost models have been developed
using the average cost rate for the system as the objective function. The numerical
example given indicates that a preventive repair during warranty with N-policy is
preferable as compared to a non-warranted product or to a warranted product without
preventive repair. Also it enables the manufacturer to avoid loss of goodwill. Thus it is
worth to note that product warranty is an important factor in designing an optimal
maintenance policy.

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About the authors 397

Sarada Yedida is an Assistant Professor in the Department of Mathematics, College of
Engineering, Anna University Chennai, Tamilnadu, India. She is the corresponding author and
can be contacted at: sarada@annauniv.edu
Mubashir Unnissa Munavar is a Research Scholar in the Department of Mathematics, CEG
Campus, Anna University Chennai, Chennai, Tamilnadu, India.

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