Lean Six Sigma Black Belt

Lean Six
Sigma Black
Belt
Section 1
• Organization Wide Planning and Deployment
Six Sigma Timeline
Johnson &
Control Allied Signal Johnson,
Charts Ford, Nissan,
Motorola General Electric Honeywell
1924 1985 1987 1992 1995 2002
Dr Mikel J Harry wrote a paper relating early failures to quality

Lean Timeline
Fredrick James
Eiji Toyoda
Taylor Womack
Henry Taichi Ohno
Ford Shineo Shingo
1900 1910 1950-60 2000

• Value - specify what creates value from the
customer’s perspective.
• The value stream – identify all the steps along
the process chain.
• Flow - make the value process flow.
• Pull - make only what is needed by the
customer (short term response to the
• customer’s rate of demand).
• Perfection - strive for perfection by continually
attempting to produce exactly what the
Lean customer wants.
Philosophy
• Generated sustained success
• Project selection tied to organizational strategy
• Customer focused
• Profits
Six Sigma • Project outcomes / benefits tied to financial
Benefits reporting system.
• Full-time Black Belts in a rigorous, project-
oriented method.
• Recognition and reward system established to
provide motivation.
Lean Reduce Waste
Benefits Improved Quality/Customer Satisfaction
Reduced Inventory
Reduced Cycle Time
Flexible Manufacturing
Safe Workplace Environment
Improved Employee Morale

• Various Methodologies
• PDCA
Continuous • A3
Improvement • DMAIC
• 8-D
• Kaizen
• Motorola:
• 5-Fold growth in Sales
• Profits climbing by 20% pa
• Cumulative savings of $14 billion over 11
Six Sigma years
• General Electric:
Benefits • $2 billion savings in just 3 years
• The no.1 company in the USA
• Bechtel Corporation:
• $200 million savings with investment of $30
million
• External Sources:
• Voice of Customer
Six Sigma • What are we falling short of meeting customer

needs?
Project • What are the new needs of customers?
• Voice of Market
Selection • What are market trends, and are we ready to
adapt?
• Voice of Competitors
• What are we behind our competitors?
• Internal Sources:
• Voice of Process
• Where are the defects, repairs, reworks?
Six Sigma • What are the major delays?
Project • What are the major wastes?

• Voice of Employee
Selection • What concerns or ideas have employees or
managers
• raised?
• What are we behind our competitors?
Six Sigma Project Selection
Sweet Fruit
Design for Repeatability
Process Enhancement
Bulk of Fruit
Process Characterization
and Optimization
Low Hanging Fruit

Seven Basic Tools
Ground Fruit
Logic and Intuition
• Three basic qualifications:
Qualifications • There is a gap between current and desired /

needed performance.
of a SS • The cause of problem is not clearly understood.
Project • The solution is not pre-determined, nor is
the optimal solution apparent.
Six Sigma Project Prioritization
Criteria Weightage Criteria PR1 PR2 PR3 PR3
Aligned to 4 High=5 Medium = 3 4*5 = 4*1 =

Low = 1
Strategic 20 4
Objective
Addresses Voice 3 Yes = 5 3*3 = 3*1 =
Somewhat = 3
of Customer No = 1 9 3
Effort/Investment 2 Quick and Easy = 5 2*1 = 2*5 =
Medium = 3
Complex = 1 2 10
Return on 5 >100% = 5 5*5 = 5*1 =
100 to 50% = 3
Investment <50% = 1 25 5
Overall Rating 56 22
• Systems
Business •
•
Business Systems
Process
Systems • Stakeholders – Internal, External
• Impact of stakeholders
• Interdependent parts forming a
Systems complex/intricate whole.
• Common goal
Business • procedure or process for providing specific
Systems goods or services to customers.
Process • Systems help you run the business and the
processes help you run the systems.
• Any individual, group or institution that is
affected or is interested in the project
Stakeholders • The poorly managed stakeholders will
have negative effect on the project and this
may lead to the project failing
Stake Holders
Owner, Managers
Suppliers, Customers
Employees, Partners
Local Community,
Associations, Media
Public
Stakeholders Analysis
Manage
Keep
closely
Satisfied LATENTS KEY PLAYERS
INTEREST
Monitor Keep
informed
APETHETICS DEFENDERS
POWER
Activities to
• set priorities,
• focus energy and resources,
• ensure that employees and other
Strategic stakeholders are working toward
Planning common goals,
• establish agreement around intended
outcomes/ results,
• assess and adjust the organization's
direction in response to a changing
environment.
Strategic plan provides the
direction
Strategic Plan Six Sigma helps in achieving

and Six Sigma objectives
Select projects which helps in

achieving organizational strategic
plan.
Strategic • Vision (the dream)
Planning •
•
Mission (what and why)
Objectives (how much of what)
Process- • Strategies (how)
VMOSA • Action plans (who will do what by when)

SWOT Analysis
Tools for •
• PEST Analysis
Strategic • Contingency Planning
Business Continuity Planning
Deployment
•
• Hoshin Kanri (X Matrix)
SWOT Analysis
Weakness
Strength
that place the business
that gives it an
or project at a
advantage over Strength Weakness
others disadvantage relative
to others
Opportunity Threats
that the business or that could cause
project could exploit trouble for the
to Opportunity business or project
its
Threat
advantage
PEST Analysis
Political Social
Governmen Culural
t aspects
Interventio
n Economic Technological
How business Automation
operates and
innovation
A CONTINGENCY PLAN IS A PLAN
DEVISED FOR AN OUTCOME
OTHER THAN IN THE USUAL
(EXPECTED) PLAN.
Contingency
Planning
PART OF RISK MANAGEMENT

Business • Business continuity planning is the process of
Continuity creating systems of prevention and recovery to
deal with potential threats to a company.
Planning
Hoshin Kanri
Process of creating goals, assigning them Ongoing process Creates a shared vision in the
measurable milestones, and assess organization
progress against those milestones
Portfolio • Selecting the right projects based on the
investment, expected gains and chance of
Analysis success. A
Roles
Master Master Black Belts, identified by champions, act as

in-house coaches on Six Sigma.
Black Belt
Champions
Black Belts operate under Master Black Belts to

Black apply Six Sigma methodology to specific projects.
Belts Green Belts are the employees who take up Six
Sigma implementation along with their other job
responsibilities, operating under the guidance of
Green Belts Black Belts.
Yellow Belts participates

Team Members / on and supports the
Yellow Belts project teams, typically in
the context of his or her
existing responsibilities.
Master
Champions Black Belt
Champions
Black
Belts
 Charters or champions chartering

process Green Belts
 Identifies, sponsors and directs Six Team Members /
Sigma projects Yellow Belts
 Holds regular project reviews in

accordance with project charters
 Includes Six Sigma requirements in
expense and capital budgets
Master
Champion Black Belt
Champions
Black
Belts
Identifies and removes organizational
and cultural barriers to Six Sigma Green Belts
success.
Rewards and recognizes Team Members /
Yellow Belts
Communicates leadership vision

Monitors and reports Six Sigma
progress
Validates Six Sigma project results
Nominates MBB /Black Belt
candidates
Master
Black Belt
Black Belt
Champions
Black
Belts
 Six Sigma technical expert Green Belts

 Temporary, full-time change agent (will
return to other duties after completing a Team Members /
Yellow Belts
two to three year tour of duty as a Black
Belt)
 Leads business process
improvement projects using Six Sigma
approach that result in tangible benefits
 Demonstrated mastery of Black Belt
body of knowledge
 Coach / Mentor Green Belts
 Recommends Green Belts for
Master
Green Belt Black Belt
Champions
Black
Belts
 Part-time Six Sigma change agent.

Green Belts
 Continues to perform normal duties
while participating on Six Sigma Team Members /
project teams Yellow Belts
 Six Sigma champion in local area

 Participates on Six Sigma project
teams
Master
Yellow Belt Black Belt
Champions
Black
Belts
Learns and applies Six Sigma

tools to projects Green Belts
Actively participates in team tasks Team Members /

Yellow Belts
Communicates well with other
team members
Demonstrates basic improvement
tool knowledge
Accepts and executes
assignments as determined by
team
Master
Financial Analyst Black Belt
Champions
Black
Belts
Validates the baseline status for each

project. Green Belts
Validates the sustained results / savings Team Members /

after completion of the project. Yellow Belts
Compiles overall investment vs. benefits

on Six Sigma for management reporting.
Will usually be the part of Senior
Leadership Team.
• Organizational Roadblocks and Change
Management
• Types of organizational structures
Organizations • Cause of Six Sigma failures

• Change Management
and Change • Lewin’s Model
• Kotter’s Model
• Change Management tools
It defines how the work is
distributed
Types of
Organizations
Structures Complexity
Three key Formalization
components: Centralization
Types of Flat vs Vertical Organizations
Organizations Project or Product Organizations

Structures
• Functional Organizations
• Project or Product Organizations
• Matrix Organizations
• Lack of management support
• Lack of process owner support
Causes of Six • Team members commitment
Sigma •
•
Incorrect scope
Lack of training
Failures • Incorrect project selection
• No alignment to strategic goals
• No financial goals
Change - Lewin's Model
UNFREEZE CHANGE RE-FREEZE

Acceptance by Internalize the change
stakeholders Make Train
the change Celebrate
UNFREEZE CHANGE RE-FREEZE
Accept that change is

needed Prepare for the
change
• Creating a Climate for Change
• 1. Increasing Urgency
• 2. Building the Guiding Team
Kotter’s 8- • 3. Getting the Right Vision
• Engaging and Enabling the Organisation
Step Change • 4. Communicate for Buy-in
• 5. Empower Action
Model • 6. Create Short-term Wins
• Implementing and Sustaining Change
• 7. Don’t Let Up
• 8. Make it Stick
Change – Success Factors
Business case for Monitor Effective Training and/or Counter Provide personal Monitoring of the
the change assumptions and communication skills resistance from counseling implementation
risks improvement the employees
Why Change?
Benefits of successful
implementation
Details of the change
(when? where? Who?
how much? etc.)
Stakeholder Analysis
Change
Management Readiness Assessment
Tools
Communication Plan
Stakeholders Analysis
Owner, Managers
Employees, Partners
Local Community,
Associations, Media
Public
Stakeholder Analysis
Manage
Keep
closely
Satisfied LATENTS KEY PLAYERS
INTEREST
Monitor Keep
informed
APETHETICS DEFENDERS
POWER
• To assess the level of preparedness for the
change.
• Is there a clear vision?
Readiness • Has that vision effectively communicated?
Assessment • Are employees willing to change?

• Are resources required for the change
available?
• Are employees trained for the change?
Communication Plan
Stakeholder Impact of Change Key Message Approach
Employees High Economic condition Letter from CEO Departmental

Company Finance Meetings
Expected recovery One to One meeting as needed
Manager Medium
Families High
Media Low
Impact on stakeholders
Owner, Managers
Employees, Partners
Local Community,
Associations, Media
Public
Benchmarking
The process of comparing
• one's business processes and performance metrics
to
• industry bests and best practices from other

companies.
Process Example: Delivery
process, Billing
benchmarking process
Features of
Performance products and
Benchmarking benchmarking
services e.g.
mileage, download
speed
Strategic How companies

benchmarking compete
Internal Benchmarking
• Easy access to sensitive information

• Less time and resources required
• Limited gain because internal
benchmark might not be the best
in class.
External Benchmarking
Internal vs
• Just the revise of internal
External benchmarking
Benchmarking
• What function to benchmark (D)
• What is the current performance level (M)
• Select the Best-in-Class (M)
Benchmarking • Compare (A)
Process • Agree on actions to achieve or beat the Best-
in-Class and Implement (I)
• Monitor (C )
• Re-do
Management support
Alignment with the strategy
Lack of Resources
Benchmarking
Challenges Right team
A suitable and willing partner
Willingness to change
• Metrics to measure performance
• Commonly used performance measures for
outsiders are financial
Performance • Internal metrics include performance levels
Measures • Process yield
• Defect rate
• Average time to answer a call
• Schedule
• By Robert S.Kaplan and David P. Norton
Balanced • Four perspectives

• Financial
Scorecard • Customer
• Internal Business Processes
• Learning and Growth
Balance Scorecard
## ##
Financial Customer
## ##
Internal Processes Learning/Growth

• Lagging are easy to measure
Leading vs • Lagging are post event (output)
• Leading are predictive measures (inputs)
Lagging • Leading indicators are not guaranteed and are
Indicators the difficult to decide, which one to select.
• Mix of both leading and lagging is good.
Return on Investment
Common •
• Payback Period
Financial • Net Present Value
Internal Rate of Return
Measures
•
• Benefit/Cost Ratio
Return on Investment
$2,000
Year 01 Year 02 Year 03 Year 04 Year 05
$1,000 $1,000 $1,000 $1,000 $1,000
Return on investment =
Income x 100%
Cost
Payback Period
$2,000
$1,000 $1,000 $1,000 $1,000 $1,000
Time to recover the investment

Net Present Value
$2,000
$1,000 $1,000 $1,000 $1,000 $1,000
Cost of Capital = 10%

Net Present Value
$2,000
$2,500

Internal Rate ofReturn
$2,000
$2,500

Benefit/Cost Ratio
$2,000
$1,000 $1,000 $1,000 $1,000 $1,000

Functional
Cross Functional
Team Types
Virtual
Self Directed
Leader
Facilitator
Team Roles
Coach
Members
Team Roles Provides direction to team members
- Leader Clarity on the roles of team members
Establishes ground rules for working with

each other
Ensures successful completion of team
goal
Preparing for and conducting team
meetings
Assigns roles to team members
• Facilitator provides leadership to the team
Team Roles - without formal authority to make decisions.
• Facilitator helps team understand the
Facilitator objective and support the team on how to
achieve the objective.
Team Roles - GROW
Coach G - Goal What team wants to achieve
 Coach provides one to one R - Reality Current reality and challenges the
support after training. team has
 Coach is the first person to
be contacted if the team has O - Obstacles What stops team from achieving
an issue and needs help. the goal.
 GROW Model of Coaching
W – Way forward Steps needed to be taken to
achieve the goal
• Participate in team meetings
Team Roles - • Perform the tasks assigned to them
Members • Actively participate in brainstorming and idea
generation
Selection
Criteria Ability to influence
Openness to change
Team Member Required skillset
Selection
Subject Matter Expertise
Availability
Management support
Clear goals
Team Success
Factors Ground rules
Timeliness
• Abraham Maslow’s Hierarchy
Motivation • Herzberg’s Two Factory Theory
• Douglas McGregor – Theory X and Y
Maslow’s Hierarchy of Needs
Self Actualization
Esteem
Love and
Belongingness Safety
Physiological
Herzberg's two-factor theory
Hygiene Factors
Motivators
Douglas McGregor – Theory X andY
Theory X Theory Y
Dislikes work
Likes work
To be directed
Takes responsibility
Little creativity
Creative
Tuckman Model of Team Life Cycle
Forming Storming Norming Performing Adjourning

The forming During the The norming When a team Breaking up
stage occurs storming stage begins as reaches the the team
when team stage, teams the team moves performing when the
members first discover beyond the stage it is required task
come together teamwork is storming stage functioning as is complete.
as a team. more difficult and begins to a high
than they function as a performance
expected. team. team.
Forming
 Strong dependence on
leader Forming
 Simple ideas The forming stage
occurs when
 Avoidance of controversy team members

first come
together as a
 Avoidance of serious team.
topics
 Minimum feedback
Leader
Storming
 Strongly expressed views

Storming
 Challenging others’ ideas
 Challenging leadership, authority During the storming
stage, teams
discover teamwork
and position is more difficult
than they expected.
 Withdrawal by some team
members
 Lack of collaboration, competing
for control
 High levelLeaders
of reacting or defending
Coach
Norming
 Active listening
 Shared leadership Norming
 Methodical systematic ways of The norming stage

begins as the team
working moves beyond the
storming stage and
 Readiness to change preconceived begins to function as
a team.
views
 Receptiveness to others’ ideas
 Active participation by all
 Conflicts seen as mutual problems
Leaders
 Open exchange of ideas
Performing
 High Performing
 creativity
Openness and When a team reaches
the performing stage
trust it is functioning as a
high performance
team.
 Strong
relationships
 High achievement
Leaders
Delegate
Adjourning
 Adjourning, is the break-up of the

group, hopefully when their task is
completed successfully, their Adjourning
Breaking up the team
purpose fulfilled. when the required
task is complete.
 Recognition of and sensitivity to
people's vulnerabilities is helpful
Leaders Reassure and

communicate
Create right
environment of
open
communication
Team
Communication
Encourage
communication
Communication Model
Noise
Sender Receiver
Encod Channel Decod
e e
Feedback
FACE TO FACE VIDEO CHAT TELEPHONE
Communication
Channels
EMAIL LETTER NEWSLETTER/INTRANET/POSTER/

TEAM MEETINGS
Communication Type Objective Medium Frequenc Audience
y
Owner Deliverabl
e
Plan
Kickoff Set goal Face to face Once Team Champion Team Agenda
meeting Team alignment Sr Mgmt (optional) leader Minutes of
meeting
Team Review status Plan Face to face Weekly Team members Team Agenda
meetings for future Champion leader Minutes of
(Optional) meeting
Weekly Update Champion Email Weekly Champion Team Report
status report leader
Monthly Updates for senior Presentatio Monthly Champion Team Report
report management n Senior Management leader
Leader’s Role During Team LifeCycle
Direct Coach Facilitate Reassu
Delegate re
Forming Storming Norming Performing Adjourning

The forming During the The norming When a team Breaking up
stage occurs storming stage begins as reaches the the team
when team stage, teams the team moves performing when the
members first discover beyond the stage it is required task
come together teamwork is storming stage functioning as is complete.
as a team. more difficult and begins to a high
than they function as a performance
expected. team. team.
Leadership we do not have a “one
size fit all” solution
Situational
Leadership Based on ability and
Directing
Coaching
willingness different Supporting
approaches: Delegating
Leadership Approach
Ability
Supportin Delegatin
g g
Willingnes
s
Directin Coachin
g g
• when the followers have low willingness and
low ability for the task at hand.
Leadership • leader takes a highly directive role.
Approach - • Define task

• Close supervision
Directing • One way communication
• Used when time is less and consequences
are serious
• when the followers have high willingness and
Leadership low ability for the task at hand.
• Define task
Approach - • Seeks ideas and suggestions
• Supervision provided
Coaching • Two way communication
• Support and praise to boost confidence
• when the followers have low willingness and
high ability for the task at hand.
Leadership • Team can do the job but are refusing to do
it. Leader needs to find out why?
Approach - • Persuade to cooperate
Supporting • Motivate and build confidence
• Leaders listen, praise and make team feel
good
• when the followers have high willingness and
Leadership high ability for the task at hand.
Approach - • Leader is still engaged in decision making

but execution is mostly by the team
Delegating • Less need for support or praise, but
occasional recognition is always good.
Leadership Approach
Ability
Supportin Delegatin
g g
Willingnes
s
Directin Coachin
g g
• Group Thinking
• Members avoid conflict and agree to a
Group point without critical evaluation.
• Group feels invulnerable
Behaviour • Unquestioned belief in group
• Group pressure on person opposing group
decision.
• Reluctant Participants
Group • Might answer only when specifically asked
a question.
Behaviour • Don’t embarrass them, encourage them to
participate
• Dominant Participants
• Create unbalanced participation in
discussion.
Group • If left unchecked all decisions will be biased
Behaviour based on the opinion of certain people
only.
• Use words such as “let’s listen to what
other opinion we have in the group.”
• Digressions
• Keep meeting on track.
Group • Project Charter might be used to keep the
Behaviour project within scope.
• Could suggest to deal with that issue after
the meeting.
Agenda
Time Management
Meeting Require pre-work from participants

Management
Ensure right people in the meetings
Right resources
• Brainstorming
Consensus
Team Tools •
• Nominal Group Technique
• Multi-voting
• Brainstorming is a group or individual
creativity technique by which efforts are made
to find a conclusion for a specific problem by
Brainstorming gathering a list of ideas spontaneously
contributed by its member.
• Defer judgment,
• Reach for quantity
FOUR RULES: FOCUS ON WITHHOLD
QUANTITY CRITICISM
Brainstorming
WELCOME COMBINE AND

UNUSUAL IDEAS IMPROVE IDEAS
• Consensus – coming to an agreement
• Listening
Consensus • Discussing
• Bargaining
• Agreement which everyone can live with.
• The nominal group technique (NGT) is a group
process involving problem identification,
Nominal solution generation, and decision making.
• Five Steps
Group • Introduction and explanation
• Silent generation of ideas
Technique • Sharing ideas
• Group discussion
• Voting and ranking
• Brainstorming generates a long list of ideas
• Multi-voting technique is used to reduce
/narrow down this list with group consensus.
Multi-voting • Out of big list of ideas each member selects 5
(or any other number of ideas).
• Each member ranks his/her choice. (5 for
most preferred and 1 for least)
Multi voting
Identify roles.
List down the skills needed for each
Identify skills gaps, role
Identify available skills
Gap analysis
Develop learning objectives,

Training Need
Assessment Prepare a training plan, and
Develop training materials

• Lectures
• Discussions
• Case Study
• Simulation
Training •
•
Demonstration
Business Games
Delivery •
•
Role Play
On the job
• Coaching
• Online
• Self Study
• Adults want to learn
• Adults learn what is relevant and applicable to
them
Adult • Adults have life experience
Learning • Adults look for guidance and not instructions

or hand holding.
• Adults need to be shown respect
• Adults have time limitation
• Andragogy is the theory and practice of
Adult education of adults.
Learning • Three Learning Styles:

• Visual
Styles • Auditory
• Kinesthetic
Evaluation planning,
Feedback surveys
Training Pre-training and post-

Evaluation training testing
Internal Customers
• The notion of an internal
customer was popularized by
Joseph Juran
External Customers
• Intermediate Customer
Customer • Ultimate Customer
Types • Consumer
• Dividing customers into groups to meet
specific demands of specific groups:
• Examples: Location, Buying habits, gender,
language, local customs, education, past
Customer purchases
• Why segment?
Segmentation • Focus based on specific needs
• Provide better service
• Price differentiation
• Prioritize product development, marketing
etc.
• Tools:
• Sorting (Male/Female, Married/Unmarried)
Customer • Complex tools:
Segmentation • Cluster analysis
• Factor analysis
• Multiple regression analysis
Surveys
• Listen to your customers
• Mail, Phone, Web surveys
• Feedback
Customer Data Focus Groups
Collection • A group of people are asked about their
perceptions, opinions, beliefs, and attitudes.
Interviews / Meetings
Observations
What is the goal of the survey?
Unambiguous
Scale of 1 to 10
Clarity of questions Historical relevance (to compare year to
year change)
Open ended questions
Survey Review the survey
Send the survey to target audience
Analyze
• A group of people are asked about their
perceptions, opinions, beliefs, and attitudes.
Focus Group • Generally 6-10 people having open discussion
with skilled moderator.
Engagement questions
• Start discussion to make
participants comfortable with the
process.
Focus Group Exploration questions
• Main questions
Exit question
• Anything else members want to add
Validity
• Data being recorded is what it was
intended to be?
• How closely do the results correspond to
the true state of the thing being
Data Validity measured?
• – False positive or negative
and Reliability
Reliability
• Method of data collection leads to
consistent results.
• Does the sample of customer surveyed
represent the customer base?
Customer Needsand Requirements
 Data collected using Surveys,
Focus Groups, Interviews /
Meetings, Observations
 What customer needs?

 E.g. – Comprehensive, quizzes,
interesting and practical
Voice of Customer
Critical to X (CTX)
Critical to Quality (CTQ)

Tools/Concepts
Quality Function Deployment (QFD)
SIPOC
Kano Model
Voice of • Voice of the customer (VOC) is a term used to
describe the in-depth process of capturing a
Customer customer's expectations, preferences and
aversions. (stated
(VoC) and unstated)
• Here X can be:
Critical to X • Quality
• Safety
(CTX) • Cost
• Etc.
• VOC’s can be vague and difficult to define,
Critical to that’s where CTQ’s come in. The customer may
identify a requirement that is difficult to
Quality (CTQ) measure directly so it will be necessary to
break down what is meant by the customer
into identifiable and measurable terms
Quality
Function
Deployment
• Developed by Yoji Akao in 1970s.

• Quality Function Deployment (QFD) is a method to
acquire and analyze the voice of the customer and
then transform it into product requirements and
quality assurance measures throughout the design,
build, test, commercialization, and even product
retirement process.
Quality Function
Deployment
Quality Function Deployment
SIPOC
• The Kano model is a theory of product
development and customer satisfaction
developed in the 1980s by Professor Noriaki
Kano, which classifies customer preferences
Kano Model into
• Must-be Quality (Basic Needs)
• Performance Needs
• Attractive Quality (Delighters)
Kano Model
First step in Six Sigma Elements of Charter
Business Case
Problem Statement
Project Scope
Goals and Objectives
Project Performance
Measures
Project Charter Review

Plan – DMAIC start/end
Charter Team members

commitment
Project Charter
Business Case
• Why this project?
• How is this project linked to
company strategy?
• Benefits – cheaper, better,
safer, faster
• Competitive advantage
• In our welding shop we are not

meeting the goal of maximum
1% repair rate. Weld repairs
and retesting is costing us
$300,000 per year.
• First step in Six Sigma
• Elements of Charter
• Business Case
Project • Problem Statement

• Project Scope
Charter • Goals and Objectives
• Project Performance Measures
• Charter Review
• Plan – DMAIC start/end
• Team members commitment
Project Charter
• What is the problem? Magnitude of the
problem, where, when etc.
Problem
Statement • In our welding shop the average weld repair
rate for last 3 months has been 4.5% as against
the maximum target of 1%. This is adding
to the cost and delaying production.
Problem Statement
Poor weld quality leading to losses.
In our welding shop the average weld

repair rate for last 3 months has been
4.5% as against the maximum target of
1%. Poor quality welders are adding
to the cost and delaying production.
In our welding shop the average weld

repair rate for last 3 months has been
4.5% as against the maximum target of
1%. This is adding to the cost and
delaying production.
First step in Six Sigma
Elements of Charter
• Business Case
• Problem Statement
• Project Scope
• Goals and Objectives
Project • Charter Review
Charter • Team members commitment
Project Charter
• Just the right size:
• Not too big – “solving world hunger issue”
• Not too small
• Is it doable in 2-3 months?
Project Scope • Depth and width of scope:
• Depth is vertical – from purchase>receiving
inspection>production> assembly>dispatch
• Width is horizontal – production > machine
• 1, 2, 3, 4 … / Location a, b, c, d …
• If scope is too wide then you might consider
doing Pareto Analysis and select the “vital
fews”.
• It defines the project starting point and ending
point.
Project Scope • “From receiving of welding consumables - to
the
• testing of weld”
• Defines in and out of scope.
• In scope: Welding at weld shop
• Out of scope: Welding done during assembly
• Business Case

• Project Scope
• Charter Review
Project Charter
• Needs to be aligned with the Problem
Statement.
• Problem Statement:
Goals and • In our welding shop the average weld repair

rate for last 3 months has been 4.5% as against
Objectives the maximum target of 1%. This is adding to
the cost and delaying production.
• Goals and Objectives:
• To reduce the weld repair rate from 4.5% to
0.5% by end of Dec
• 2016.
Specific
Measurable
Achievable
SMART
Relevant
Time bound
To reduce the weld repair rate from 4.5% to 0.5% by

end of Dec 2016.
First step in Six Sigma Elements of Charter
Project Business Case
Problem Statement
Charter Project Scope

Goals and Objectives
Project Performance Measures
Charter Review
Plan – DMAIC start/end
Team members commitment
Project Charter
Increased sale and revenue
Reduce cost
Monetary Avoid cost
Benefits Avoid investment
Cycle time reduction
Reduced inventory
Performance
Measures
Customer satisfaction
Nonmonetary
Employee satisfaction
Benefits
Reputation
• Business Case

• Project Scope
• Charter Review
Project Charter
Charter
Review
Stakeholders
involvement
Creates buy-in of
the key
stakeholders
1. Gantt charts
2. Toll-gate reviews
Project
Management
3. Work breakdown structure (WBS)
Tools
4. RACI model (responsible,

accountable, consulted and informed)
Gantt Chart
 A Gantt chart is a type of bar
chart,
 Gantt charts illustrate the start
and finish dates of the terminal
elements and summary elements
of a project.
Gantt
Chart
1. Gantt charts
Project 2. Toll-gate reviews

Management
Tools 3. Work breakdown structure (WBS)
4. RACI model (responsible,

accountable, consulted and informed)
CHECKPOINT TO CONFIRM IF DOES IT MAKE SENSE TO
THE WORK HAS PROGRESSED MOVE TO THE NEXT PHASE OF
Toll Gate AS PER PLAN, AND THE PROJECT?
Review
REVIEW IS CONDUCTED IF THE REVIEW BY SPONSOR AND

REQUIRED STEPS COMPLETED STAKEHOLDERS.
AND DELIVERABLE PREPARED.
Toll Gate Review
MEASURE IMPROVE
DEFINE ANALY CONTROL

ZE
1. Gantt charts
Project 2. Toll-gate reviews
Management
Tools 3. Work breakdown structure (WBS)
4. RACI model (responsible, accountable,

consulted and informed)
Work BreakdownStructure
 WBS is used to breakdown a project
into management components.
Project
1. GANTT CHARTS 2. TOLL-GATE REVIEWS
Management
Tools
3. WORK BREAKDOWN 4. RACI MODEL (RESPONSIBLE,

STRUCTURE (WBS) ACCOUNTABLE, CONSULTED
AND INFORMED)
• Describes the participation by various roles in
completing tasks.
• Responsible: Those who do the work to
achieve the task
• Accountable: The one ultimately
RACI answerable for the correct and thorough
completion of the deliverable or task
• Consulted: Those whose opinions are
sought, typically subject matter experts
• Informed: Those who are kept up-to-date
on progress
RACI
1. Affinity
PDPC
diagrams
Analytical Interrelationship
Diagram
2. Tree diagrams
Tools 5. Activity
3. Matrix
network
diagrams
diagrams
4.
Prioritization
matrices
After brainstorming
To organize large number
Affinity of ideas into natural
groups
Diagrams Interviews/surveys –
open ended questions
Also known as K-J
Method after Kawakita
Jiro who developed this
tool.
Affinity Diagrams
More quizzes interactive
To the point Flash

cards
Easy to Small videos
understand
Detailed
slides coverage
notes Cover the
practice BoK
Affinity Diagrams
Small videos
Interactive
To the point Slides
More quizzes
Notes
Easy to
Flash
understan Detailed
cards
Practice d coverage
Cover the
BoK
To breakdown a goal or broad
category into fine level of details
Tree Diagram
Finer details of activities that
contributes to the issue.
Tree Diagrams
Org.
support
Motiv
ation
Finan
cial
Passing Binde
Handboo
r
CSSBB
k
exam Book
Youtub
s
e
Videos
Udemy
Quizzes
Matrix • Shows the relationship between two or more
Diagram groups.
Matrix
Diagrams – Section
1
Section
2
Section
3
Section
4
Section
5
L Shaped
Difficult 1 5 3 2 1
y Level
Conceptual 4 3 2 1 1
Knowledge
Statistical 1 1 1 1 5
Knowledge
Business 2 4 5 4 2
Application
Matrix Returns 5 3 1 1 3
Diagrams – Complaints 5 4 1 3 2
T Shaped
Sale 1 2 5 4 5
Product 1 Product 2 Product 3 Product 4 Product 5
Efficiency 2 3 5 2 1
Pickup 1 3 4 5 3
Look 1 2 5 4 4
Comfort 2 1 4 2 3
Matrix Diagrams – X Shaped
Matrix
Diagrams –
Roof Shaped
Prioritization
Matrix It is used to
compare choices
Or to select a
project
Activity • To manage number of tasks in a sequence.
• List down tasks
Network • Time for each task
• Predecessor and successor tasks
Diagram • Identify bottlenecks
Activity Duration Depends
on
A 2
Activity Network Diagram B 4 A
C 1 A
D 2 B
 CPM (Critical Path Method) is E 7 B, C
commonly used with all forms of
projects
 It includes:
 A list of all activities required to complete
the project
 The time (duration) that each activity will
take to complete,
 The dependencies between the activities
and,
 Logical end points such as milestones or
deliverable items.
Activity Float
Network
• float or slack is the amount
Diagram of time that a task in a
project network can be
delayed without causing a
delay
Critical Path
• An activity on critical path
has "zero free float"
Activity Network Diagram
Activity Duration Depends

on
A 2
B 4 A
C 1 A
D 2 B
E 7 B, C
Program Evaluation and Review Techniques(PERT)
 The PERT Network acknowledges

that there will be a time variance
(due to uncertainty) in the completion
of each activity
 PERT Network uses a probabilistic
approach to estimating for each
activity.
 To estimate for an activity, the
following formula is used:
 Expected time = ( Optimistic + 4 x
Most likely + Pessimistic ) / 6
Program Evaluation and Review Techniques(PERT)
WORK IN WORK IN QUEUE TOUCH TIME
Process Flow PROGRESS (WIP) (WIQ)
Metrics
TAKT TIME CYCLE TIME THROUGHPUT

Work In
Progress (WIP)
PARTIALLY FINISHED GOODS WAITING THESE ITEMS ARE EITHER JUST BEING
FOR COMPLETION AND EVENTUAL FABRICATED OR WAITING FOR
SALE OF THESE ITEMS. FURTHER PROCESSING.
Material at work
station waiting to
be processed.
Work in
Queue (WIQ)
Some of the Work
in Progress may not
be in the queue.
Touch Time
TIME THAT MATERIAL IS THIS EXCLUDES MOVING,
ACTUALLY BEING WORKED ON. WAITING TIME.
Takt Time
 Takt time is the time in which a

product needs to be produced in
order to satisfy customer demand.
 Takt time =
Net Operating time per period
Customer demand per period
• For example
• Customer wants 10 units per week,

Takt Time • Plant operates 40 hour per week
• Takt Time = 40/10 = 4 hrs.
• Takt time is not related to how much time

it takes to make the unit.
• For example
• Customer wants 10 units per week,

• Plant operates 40 hour per week
• Two breaks of 10 minutes and 40 minutes
Takt Time lunch break daily. (5 days week)
• Net operating time = 40 hrs – 5x(1 hr)= 35
hrs
• Takt Time = 35/10 = 3.5 hrs.
• Takt time is not related to how much time

it takes to make the unit.
Cycle Time
 Actual time to produce onepiece.
Process 1 Process 2 Process 3
3.5 Hours 3.5 Hours 3.5

Hours
 Takt time = 3.5 hrs

 Cycle time = 10.5 hrs
Cycle Time
 Actual time to produce onepiece.
1 Hours 3.5 Hours 3.5

Hours
 Takt time = 3.5 hrs

 Cycle time = 8 hrs
Cycle Time
 Cycle time is value added time only.
1 3.5 1
Hours Hours Hours
Total time a unit takes from the time the
work is requested to the time it is delivered.
Includes processing and waiting time.
Lead Time = WIP/Throughput
• Example:
• WIP is 50 units
• Throughput is 10 units per day
Lead Time • Lead Time = 50/10 = 5 days
Throughput is the average
number of units processed per
time unit.
Throughput Throughput rate = 1/ Cycle time

Rate
Cycle time = 20
minutes
Throughput rate =
1/20 per minutes
Example: Or 60/20 per hour = 3
per hour
Or 3x8 per day (for 8
hour shift) = 24 per
day
Flowcharts
Process maps
Value stream maps
Process Work instructions
Analysis Tools
Spaghetti diagrams
Circle diagrams
Gemba walk
Flow Chart • Shows the processes as boxes connected by
arrows and decision boxes.
BASIC SWIM LANE
FLOWCHARTS
Types of
Flowcharts
VALUE STREAM
MAPS
Flow chart and process map
are used interchangeably
Process
Mapping
Process mapping is the
process of creating a
diagram; the diagram itself
is called a flow chart.
• Type of Flow Chart showing how value flows
Value Stream through the organization
Maps • Flow of material
• Flow of information
Value
Stream
Maps
SigmaXL demonstration
Value Stream
Maps
Symbols
Value Stream Maps
 Used to analyze waste
Curren Lean Futur

t Principle e
State s State
• Steps to do a job
• Brings consistency
Work • Helps in orienting new hire
Instructions • Generally in text but could be in the form of a
flow chart, illustrations as well
• Should be easy to understand
Spaghetti Diagrams
 Trace the path of aproduct/activity
 To reduce the transport and motion waste
Waiting X-ray Receptio Doctor

n
Exam
Receptio Waiting
n
Exam Doctor X-ray

Circle Diagrams
 Venn Diagram
 Pie Chart
Sales
Knowledge 9%
1st Qtr
10% 2nd Qtr
58% 3rd Qtr
23% 4th Qtr
Experience Attitude
Gemba Gemba = work area or shop floor
Walk
Originated from “gembutsu”, which
means “real thing.”
Gemba walk is the action of going to

see the process, observe, understand,
ask questions and learn.
Qualitative vs Quantitative
Data
Qualitative Data Quantitative Data
Description Numbers
Measurements: Length, height, time
More information with less samples
Continuous
More sensitive
Data
Provide more information
More expensive to collect
Continuous vs
Discrete
Discrete
Count: Number of students, Number of heads
Data
Measurement Scales
Data
Nominal Ordinal Interval Ratio

Measurement Scales
Data
Example:
Color: Blue, Green,
Red
Measurement Scales
Data

Example:
Pass/Fail
Good, Bad,
Worst
Measurement Scales
Data
Example
: Temperature:
Celsius
Measurement Scales
Data
Example
: Height, mass,
volume
Measurement
Scales
Ordered N Y Y Y
Difference N N Y Y
Absolute Zero N N N Y
Example Red, Good, Bad, Temperature Length,

Blue Worst : Degree C Weight
Central Mode Mode, Mode, Mode,

Tendency Median Median, Median,
Measurement Mean Mean
Qualitative vs Quantitative
Data
Qualitative Data Quantitative Data

Sampling
Sample:
Population: Samplin Part of
Complete g population
collection Proces
to be s
studied
Inference
Parameter Statistic
Characteristic of Characteristic
a population
number of membersof asample
N n
μ mean standard x̅
σ deviation s
Sampling
Sample:
collection Proces
to be s
studied
Inference
Parameter Statistic
a population
number of membersof asample
N mean n
μ standard deviation x̅
σ s
Why • Because of the cost and time involved in
Sampling? studying the entire population.
• Probability Samples
• Everyone in the population has an equal
chance of being selected
Sampling • Non-Probability Samples

• Where the probability of selection can't be
accurately determined.
• Sample may not be (generally isn’t)
• representative of the general population
Sampling
Simple Random Sampling
Probability Systematic Random Sampling
Sampling
Stratified Random Sampling
Cluster Sampling
Accidental / Convenience
Probability
Sampling
Sampling
Judgemental Sampling
Non
Quota Sampling
 Each item in the population has an
equal chance of being selected.
 Examples: Using random tables,
Random draw of lot (lottery)

Systematic Random
Probability
Sampling
Sampling Stratified
Random Sampling Cluster
Sampling
Systematic Random Sampling
 Select elements at regular intervals
through that ordered list.
 Example: Checking every 6th piece
produced by the machine.

Systematic Random
Probability
Sampling
Sampling Stratified
Random Sampling
Cluster Sampling
Stratified Random Sampling
 Used to ensure that sub-groups within a
population are represented
proportionally in the sample.
 Example: If 10 people are drawn to
represent a country, 5 of them are male
and 5 females to avoid the sex bias.
Systematic Random Sampling Stratified
Probability
Sampling
Random Sampling Cluster Sampling

Cluster Sampling
 Sometimes it is more cost-effective to
select respondents in groups ('clusters').
Sampling is often clustered by
geography, or by time periods.
 Example: Survey all customers visiting
particular stores on particular days.
Systematic Random Sampling Stratified
Probability
Sampling
Random Sampling Cluster Sampling

Convenience Sampling
 The researcher selects whoever is
convenient. The samples are being
drawn from that part of the population
which is close to hand
 Example: A researcher at the mall
selects the first five people who walk
by to get
their opinion of a product.
Probability
Accidental / Convenience Sampling

Sampling
Non
Quota Sampling
Judgmental Sampling
 The researcher chooses the sample
based on who they think would be
appropriate for the study.
 Example: Auditor selects a sample
based on the concerns he/she had in
the earlier audit

Probability
Sampling
Non
Quota Sampling
Quota Sampling
 A quota is established and auditor are
free to choose any sample they wish
as long as the quota is met.
 Example: 2% of the calibration records.

Probability
Sampling
Non
Quota Sampling
Why you
need to Goal and Objective
collect data?
Data How much? How? Where? When? Etc.
Collection Operational
Definition
Type of data – NOIR
Manual or Automatic
Plan
Past data vs Future
Is data
reliable?
Data Operational How is it Type of Sample Data Recording Comment
Collection
Measurement Who?
Definition measured? Data size Form s
Time to Time from picking up Using a stop Continuo Every 10th Operato Assembly Record
assemble the first piece to watch us piece r F-0156
placing the assembled
Plan
item in tray Ratio
• Adding, Subtracting
• Example: -95, -97, -98, -90
• Add 100 to each: 5, 3, 2, 10
Data Coding • Coded mean: 5

• Un-coded mean: 5-100 = -95
• Standard deviation remains same and is
not affected by addition and subtraction.
• s = 3.559
• Multiplying or dividing
• Example: 1.05, 1.03, 1.02, 1.10
• Multiply 100 to each: 105, 103, 102, 110
• Coded mean: 105
Data Coding • Un-coded mean: 105 / 100 = 1.05
• Standard deviation need to divided by you
multiplied for coding.
• For coded data s = 3.559
• For original data s = 3.559/100 = 0.03559
• By truncation of repetitive terms
• Example: 0.555, 0.553, 0.552, 0.550
• Truncate 0.55 from all: 5,3,2,0
• This means we multiplied it by 1000 and
subtracted 550
• Coded mean: 2.5
Data Coding • Un-coded mean: (2.5+550)/ 1000 =.5525
• Standard deviation need to divided by you
multiplied for coding.
• For coded data s = 2.0816
• For original data s = 2.0816/1000 =
0.0020816
In statistics, imputation is the process of
replacing missing data with substituted values.
Data Cleaning Missing data can

introduce bias.
Missing randomly
Reason for missing
– Missing
Data Delete the row
Replace with the average value

You need measurement to
see how the process is
performing.
Measurement
System Analysis Process has variation.
(MSA)
What about measurement

error / variation?
Measurement
• Measurement System includes – operator,
System measuring instrument and procedures.
Analysis (MSA)
Measurement
System
Analysis (MSA) TRUE VALUE – ACTUAL VALUE, WHICH REFERENCE VALUE – ACCEPTED VALUE
IS UNKNOWN OR SUBSTITUTE OF TRUE VALUE.
• Resolution/ Discrimination
• Smallest readable unit of the measuring
instrument.
• 10 to 1 Rule of Thumb:
Resolution • “Rule of Ten” or “one to ten” is that the
discrimination (resolution) of the
measuring instrument should divide the
tolerance of the characteristic to be
measured into ten parts.
Resolution • Which of these two would you use if the

part tolerance is 52.00 +/- 0.05 (51.95 –
52.05)
• Which of these two would you use if the
part tolerance is 52.00 +/- 0.05 (51.95 –
52.05)
Resolution • Tolerance Range = 0.10
• Minimum Reading of Digital Vernier = 0.01
• Digital Vernier divides the tolerance into 10
parts, hence acceptable.
• Resolution
• Accuracy
Measurement • Bias
• Linearity
System • Stability
Analysis (MSA) • Precision

• Repeatability
• Reproducibility
Accuracy vs Precision
 Accuracy
 “Closeness” to the true value, or to an
accepted reference value.
 Bias
 Linearity
 Stability
 Precision
 “Closeness” of repeated readings to each
other
 Repeatability
 Reproducibility
Measurement System Analysis (MSA)
 Resolution
 Accuracy
 Bias
 Linearity
 Stability
 Precision
 Repeatability
 Reproducibility
Reference Measured
Bias Value (psi) Value (psi)
100 100
• Bias is the difference between the 100 101

observed average of measurements and
the reference value. 100 102
100 102
100 101
100 100
Average 101
Bias = 101 psi -100 psi = 1 psi

Bias
 Bias is the difference between

the observed average of
measurements and the
reference value.
Average
Reference
Value
Bia
s
Bias
Bias is the
systematic error.
Bias is addressed
by calibration.
Linearity
 Linearity measures the bias across

the operating range of a tool or
instrument.
Reference Average Bias BIA
Value (psi) Measured 2.5 S
Value (psi)
2
0 0 0
1.5
50 50.5 0.5
1
100 101 1
0.5
150 151.5 1.5
0
200 202 2 0 50 100 150 200 250
Stability
 Stability measures the bias over
time. Also known as drift.
Time
Time 2
Bias 2
Time
1
Bias 1
Accuracy vs Precision
 Accuracy
 “Closeness” to the true value, or to an
accepted reference value.
 Bias
 Linearity
 Stability
 Precision
 “Closeness” of repeated readings to each
other
 Repeatability
 Reproducibility
Repeatability
 Variation in measurements obtained with one measuring
instrument when used several times by an appraiser.
 Also called Equipment Variation (EV)
 It’s the capability of the gauge to produce consistent results.
Reproducibility
 Variation in the average of the measurements made by different
appraisers using the same gage
 Also called Appraiser Variation (AV)
 It’s the capability of the appraiser to produce consistent results.
Gage R&R (GRR)`
 Combined estimate of repeatability
and reproducibility.
Gage R&R (GRR)
 Combined estimate of repeatability
and reproducibility.
Precision to • How capable your measurement system is?
• Precision/Tolerance (P/T) is the ratio between
Tolerance the estimated measurement error (precision)
and the tolerance of the characteristic being
Ratio measured.
Precision to Tolerance Ratio
 P/T ratio is the most common
estimate of measurement
precision
system Measurement
Toleran System
ce Variation
P/T = 10%
P/T = 100%
P/T = 200%
LSL USL
Precision to Tolerance Ratio
PTR
PTR = 5.15 σms
USL-LSL
Why not 6σms ?

6 sigma includes 99.73%
area
5.15 sigma includes 99%
area
Gage R&R
Gage R&R Studies
(GRR)
• Repeatability and reproducibility
(R&R) studies are a method for
determining the variation of a
measurement system.
• There are three methods of
conducting GRR Studies.
• Range
• Average and Range
• ANOVA
Gage R&R
(GRR) The range method quantifies both
repeatability and reproducibility together.
The average and range method provides

separate estimate of repeatability and
reproducibility.
The analysis of variance method (ANOVA)

estimates variation due to repeatability and
reproducibility and parts, and also looks at
the interaction between those these.
Provides quick estimate of This method does not split
GRR. the GRR into Repeatability
and Reproducibility
Gage R&R
(GRR) – Two operators usually
measure 5 parts one time
Range each.
Method
Gage R&R (GRR) –
Range Method Part Appraise Appraise Rang
• Two operators usually measure 5 parts one # rA rB e
time each. 1 100 101 1
• GRR = R-bar/d2 = 1.6/1.19 = 1.34
• Process standard deviation = 2.23
2 99 102 3
• (From previous study) 3 97 99 2
• %GRR = 100 (GRR/process std dev) 4 103 103 0
• %GRR = 100 x 1.34 / 2.23 = 0.60
5 101 103 2
• Measurement variation consumes 60% of
the process variation. Measurement R-bar 1.6
system needs improvement. =
GRR –
Average and
Range
Method AVERAGE AND RANGE METHOD
PROVIDES THE ESTIMATE OF BOTH
INTERACTION BETWEEN APPRAISER AND
GAGE IS NOT COMPUTED (ANOVA
REPEATABILITY AND REPRODUCIBILITY. METHOD DOES THAT)
GRR – ANOVA Method
ANOVAis Analysis of Variance
Resolution:
Using a meter stick to

measure the height of
Number of the students: (100cm to

130cm heights)
Distinct Round to height to the • All students will have the

Categories same height.
nearest meter
(NDC) Round to the nearest

decimeter • We are 3 different heights.
Round to the nearest

centimeter • We are 30 different heights.
Number of Distinct Categories (NDC)
 NDC = 1.414 x
σparts
σgage
NDC is the number of buckets What if The NDC is low?
your data values would naturally
drop into.
Analyze more distinct parts that truly
Number of represent the entire range of the process.

Increase the precision on your
measurement tool.
Distinct
Categories
(NDC)
• Value of NDC
• Less than 2, the measurement system is of
Number of no value for controlling the process, since
one part cannot be distinguished from
Distinct another.
• Equal to 2, the data can be divided into
Categories two groups, say high and low.
• Equal to 3, the data can be divided into 3
(NDC) groups, say low, middle and high.
• More than 5, denotes an acceptable
measurement system.
Measurement System Analysis (MSA)
Crossed gage R&R study
A study in which each operator
measures each part. (Non-destructive)
Nested gage R&R study

A study in which only one operator
measures each part, usually because
the test destroys the part.
(Destructive)
Organizations need
These are also called KPIs –
measurement systems to
Key Performance Indicators.
track the progress.
Focus on those
All functions in the business measurements which ensure
have measurement systems the overall business success,
in place. not the one which are easy
to measure.
Measurement
Systems
• Number of customercomplaints
• Percent of itemsreturned
Measurement • Percent sales from returning customers
Systems - Sales •
•
Salesgrowth
Market share
• Customer satisfactionrating
Measurement Average number of
Systems - suppliers for key
Purchase components
Number of strategic
alliances
Rejection rate
Value added per Internal
Measurement person repair/rejection rate
Systems -
Production Work in Progress
Equipment
Utilization
• Ensure that your measurements are free from
Measurement bias
Systems • Repeatability and Reproducible of

measurements
Metrology • Metrology is the science of
measurements. (Meteorology is science
of weather forecasting)
• Involves three Main activities:

• Definition of internationally
accepted units of measurement
• Realisation of these units of
measurement in practice
• Application of chains of traceability
linking measurements made in
practice to reference standards
Seven Base Unit name Unit symbol Quantity name Dimensionsymbol
Units
metre m length L
kilogram kg mass M
second s time T
ampere A electric current I

thermodynamic
kelvin K Θ
temperature
mole mol amount of substance N
candela cd luminous intensity J

Seven Base
Unit name Unit symbol
metre The distance travelled by light in vacuum in 1/299792458 second.
Units kilogram
second
The mass of the international prototype kilogram.
The duration of 9192631770 periods of the radiation corresponding to the
transition between the two hyperfine levels of the ground state of the
caesium-133 atom.
The constant current which, if maintained in two straight parallel

ampere conductors of infinite length, of negligible circular cross-section, and
placed 1 m apart in vacuum, would produce between these conductors a
force equal to 2×10−7 newtons per metre of length.
kelvin 1/273.16 of the thermodynamic temperature of the triple point of water
mole
The amount of substance of a system which contains as many elementary
entities as there are atoms in 0.012 kilogram of carbon-12
The luminous intensity, in a given direction, of a source that emits

candela
monochromatic radiation of frequency 5.4×1014 hertz and that has a
radiant intensity in that direction of 1/683 watt per steradian.
Derived • The derived units in the SI are formed
by powers, products or quotients of
Units the base units.
• For example velocity is a quantity that is
derived from the base quantities of
time and length, so in SI the derived
unit is metres per second (symbol m/s).
• Purpose:
Calibration • Toensureconsistency
• Todetermine the accuracyreadings
• Canmeasurements be trusted
• “Property of a measurement result whereby
the result can be related to a reference
Traceability through a documented unbroken chain of
calibrations, each contributing to the
measurement uncertainty.”
Traceability
SI Units
National Labs Third
Party Labs
Metrology
Department
Working Instruments
Basic Statistical Terms
Sample:
collection Proces
to be s
studied
Inference
Parameter Statistic
a population of asample
N number of members n
μ mean standard x̅
σ deviation s
Notations Mean
POPULATION
PARAMETERS
μ
SAMPLE
STATISTICS
x̄
Standard Deviation σ s
Variance σ2 s2
Proportion of population P p
having an attribute
Proportion of population not Q (=1-P) q (=1-p)
having an attribute
Correlation coefficient ρ r
Number of elements N n
Central Limit Theorem
Central Limit • For almost all populations, the sampling
distribution of the mean can be approximated
Theorem closely by a normal distribution, provided the
sample size is sufficiently large.
Central Limit Theorem
Central Limit
Theorem
Central Limit
Theorem
Distribution of
Individual Observations
Distribution of
Sample Means
Standard Error of Means
 Standard deviation of the
sampling distribution of the
sample mean
 Called “standard error of the
mean”
Descriptive Statistics
Descriptiv
e
Statistics
Central
Variability
Tendenc
y
Mean Rang
e
Standard
Mod
Deviation
e
Interquartil
Median
e Range
Percentil
e
Mean
 Also known asAverage Central
Tendenc
y
 Affected by extreme values Mean Mode Median Percentil

e
 Example: 10, 11, 14, 9, 6
 Mean = (10+11+14+9+6)/5 = 50/5 = 10
Quartile
Mode
 Most occurring item Central
Tendenc
y
 Example: 10, 11, 14, 9, 6, 10 Mean Mode Median Percentil

e
 Mode = 10 Quartile
Median
 Middle value when put in ascending Central
Tendenc
or descending order. y
 Example: 10, 11, 14, 9, 6 Mean Mode Median Percentil

e
 In ascending order - 6,9,10,11,14 Quartile
 Median = 10
 Example: 10, 11, 14, 9, 6, 11

 In order - 6,9,10,11, 11,14
 Median = 10.5
Percentile
 Median divides the data in two Central
Tendenc
y
equal parts when arranged in
ascending or descending order Mean Mode Median Percentil
e
 Percentile divides data in 99 parts Quartile
 Quartile divides data in 4 parts

 Example: 6,9,10,11, 11,14
 Q1=9, Q2=10.5, Q3=11
Percentile/Quartile Steps
 Arrange in ascending or Central
Tendenc
descending order y
 Calculate location(i) = P.(n)/100 Mean Mode Median Percentil

e
 P=percentile, n=numbers in data Quartile
set
 If i is whole number – Percentile
 is
If i average
is “not” aof (i)th and
whole (i+1)th
number –
location
Percentile is located at (i+1)th
whole-num.
 Example: 6,9,10,11, 11,14
 Q1=9, Q2=10.5, Q3=11
Descriptive Statistics
Variability
Interquartile Standard
Rang
Range Deviation
e
Range
 Difference between lowest and Variability
the highest value.

Interquartil Standard
 Example: 6,9,10,11, 11,14 Rang
e
e Range Deviation
 Range = 14-6 = 8
Interquartile Range
 Range of middle 50%data Variability
 IQR = Q3-Q1 Interquartil Standard

Rang
e Range Deviation
 Example: 6,9,10,11, 11,14 e
 Q1=9, Q2=10.5, Q3=11

 IQR = 11-9 = 2
 Box-and-Whisker Plot
Standard Deviation
 Variance = average of squared Variability
deviation about the arithmetic mean.

Interquartil Standard
 Square root of variance is standard
Rang
e Range Deviation
e
deviation
Standard Deviation
x x-x̅ (x-x̅ )2
100 0 0 ∑(x-x̅
S2 = )2
101 1 1 n-1
99 -1 1
102 2 4 S 2 = 10/5 = 2
98 -2 4
S =√2=
100 0 0
1.414
x̅ =100 ∑(x-x̅ )=0 ∑(x-x̅ )2=10
• Box-and-whisker plots
• Scatterdiagrams
Graphical • Histograms
Methods •
•
Normal probability plots
Frequencydistributions
• Cumulative frequencydistributions.
Box and Whisker Plots
 Also known as Box Plot
 Shows the median
 Shows Q1, Q3 and IQR
70
60
50 Median
25th
40
75th
30
20 Mean
10 Avg No. of Outliers

orders
0 per
mo
Box and Whisker Plots
 Demonstration: SigmaXL >
Customer Data > Average
number of orders/month
70
60
50 Median
25th
40
75th
30
20 Mean
10 Avg No. of Outliers

orders
0 per
mo
• One of seven basic quality tools
• To relationship between two variables
• Relationship should make practical sense
Scatter • Temperature(X) vs Ice cream sale (Y)
Diagram • Some times relationship between two variables is

because of a third variable. (ice cream sale vs heat
stroke cases)
• Correlation/Regression is covered in the Analyze
Phase
Histogram
 Graphical representation of the
distribution of numerical data
 Values are assigned “bins” and
frequency for each bin is plotted.
Histograms
Frequen
cy
10
15
20
0
5
7.
1
11.
7
16.
2
20.
8
mo
25.
4
30.
0
34.
MS Excel
5
39.
1
43.
Avg No. of orders per

7
48.
2
52.
Histogram
8
57.
4
Frequen
cy
10
15
20
25
30
0
5
7.1
12.5
8
18.0
6
23.5
n
Bi
4
29.0
2
34.5
39.9
 Demonstration Using SigmaXL and
8
45.4
6
50.9
4
Frequency
56.4
2
More
• Hypothesis:
• A claim that we want to test
Valid • Null Hypothesis - H0
Statistical • Default position / Currently accepted
position / Assumed / Status Quo
Conclusions • Alternate Hypothesis – Ha
• Claim to be tested. Also known as
Research Hypothesis or the other option.
Valid Statistical Conclusions
 Null Hypothesis and Alternate
Hypothesis are pair and cover all
possibilities.
 Only one of these has to stand and
not both.
Types of Errors
True State of Nature
H0 Ha
Is true Is true
Support H0 /
Reject Ha Correct Type II Error
Conclusion
Conclusion Support Ha /
Reject H0 Type I Error Correct
Conclusion
Probability
 Classic Model
Number of outcomes in which the event occurs

Total Number of possible outcomes of anexperiment
Probability
 Relative Frequency of Occurrence
Number of times an event occurred

Total number of opportunities for an event to occur
• Experiment/Trial: Some thing done with an
expectation of result.
• Event or Outcome: Result of experiment

Probability • Sample Space: A sample space of an
experiment is the set of all possible results of
that random experiment.
• {1, 2, 3, 4, 5, 6}
Probability
 Union: Probability that events A or
B occur: P(A ∪ B)
 Intersection: Probability that events

A and B occur: P(A ∩ B)
Probability
 Mutually Exclusive Events: When two
events cannot occur at the same
time
 Independent Events: The occurrence

of Event A does not change the
probability of Event B
 Complementary Events: The

probability that Event A will NOT
occur is denoted by P(A').
Probability
 Rule of Addition
The probability that Event A or Event B occurs
=
Probability that Event A occurs
+
Probability that Event B occurs
-
Probability that both Events A and B occur
P(A ∪ B) = P(A) + P(B) - P(A ∩ B)

Probability
 Rule of Multiplication:
The probability that Events A and B both occur
=
Probability that Event A occurs x
Probability that Event B occurs, given that A has
occurred
P(A ∩ B) = P(A) P(B|A)

Probability
 Independent Events
Probability
 Dependent Events
Factorial
 Factorial of a non-negative integer
n, denoted by n!, is the product of
all positive integers less than or
equal to n
Permutation/ Combination
 Permutation: A set of objects in
which position (or order) is
important.
 e.g. Lock combination: 3376
 Combination: A set of objects in

which position (or order) is NOT
important.
 e.g. Selecting 2 students out of 5
Continuous • Normal probabilitydistribution
Probability • Student's t distribution

• Chi-squaredistribution
Distributions • Fdistribution
Continuous • In case of a Continuous Distribution:
Probability • The probability of a specific value is zero?
Distributions • You should be looking for the probability of

a range in case of Continuous Distribution.
Normal • Symmetricallydistributed
Probability • Long Tails/ BellShaped
Distribution • Mean/ Mode and Median aresame

Normal • Two factors define the shape of the curve:
Probability • Mean
Distribution • Standard Deviation

Normal Probability Distribution
 About 68% of the area under the
curve falls within 1 standard
deviation of the mean.
 About 95% of the area under the

deviations of the mean.
 About 99.7% of the area under the

deviations of the mean.
 The total area under the normal
curve = 1.
 The probability of any particular value
is 0.
 The probability that X is greater than
or less than a value = area under the
normal curve in that direction
 The value of the random variable Y
is:
Y = { 1/[ σ * sqrt(2π) ] } * e -(x - μ)2/2σ2
 where X is a normal random

variable,
 μ = mean,
 σ = standard deviation,
 π is approximately 3.14159,
 Z Value / Standard Score
 How many standard deviations

an element is from the mean.
 z = (X - μ) / σ
 z is the z-score,
 X is the value of the element,
 μ is the population mean,
 σ is the standard deviation.
Z Table
Z Table in Excel
 NORMSDIST(z) returns
p
 NORMSINV(p) returns z.
Continuous • Normal probability distribution
Probability • Student's t distribution

• Chi-squaredistribution
Distributions • Fdistribution
Continuous • If a variable can take on any value between
vs Discrete two specified values, it is called a continuous
variable; otherwise, it is called a discrete
Variable variable.
Binomial
Bernoulli
Probability
Distribution
Distribution
Discrete Hypergeometric
Geometric
Probability Probability
Distribution
Distribution
Distributions
Negative Poisson
Geometric Probability
Distribution Distribution
Binomial Probability Distribution
 A binomial experiment has the
following properties:
 The experiment consists of n repeated
trials.
 Each trial can result in just two possible
outcomes. We call one of these
outcomes a success and the other, a
failure.
 The probability of success, denoted by
p, is the same on every trial.
 The trials are independent; that is, the
outcome on one trial does not affect the
outcome on other trials.
 A binomial experiment has the
following properties:
 The experiment consists of n repeated
trials.
 Each trial can result in just two possible
outcomes. We call one of these
outcomes a success and the other, a
failure.
 The probability of success, denoted by
p, is the same on every trial.
 The trials are independent; that is, the
outcome on one trial does not affect the
outcome on other trials.
 x: The number of successes that result from the P(x) = nCx . px . (1 - p)n -
binomial experiment. x
n: The number of trials in the binomial
experiment.
p: The probability of success on an
individual trial.
q: The probability of failure on an
individual trial. (This is equal to 1 - p.)
n!: The factorial of n (also known as n
factorial).
P(x) : Binomial probability - the
probability that an n-trial binomial
experiment results in exactly x successes,
 nwhen thenumber
Cx: The probability of successof on
of combinations n an
individual
things, trial xisat
taken p.a time.
 The binomial probability refers to
the probability that a binomial
experiment results in exactly x
successes.
 Suppose a binomial experiment
consists of n trials and results in x
successes. If the probability of
success on an individual trial is p,
then the binomial probability is:
 P(x) = nCx . px . (1 - p)n - x
or
P(x) = { n! / [ x! (n - x)! ] } . px . (1 - p)n - x
Binomial Probability
Distribution
 The mean of the distribution (μx) n: The number of trials in the
is binomial experiment.
n.p p: The probability of success on
an individual trial.
 The variance (σ2x) is
n.p.(1-p)
 The standard deviation (σx) is

sqrt[ n . p . ( 1 - p ) ]
Five Conditions - Binomial
 1. There is a fixed number, n , of P(x) = nCx . px . (1 - p)n -
x
identical trials.
 2. For each trial, there are only two
possible outcomes (success/failure).
 3. The probability of success, p,
remains the same for each trial.
 4. The trials are independent of each
other.
 5. x = the number of successes
observed for the n trials.
Bernoulli • Distribution of successes on a single trial.
• What is the probability of getting head in
Distribution tossing of a coin once?
Hypergeometric Distribution
 There is a fixed number, n , of identical P(x) = nCx . px . (1 - p)n -
x
trials.
 For each trial, there are only two possible
outcomes (success/failure).
 Finite and known population
without replacement.
 Number of successes in
population are known
 x = the number of successes observed for
the n trials.
 N: size of population P(x) = ACx . N-ACn-x / NCn
 A: number of successes in population
 x: The number of successes that result from
the experiment.
 n: The number of trials withoutreplacement.
 P(x) : The probability that an n-trial
experiment results in exactly x successes
 nCx: The number of combinations of n

things, taken x at a time.
 Out of 10 people (6M, 4F), 3 people P(x) = ACx . N-ACn-x / NCn
are selected without replacement.
What is the probability that two of
them are females?
P(2) = 4C2 . 10-4C3-2 / 10C3
 = 4C2 . 6C1 / 10C3 = 6x6/120 = 0.3
 In Excel use: HYPGEOM.DIST

function
 When sample size is less than 5%
population then can use Binomial.
• Number of trials needed to get the first
Geometric success.
• What is the probability that if the coin is
Distribution tossed repeatedly the first head appears
on 5th trial?
• Generalization of theGeometric
distribution
Negative • Number of trials needed to get the first number of

successes.
Binomial • What is the probability that if the coin is
tossedrepeatedly the first third time head
Distribution appears on 5th trial?
• In Binomial distribution trials arefixed, in Negative

Binomial number of successesare fixed.
Poisson A Poisson experiment has the following properties:
Distribution The experiment results in outcomes that can be classified

as successes or failures.
The average number of successes (μ) that
occurs in a specified region is known.
Outcomes are random. Occurrence of one outcome does

not influence the chance of another outcome of interest.
The outcomes of interest are rare relative to the possible

outcomes.
e: A constant equal to approximately 2.71828. (Actually, e is
the base of the natural logarithm system)
μ: The mean number of successes that
occur in a specified region.
x: The actual number of successes that occur in a specified

region.
Poisson P(x; μ)that

P(x; μ): The Poisson probability = (eexactly
-μ) (μxx) successes
/ x!
Distribution occur in a Poisson experiment, when the mean number of
successes is μ.
Poisson Poisson Formula. Suppose we conduct a
Poisson experiment, in which the average
Distribution number of successes within a given region
is μ. Then, the Poisson probability is:
P(x; μ) = (e-μ) (μx) / x!
where x is the actual number of successes

that result from the experiment, and e is
approximately equal to 2.71828.
The Poisson distribution has
the following properties:
The mean of the

distribution is equal to μ .
The variance is also equal to

Poisson μ.
Distribution
• On a booking counter on the average 3.6
people come every 10 minute on weekends.
Poisson What is the probability of getting 7 people in
10 minutes?
Distribution • μ = 3.6, x=7
• P(x; μ) = (e-μ) (μx) / x! = (e-3.6) (3.67) / 7!
•  =0.02732 x 7836.41 / 5040 = 0.0424
Process Capability Indices
 Ratio of the spread between the
process specifications to the spread
of the process values, (6 process
standard deviations) .
 LSL – Lower Specification Limit
 USL - Upper Specification Limit
 LCL– Lower Control Limit

 UCL- Upper ControlLimit
 Cp = (USL – LSL)/(6*σ
within)
 Cp = (USL – LSL)/(6*σ within)
 CpL = (Process Mean – LSL)/(3* σ

within)
 CpU = (USL – Process Mean)/(3* σ

within)
 Cpk = Min (CpU, CpL )

• Why to do Process Capability study?
Process
Capability • Understand the behaviors of
new/repaired/ adjusted equipment
Indices • Review of tolerances
• Allocation of equipment
Process • Conditions to bemet:
• Sample to represent thepopulation
Capability • Normal distribution ofdata
• The process must be in statisticalcontrol
Indices • Sample size must be sufficient
 Process Capability vs Rejections
USL−LS 6σ 8σ 10σ 12σ

L
Cp 1.00 1.33 1.66 2.00
Rejects 0.27 % 64 ppm 0.6 ppm 2 ppb
Process Performance Indices
 Conditions to bemet:
 Sample to represent the population
 Normal distribution of data
 Sample size must be sufficient
Process Performance Indices
 Pp = (USL – LSL)/(6* σ overall)
 PpL = (Process Mean – LSL)/(3* σ

overall)
 PpU = (USL – Process Mean)/(3* σ

overall)
 Ppk = Min (PpU, PpL )

Difference • Cpk is calculated using “within” standard
deviation, while Ppk is using “overall” standard
Between Cpk deviation.
and Ppk • Cpk is for short term and Ppk is for long term.
Taguchi Capability Index - Cpm
 Process Capability
Select the process
Data Collection Plan
Measurement System Analysis
Process Gather data
Capability
Studies
Confirm normality of data
Confirm that the process is in control
Estimate the process capability
Continually improve process

Process • When your data is pass/fail instead of values,
you are looking for Attribute Data Process
Capability – Capability.
Attribute • Common way to do this is to use p, np, c and u

charts. We will cover these charts later in the
Data Control section.
• What if the data is not normal?
Process
Capability for • Check for Normality – Anderson Darling
Test
Non Normal • Transformation Basics
• Box-Cox Power Transformation
25
Check for Normality

20
Frequen
15
10
cy
5
0
 Non Normal Cycle Time File from
804
156
231
307
383
459
534
46
9
Cycle Time
(Minutes)
SigmaXL 1.83
NSCORE
 Histogram
0.83
-0.17
-1.17
 SigmaXL > Customer Data > Graphical -2.17
-4000.00
-2000.00
2000.0
4000.0
6000.0
8000.0
0.0
Tool> Basic Histogram
0
Cycle Time
0
(Minutes)
Anderson-Darling Normality Test 5.357
 Anderson-Darling Test P-Value (A-D Test) 0.0000
 SigmaXL > Customer Data >

Graphical Tool> Normal
Probability Plot
Transformation Basics
Box-Cox Power Transformation
PercentDefectives
Process •
• PPM
Performance • DPMO
DPU
Metrics
•
• Rolled ThroughYield
Percent • Percent of parts having one or more defects
Defectives • 2 percent – 2 pieces per 100 pieces

Parts per Million (PPM)
 Defective parts per million.
 2 percent – 2 pieces per 100 pieces
 0.02 x 1,000,000 = 20,000 PPM
A NONCONFORMING UNIT IS A DEFECTIVE DEFECT IS NONCONFORMANCE ON ONE OF
UNIT MANY POSSIBLE QUALITY CHARACTERISTICS
OF A UNIT THAT CAUSES CUSTOMER
Defect vs
DISSATISFACTION.
Defective
• Circumstances in which CTQ can fail to meet.
• Number of defect opportunities relate to
complexity of unit.
Defect • Complex units – Greater opportunities of defect
than simple units
Opportunity • Examples:
• A units has 5 parts, and in each part there are 3
opportunities of defects – Total defect
opportunities are 5 x 3 = 15
• Number of defects divided by number of defect
Defects Per opportunities
• Examples:
Opportunity • In previous case (15 defect opportunities), if 10
units have 2 defects.
(DPO)
• DPO = 2 / (15 x 10) = 0.0133333
• DPO multiplies by one million
• Examples:
Defect Per • In previous case (15 defect opportunities), if 10
units have 2 defects.
Million
Opportunities • DPO = 2 / (15 x 10) = 0.0133333
(DPMO) • DPMO = 0.013333333 x 1,000,000 = 13,333
• 13,333 DPMO is 3.7 Sigma

• Six Sigma performance is 3.4 DPMO
• Number of Defects / Number of Units
• In 3,000 welds defects observedwere:

Defects Per • 10Cracks
• 15Porosity
Unit • 5Undercut
• DPU=(10+15+5)/3,000 =30/3,000
• =1/100 =0.01
Rolled Through Yield
 Units entering a process = P
 Defective Units = D
 Yield = (P-D)/P
 Y1 = 0.99, Y2 =0.95, Y3=0.98
 RTY= Y1 . Y2 . Y3 = 0.99x0.95x0.98
=0.92169
Short Term vs Long Term Capability
 Cp Cpk – Short term
 Pp Ppk – Long term
 In both of these measurements

the difference lies in the
calculation of sigma.
• Y = f(X),
• where Y is Dependent variable or the result
(output)
Correlation • X is Independent variable, input or the
controllable variable
• For example in the study of marks obtained by

students in a subject (Y) vs hours of study (X)
Correlation
Correlation
Column 1 Column 2
Correlation
• Demonstration:
• Calculate Pearson’s Column 1 1
Correlation coefficient
• using MSExcel
Column 2 0.879350768 1
• Correlation
• Measures the strength of linear relationship
between Y and X
Correlation • Pearson Correlation Coefficient, r (r varies
Coefficient between -1 and +1)
• Perfect positive relationship: r = 1
• No relationship: r = 0
• Perfect negative relationship: r = -1
Correlation
Coefficient
Correlation vs Causation
 Correlation does not imply
causation
 a correlation between two variables
does not imply that one causes the
other
Population correlation (ρ) –
usually unknown
Correlation –
Confidence
Interval
Sample correlation (r)
• Since r is not normally distributed, there are
three steps to find out confidence interval
Correlation – • Convert r to z’ (Fisher’s Transformation)
Confidence • Calculate confidence interval in terms of z’
• Convert confidence interval back to r
Interval • z’ = .5[ln(1+r) – ln(1-r)]
• Variance = 1/N-3
• N=10, r=0.88 find confidenceinterval
Correlation – • Step1.
Convert r toz’
Confidence •
• z’ =.5[ln(1+r) –ln(1-r)]
Interval • z’ =.5[ln(1+0.88) –ln(1-0.88)]
• z’= . 5[0.63 –(-2.12)] =1.375
Correlation – Confidence Interval
 N=10, r=0.88 find confidence interval
 Step 2. Confidence interval for z’
 Variance = 1/N-3 = 1/7 = 0.1428
 Standard error = Sqrt (0.1428) = 0.378
 95% confidence Z= 1.96
 CI = 1.375 +/- (1.96)(0.378)
 Lower Limit =0.635
 Upper Limit =2.11
Correlation – Confidence Interval
 N=10, r=0.88 find confidence interval
 Step 3. Convert back to r
 z’ Lower Limit =0.635
 z’ Upper Limit =2.11
z’ = .5[ln(1+r) – ln(1-r)]
 r Lower Limit =0.56

 r Upper Limit = 0.97
• Coefficient of Determination, r2
• Proportion of the variance in the dependent
variable that is predictable from the
independent variable
Coefficient of • (varies from 0.0 to 1.0 or zero to 100%)
• None of the variation in Y is explained by
Determination X, r2 = 0.0
• All of the variation in Y is explained by X,
r2= 1.0
• r = 0.88, r2 = 0.77
Regression • Quantifies the relationship between Y and X (Y
Analysis = a + bX)
Regression Analysis
 Quantifies the relationship between
Y and X (Y = a + bX)
Hours Studied (X) Test Score %(Y) XY X2 Y2
20 40 800 400 1600
24 55 1320 576 3025
46 69 3174 2116 4761
62 83 5146 3844 6889
22 27 594 484 729
37 44 1628 1369 1936
45 61 2745 2025 3721
27 33 891 729 1089
65 71 4615 4225 5041
23 37 851 529 1369
SUM 371 520 21764 16297 30160
Regression Analysis
 Quantifies the relationship between
Y and X (Y = 15.79 + 0.97.X)
Hours
Test
Studied XY X2 Y2
Score
(X)
% (Y)
20 40 800 400 1600
24 55 1320 576 3025
46 69 3174 2116 4761
62 83 5146 3844 6889
22 27 594 484 729
37 44 1628 1369 1936
45 61 2745 2025 3721
27 33 891 729 1089
65 71 4615 4225 5041
23 37 851 529 1369
SU 371 520 21764 16297 30160
Regression • For a student studying 50 hrs what is the
Analysis expected test score %?
Residual
Analysis
Y=15.79 +0.97.X
Residual Analysis – No pattern
Residual
20
15
10
0
0 20 30 40 50 60 70
-5 1
0
-10
-15
Residual
• Confidence interval
• 95% confidence interval, representing a
Confidence range of likely values for the mean
response.
Interval - • Prediction interval
Slope • 95% prediction interval, represents a range
of likely values for a single new
observation.
• Simple LinearRelation
• Y=a + bX
• Multiple LinearRegression
Multivariate • Y=a +b1X1+b2X2+ ……..+bnXn
• Multicollinearity
Tools • When two input variables(predictor
• variables - Xs) are correlated.
• Multivariate
• Two or more dependent variables(Ys)
Factor analysis / Principal
Component Analysis
Multivariate Discriminant analysis

Tools
Multiple analysis of variance

(MANOVA)
• Application
• Climate: Min temp, max temp,
Multivariate humidity, precipitation – for a day
• Medical – Systolic BP, Diastolic BP,
Pulse rate, Age – of a patient
• Application
• Classification of individuals – easy when
there are limited number of variables.
Multivariate • Dimension reduction – Reducing large
number of variable to manageable number.
• Cause-effect relationship
• Tools
• Classification of individuals
• Discriminant Analysis
Multivariate • Dimensionreduction
• Principal Component Analysis/Factor
• Analysis
• Cause-effectrelationship
• MANOVA
Discriminant Analysis
 Explains how clusters are different
Principal Component
Analysis/ Factor Analysis
PCA / Factor To reduce number of

Analysis variables
By grouping highly correlated

variables together
The MANOVA (multivariate analysis of
variance)
To analyze data that involves more than

one dependent variable at a time.
M A N O VA
Tests the effect of one or more
independent variables on two or more
dependent variables.
MANOVA is simply an ANOVA with

several dependent variables.
Errors of StatisticalTests
True State of Nature
H0 Ha
Is true Is true
Support H0 /
Reject Ha Correct Type II Error
Conclusion
Conclusion Support Ha / Correct
Reject H0 Type I Error Conclusion
(Power)
Errors of StatisticalTests
Type I error (alpha) Type II error (beta)
Name Producer’s risk/ Consumer’s risk
Significance level
1 minus error is Confidence level Power of the test
called
Example of Fire False fire alarm leading Missed fire leading to
Alarm to inconvenience disaster
Effects on process Unnecessary cost Defects may be produced
increase due to frequent
changes
Control method Usually fixed at a pre- Usually controlled to < 10%
determined level, 1%, by appropriate sample size
5% or 10%
Simple definition Innocent declared as Guilty declared as innocent
guilty
• Level of Confidence / Confidence Interval: C =
0.90, 0.95, 0.99 (90%, 95%, 99%)
Significance
Level • Level of Significance:
• α = 1 – C (0.10, 0.05, 0.01)
• Power = 1 – β (or 1 - type II error)
• Type II Error: Failing to reject null hypothesis
when null hypothesis is false.
Power • Power: Likelihood of rejecting null hypothesis

when null hypothesis is false.
• Or: Power is the ability of a test to correctly

reject the null hypothesis.
Researcher can not commit
both Type I and II error. Only
one can be committed.
As the value of α increases (say

Alpha vs Beta 0.01 to 0.05) β goes down and
the Power of test increases.
To reduce both Type I and II

errors increase sample size.
Power • As the value of α increases (say 0.01 to 0.05) β
goes down and the Power of test increases.
Statistical • Caseof aperfume makingcompany:
Significance • Mean Volume 150 ccand sd=2cc

• Practical significance of an experiment tells us
if there is any actionable information from the
Practical result.
• Large samples can find out statistical
Significance difference for very small difference. These
small difference might not have practical
significance.
State the Alternate Hypothesis.
State the Null Hypothesis.
Select a probability of error level (alpha level).

Hypothesis Generally 0.05
Testing Select and compute the test statistic (e.g t or z score)
Critical test statistic
Interpret the results.

• Lower Tail Tests
• H0: μ ≥ 150cc
Hypothesis • Ha: μ < 150cc
Testing • Upper Tail Tests

• H0: μ ≤ 150cc
• Ha: μ > 150cc
Hypothesis • Two TailTests
• H0: μ =150cc
Testing • Ha: μ ≠150cc
Calculate Test Single sample Mean of Multiple samples
Statistic z = (x - μ)/ σ z = (x̄ - μ) / (σ / √n)
Z Critical • α =0.05 SingleTails
• ZCritical =1.645
 α = 0.01 Two Tails means 0.005 on
both tails. Z Critical = 2.575
90% – Z Score = 1.645
95% – Z Score = 1.96
99% – Z Score = 2.576
Z Critical
• p value is the lowest value of alpha for which
the null hypothesis can be rejected.
(Probability that the null hypothesis is correct)
p Value • If p = 0.01 you can reject the null hypothesis
at α = 0.05
• p is low the null must go / p is high the null fly.
n = ( zα/2 . σ / ME)2
n is sample size
zα/2 is standard score

• α = 0.01 Z Critical = 2.575
• α = 0.05 Z Critical = 1.96
• α = 0.10 Z Critical = 1.645
σ is standard deviation
ME is the Margin of Error (shift to be detected)

Sample Size
• In perfume bottle filling m/c with mean of
150cc and s.d. of 2cc, what is the minimum
sample size which at 95% confidence will
Sample Size confirm a mean shift greater than 0.5cc?
• n = ( zα/2 . σ / ME)2
• zα/2 = 1.96, σ = 2cc, ME=0.5cc
• n = 61.46
Sample
Size –
SigmaXL
Demo
• n =( zα/2)2. p̂ . (1-p̂) / (Δp) 2
• n is samplesize
• zα/2 is standardscore
Sample Size • α =0.01 ZCritical =2.575
- Proportion • α =0.05 ZCritical =1.96
• α =0.10 ZCritical =1.645
• p̂ is proportion rate
• Δpis the desired proportion interval
Sample Size - Proportion
• Point estimate:
• Summarize the sample by a single number
Point vs that is an estimate of the population
parameter.
Interval
• Interval estimate:
Estimates • A range of values within which, we believe,
the true parameter lies with high
probability.
• Point estimate:
• Summarize the sample by a single number
Point that is an estimate of the population
parameter.
Estimates • The sample mean x̄ is a point estimate of
the population mean μ. The sample
proportion p is a point estimate of the
population proportion P.
• Interval estimate:
Point vs • A range of values within which, we believe,

the true parameter lies with high
Interval probability.
• For example, a < x̄ < b is an interval
Estimates • estimate of the population mean μ. It indicates
that the population mean is greater than a but
less than b.
• Factors affecting the width of confidence
Confidence interval
• sample size
Interval • standard deviation
• confidence level
• When population standard deviation is
known/ Sample size is >=30
Confidence • CI = x̄ +/- (Zα/2 )* σ/√(n).
Interval • Zα/2 = z table value for confidence level,
• σ = standard deviation
• n = sample size.
known/ Sample size is >=30
Confidence • CI = x̄ +/- (Zα/2 )* σ/√(n).
• The average income of 100 random residents
of city was found to be $42,000 per annum
with standard deviation of 5,000. Find the 95%
Confidence confidence interval of the town income.
• CI = x̄ +/- (Zα/2 )* σ/√(n).
confidence interval of the town income.
• CI = x̄ +/- (Zα/2 )* σ/√(n).
Confidence • Zα/2 = z table value for confidence level
= 1.96
Interval • σ = standard deviation = 5,000
• n = sample size = 100
• 90% – Z Score = 1.645
• 95% – Z Score = 1.96
• 99% – Z Score = 2.576
Confidence confidence interval of the town income.
• CI = x̄ +/- (Zα/2 )* σ/√(n)
Interval • CI = 42,000 +/- 1.96 * 5,000/√(100)
• CI = 42,000 +/- 980
• CI = 41020 to 42980
unknown and Sample size is < 30
Confidence • CI = x̄ +/- (tα/2 )* s/√(n).

• tα/2 = t distribution value for the
Interval confidence level and (n-1) degrees of
freedom
• s = sample standard deviation
• The average income of 25 random residents of
city was found to be $42,000 per annum with
standard deviation of 5,000. Find the 95%
• CI = x̄ +/- (tα/2 )* s/√(n).
• tα/2 = t distribution value for the
Confidence confidence level and (n-1) degrees of
freedom
Interval • s = sample standard deviation
• 90% – Z Score = 1.645

• 95% – Z Score = 1.96
• 99% – Z Score = 2.576
• Also known as Student’s t distribution
• Used when the sample size is small and/or
when the population variance is unknown
Introducing t • Calculated value
distribution • t = [x̄ - μ ] / [ s / sqrt( n ) ]
• The form of the t distribution is
• determined by its degrees of freedom
• (n-1)
Confidence
Interval
• The average income of 25 random residents of
city was found to be $42,000 per annum with
standard deviation of 5,000. Find the 95%
• CI = x̄ +/- (tα/2 )* s/√(n).
Confidence • tα/2 = t distribution value for the
confidence level and (n-1) degrees of
Interval freedom = 2.064
• s = sample standard deviation = 5000
• n = sample size. = 25
• CI = 42,000 +/- 2.064* 5000/√(25)
• CI = 42,000 +/- 2064
• CI = 39,936 to 44,064
Confidence Interval -Proportion
 CI = x̄ +/- (Zα/2 )* σ/√(n)
 CI = p +/- (Zα/2 )* √((p)(1-
p)/n)
 Conditions to satisfy for this:

 np ≥ 5 and
 n(1 − p) ≥ 5
• Out of 100 pieces sample inspected 10 were
found to be defective. What is the 95%
Confidence confidence interval for proportions?
• CI = p +/- (Zα/2 )* √((p)(1-p)/n)
Interval - • p = 0.10, np = 100x0.10=10, n(1-p)=90
Proportion • Conditions np ≥ 5 and n(1 − p) ≥ 5 satisfied

• CI = 0.10+/- 1.96 √((0.10)(1-0.10)/100)
• CI = 0.10 +/- 0.0588 = 0.0412 to 0.1588
Confidence Interval - Variation
Let’s understand Chi-square distribution first
 Confidence interval for variance:

• Select a random sample of size n from a
normal population, having a standard
Chi-Square deviation equal to σ.
Distribution • The standard deviation in sample is equal to s.

• chi-square for this can be calculated by:
• Χ2 = [ ( n - 1 ) * s2 ] / σ2
Chi-Square Distribution
 Χ2 = [ ( n - 1 ) * s2 ] /
σ2
Chi-Square Distribution
 Χ2 = [ ( n - 1 ) * s2 ] / σ2
 Df = 24, Χ2 0.05 = 36.42, Χ2 0.95 =
13.848
• Χ2 = [ ( n - 1 ) * s2 ] / σ2
• Df = 24, Χ2 0.05 = 36.42, Χ2 0.95 = 13.848
Chi-Square •
•
For 25 sample of perfume bottles,
variance was found to be 4. Find the CI of the
Distribution population with 90% confidence.
• (25-1).(4)/36.42 and (25-1).(4)/13.848
• Between 2.636 and 6.93
Tests for Mean, Variance & Proportion
One sample ztest
OneSample One sample t test
One sample p
test
Two sample z
test Two
Two
Tests Sample
s Paired t test
sample t test
Two sample p test
Two sample
standard deviation
More than2
ANOVA
samples
• Calculated value
• z = [x̄ - μ ] / [σ / sqrt( n ) ]
• Example: Perfume bottle producing 150cc
with sd of 2 cc, 100 bottles are randomly
One Sample picked and the average volume was found to
be 152cc. Has mean volume changed? (95%
z Test confidence)
• zcalculated = (152-150)/[2 / sqrt( 100 ) ] = 2/0.2 =
10
• zcritical = ?
One
Sample z
Test
zcritical =1.96
One Sample z Test
 Calculated value
 z = [x̄ - μ ] / [σ / sqrt( n ) ]
 Example: Perfume bottle producing
150cc with sd of 2 cc, 100
bottles are randomly picked and
the average volume was found to
be 152cc. Has mean volume
changed? (95% confidence)
 zcalculated = (152-150)/[2 / sqrt( 100 ) ]
= 2/0.2 = 10
zcritical = 1.96 > Reject Ho
• Calculated value
• t = [x̄ - μ ] / [s / sqrt( n ) ]
• Example: Perfume bottle producing 150cc, 4
One Sample bottles are randomly picked and the average
volume was found to be 151cc and sd of
t Test sample was 2 cc. Has mean volume changed?
(95% confidence)
• tcal = (151-150)/[2 / sqrt( 4 ) ] = 1/1 = 1
• tcritical = ?
One SampletTest
• tcritical =3.182
One Sample t Test
 t = [x̄ - μ ] / [s / sqrt( n ) ]
 Example: Perfume bottle producing
150cc, 4 bottles are randomly picked
and the average volume was found to
be 151cc and sd of sample was 2 cc.
Has mean volume changed? (95%
confidence)
 tcal = (151-150)/[2 / sqrt( 4 ) ] = 1/1 = 1
 tcritical = 3.182 > Fail to reject Ho
One Sample p Test
 H0: p = p0
 Example: Smoking rate in a town in

past was 21%, 100 samples were
picked and found 14 smokers. Has
smoking habit
changed?
• Example: Smoking rate in a town in past was
21%, 100 samples were picked and found 14
smokers. Has smoking habit
• changed at 95% confidence? (two tail)
• p0 = 0.21, p=0.14
One Sample • np0 = 0.21x100 = 21 and n(1-p0)= 0.79x100 =
p Test 79
• >5 means sample size is sufficient.
• z = (0.14-0.21)/sqt (0.21x0.79/100)
• z = -0.07/0.0407 = -1.719
• z critical = 1.96
One Sample p Test
 Example: Smoking rate in a town in
past was 21%, 100 samples were
picked and found 14 smokers. Has
smoking habit
reduced at 95% confidence? (one tail)
 H0: p < p0
 p0 = 0.21, p=0.14
 z = (0.14-0.21)/sqt (0.21x0.79/100)
 z = -0.07/0.0407 = -1.719
 z critical = 1.645
Tests for Mean, Variance & Proportion
One sample ztest
One sample p
test
Two sample z
test Two
Two
Tests Sample
s Paired t test
sample t test
Two sample p test
Two sample
standard deviation
More than2
ANOVA
samples
Two Samplez Test
 Null hypothesis: H 0: μ 1 = μ 2
 or H 0: μ 1 – μ 2= 0
 Alternative hypothesis: H a : μ 1 ≠ μ
2
• Example: From two machines 100 samples
each were drawn.
Two Sample • Machine 1: Mean = 151.2 / sd = 2.1
z Test • Machine 2: Mean = 151.9 / sd = 2.2

• Is there difference in these two machines.
Check at 95% confidence level.
• Example: From two machines 100 samples
each were drawn.
• Machine 1: Mean = 151.2 / sd = 2.1
• Machine 2: Mean = 151.9 / sd = 2.2
Two Sample • Is there difference in these two machines.
Check at 95% confidence level.
z Test • Zcal = -0.7 / 0.304 = -2.30
• Zcritical = 1.96
• Reject Null.
• There is a difference.
Two Samplez Test
 Example: From two machines 100
samples each were drawn.
 Machine 1: Mean = 151.2 / sd = 2.1
 Machine 2: Mean = 151.9 / sd = 2.2
 Is there difference of more than 0.3 cc
in these two machines. Check at 95%
confidence level.
 H 0: μ 2 – μ 1 <= 0.3
 H a: μ 2 – μ 1 > 0.3
Two Samplez Test
 Example: From two machines 100
samples each were drawn.
 Machine 1: Mean = 151.2 / sd = 2.1
 Machine 2: Mean = 151.9 / sd = 2.2
 Is there difference of more than 0.3 cc
in these two machines. Check at 95%
confidence level.
 Zcal = (151.2 – 151.9) – (-0.3)/0.304
 = -0.4 / 0.304 = -1.316
Zcritical = 1.64
 Fail to reject Null Hypothesis.
• If two set of data are independent or
dependent.
• If the values in one sample reveal no
information about those of the other
• sample, then the samples are independent.
Two Sample • Example: Blood pressure of
male/female
t Test • If the values in one sample affect the
values in the other sample, then the
samples are dependent.
• Example: Blood pressure before and
after a specific medicine
Two Sample t Test
 If two set of data are independent or
dependent.
 If the values in one sample reveal no
information about those of the other
sample, then the samples are independent.
 Example: Blood pressure of
male/female
Two sample t test
 If the values in one sample affect the

values in the other sample, then the
samples are dependent.
 Example: Blood pressure
specific medicine Paired t
before and
after a test
Two Sample t Test
 Is variance for two samples
equal?
 If yes: Pooled variance calculate Sp

for finding out t
Two Sample t Test
 Example: Samples from two
machines A and B have the following
volumes in bottles. If the mean
different? Calculate with 95%
confidence.
 Use SigmaXL and then lets

understand results.
Two SampletTest
tcritical =2.306
Two Sample
t Test
Two Sample • Assumptions: Normality, independent random
t Test samples, population variances are equal
Two Sample t Test
 What if variance of two samples is
A C
qual?
not e 150 144
152 162
154 177
152 150
151 140
2 Sample t-Test
TestInformation
H0: Mean Difference =0
Ha: Mean Difference Not Equal To0
Assume Unequal Variance
Results: A C
Count 5 5
Mean 151.80 154.60
Standard Deviation 1.483 15.027
Mean Difference -2.800

Std Error Difference 6.753
DF 4.078
t -0.414644
P-Value (2-sided) 0.6997
Two Sample t Test
 Degrees of freedom are calculated by:
Results: A C
Count 5 5
Mean 151.80 154.60
Standard Deviation 1.483 15.027
Two SampletTest
• tcritical =2.776
Two Sample t Test
 Minitab 17 output:
Two-Sample T-Test and CI: A, C
Two-sample T for A vs C
N Mean StDev SE Mean

A 5 151.80 1.48 0.66
C 5 15.0 6.7
154.6
Difference = μ (A) - μ (C)

Estimate for difference: -2.80
95% CI for difference: (-21.55, 15.95)
T-Test of difference = 0 (vs ≠): T-Value = -0.41 P-Value = 0.700
DF = 4
• Where you have two samples in which
observations in one sample can be paired with
observations in the other sample.
• Or
Paired tTest • If the values in one sample affect the values in
the other sample, (the samples are
dependent.)
• Example: Blood pressure before and
after a specific medicine
• Find the difference between two set of
• readings as d1, d2 …. dn.
Paired tTest • Find the mean and standard deviation of these
differences.
Paired tTest
 Example: Before and after medicine
BP was measured. Is there a
difference at 95% confidence level?
Patient Before After

1 120 122
2 122 120
3 143 141
4 100 109
5 109 109
Paired tTest
 Example: Before and after medicine
BP was measured. Is there a
difference at 95% confidence level?
Patient Before After difference
1 120 122 2
2 122 120 -2
3 143 141 -2
4 100 109 9
5 109 109 0
 d-bar = 1.4 , s = 4.56 , n=5

 tcal. = 1.4/2.04 = 0.69
Patient Before After difference
Paired tTest 1 120 122 2
2 122 120 -2
3 143 141 -2
• Example: Before and after
medicine BP was
measured. Is there a 4 100 109 9
difference at 95%
confidence level? 5 109 109 0
 tcal. = 1.4/2.04 = 0.69
 t0.025, 4 =2.766
 Fail to reject null hypothesis
Testsfor Mean, Variance & Proportion
One sample ztest
One sample p
test
Two sample z
test Two
Two
Tests Sample
s Paired t test
sample t test
Two sample p test
Two sample
standard deviation
More than
ANOVA
2
samples
Two Sample p Test
 Null hypothesis: H 0: p1 = p2
 or H 0: p 1 – p 2= 0
 Alternative hypothesis: H a : p 1 ≠ p
2
 Normal approximation – Pooled
 Normal approximation – Un-pooled

Two Sample p Test
Two Sample p Test
 Normal approximation – Pooled
 p1 = 30/200 =0.15 , p2= 10/100 =
0.10
 Pooled p = (30+10)/(200+100) =
0.1333
 Expected value = 13.33% (is >=5)
 Z = 0.0500 /
Sqrt(0.133x0.866)(1/200+1/100)
 Z = 0.0500/0.4156 = 1.20
• F-test
• for testing equality of two variances from
different populations
• for testing equality of several means with
technique of ANOVA.
Tests for • Chi-square test
Variance • For testing the population variance against
a specified value
• testing goodness of fit of some probability
distribution
• testing for independence of two attributes

• F-test
Two Sample • H0: σ2 = σ2
Variance – F • 1 2
• F calculated
Test • Keep higher value at the top for right tail
test.
• Remember: Variance is square of standard
deviation
Two Sample Variance – F Test
F critical
 Use table with appropriate degrees
of freedom
 For two tail test use the table for
α/2
 Example: We took 8 samples from
machine A and the standard
deviation was 1.1. For machine B
we took 5 samples and the
variance was 11. Is there a
difference in variance at 90%
confidence level?
 n1 = 8, s1 = 1.1, s21 = 1.21, df = 7
(denominator)
 n2 = 5, s22 = 11, df = 4 (numerator)

 F calculated = 11/1.21 = 9.09 (higher value at top)
F critical =
4.1203
 Example: We took 8 samples from
machine A and the standard
deviation was 1.1. For machine B
we took 5 samples and the
variance was 11. Is there a
difference in variance at 90% F critical =
confidence level? 4.1203
 n1 = 8, s1 = 1.1, s21 = 1.21, df = 7 (denominator)
 n2 = 5, s22 = 11, df = 4 (numerator)
 Fcalculated = 11/1.21 = 9.09 (higher value at top)
 Reject H0
 Right tail F critical = 4.1203
 Left tail F critical =?
 Reverse degrees of freedom and
then take inverse.
F critical =
 F (4,7) =4.1203
4.1203
 F (7,4) =6.0942
 Inverse of this is 1/6.0942 is F=0.164
• F-test
technique of ANOVA.
Tests for • Chi-square test
Variance • For testing the population variance against
a specified value
distribution

One Sample • For testing the population variance against a
Chi Square specified value σ
• Example: A sample of 25 bottles was selected.
The variance of these 25 bottles as 5 cc. Has it
increased from established 4 cc? 95%
One Sample confidence level.
• Ho: s2 <= σ2 / Ha: s2 > σ2
Chi Square • X2 = 24x5 / 4 = 30
• What is critical value of Chi Square for 24

degrees of freedom?
One Sample confidence level.
• Ho: s2 <= σ2 / Ha: s2 > σ2
Chi Square • X2 = 24x5 / 4 = 30
• What is critical value of Chi Square for 24

degrees of freedom?
One Sample Chi Square
confidence level.
One Sample • Ho: s2 <= σ2 / Ha: s2 > σ2
• X2 = 24x5 / 4 = 30
Chi Square • Critical value of Chi Square for 24 degrees of
freedom = 36.42
• Fail to reject H0
One Sample Chi Square
 SigmaXLOutput
• F-test
technique of ANOVA.
ANOVA • Chi-square test
• For testing the population variance against
a specified value
distribution

• F-test
• H0: σ2 = σ2
ANOVA • 1 2
• F calculated
• Keep higher value at the top for right tail

test.
• Remember: Variance is square of standard
deviation
• Why ANOVA?
• We used t test to compare the means of
two populations.
• What if we need to compare more than
two populations? With ANOVA e can find
ANOVA out if one or more populations have
different mean or comes from a different
population.
• We could have conducted multiple t Test.
• How many t Test we need to conduct if
• have to compare 4 samples? … 6
ANOVA
 Why ANOVA?
 How many t Test we need toconduct if
have to compare 4 samples?…6
4 x
3 x 3 vs 4
2 x 2 vs 3 2 vs 4
1 x 1 vs 2 1 vs 3 1 vs 4
1 2 3 4
• Why ANOVA?
• How many t Test we need to conduct if
• have to compare 4 samples? … 6
ANOVA • Each test is done with alpha = 0.05 or 95%
confidence.
• 6 tests will result in confidence level of
0.95x0.95x0.95x0.95x0.95x0.95 = 0.735
ANOVA
 Comparing three machines:
Machine 1 Machine 2 Machine 3

150 153 156
151 152 154
152 148 155
152 151 156
151 149 157
150 152 155
x̄1 = 151 x̄2 = 150.83 x̄3 = 155.50
ANOVA
 Comparing three machines: 150 153 156
151 152 154
152 148 155
152 151 156
158
151 149 157
156 150 152 155
x̄1 = 151.00 x̄2 = 150.83 x̄3 = 155.50
154
Median
25th
152 75th
Mean
150
148
146
ANOVA
Machine 1 Machine 2 Machine 3 Machine 4 Machine 5 Machine 6

150 153 156 130 163 166
151 152 154 155 152 154
152 148 155 160 143 155
152 151 156 158 141 151
151 149 157 152 149 152
150 152 155 145 157 155
x̄1 = 151.00 x̄2 = 150.83 x̄3 = 155.50 x̄1 = 151.00 x̄2 = 150.83 x̄3 = 155.50
ANOVA
Machine 1 Machine 2 Machine 3 Machine 4 Machine 5 Machine 6
150 153 156 130 163 166
151 152 154 155 152 154
152 148 155 160 143 155
152 151 156 158 141 151
151 149 157 152 149 152
150 152 155 145 157 155
x̄1 = 151.00 x̄2 = 150.83 x̄3 = 155.50 x̄1 = 151.00 x̄2 = 150.83 x̄3 = 155.50
170
158
165
156 160
154 Median 155 Median
25th 25th
152 150
75th 75th
145
150
140
Mean Mean
148
135 Outliers
Machine 1 Machine 2 Machine3
146 130
125 Machine 4 Machine 5 Machine 6
ANOVA
 ANOVAis Analysis of Variance
 Variance
 Numerator of this formula is Sum of

Squares
 Total of Sum of Squares (SST) =
SS between/or treatment +SS within/or error
• ST=Sbetween(or treatment) +SSwithin(or error)
ANOVA • Ratio:
• Sbetween(or treatment) / Swithin(orerror)
F= MS between(or treatment) / MS within(or error)

ANOVA
SST= SSbetween(or treatment) +SSwithin(or error)
150 153 156
151 152 154
152 148 155
152 151 156
151 149 157
150 152 155
x̄1 = 151.00 x̄2 = 150.83 x̄3 = 155.50
ANOVA
150 153 156
151 152 154
152 148 155
152 151 156
SST= SSbetween(or treatment) +SSwithin(or error) 151

150
149
152
157
155
x̄1 = 151.00 x̄2 = 150.83 x̄3 = 155.50
Machine 1 x1 - x̄1 Sqr(x1 - x̄1) Machine 2 x2 - x̄2 Sqr(x2 - x̄2) Machine 3 x3 - x̄3 Sqr(x3 - x̄3)
150.00 -1.00 1.00 153.00 2.17 4.69 156.00 0.50 0.25
151.00 0.00 0.00 152.00 1.17 1.36 154.00 -1.50 2.25
152.00 1.00 1.00 148.00 -2.83 8.03 155.00 -0.50 0.25
152.00 1.00 1.00 151.00 0.17 0.03 156.00 0.50 0.25
151.00 0.00 0.00 149.00 -1.83 3.36 157.00 1.50 2.25
150.00 -1.00 1.00 152.00 1.17 1.36 155.00 -0.50 0.25
151.00 150.83 155.50 152.4
4
 SSwithin = 4.00+18.83+5.50
4.0
0
= 28.33
18.8
3
5.50
ANOVA
150 153 156
151 152 154
152 148 155
152 151 156
SST = SS between(or treatment) +SS 151

150
149
152
157
155
within(or error) x̄1 = 151.00 x̄2 = 150.83 x̄3 = 155.50
Machine 1 x1 - x̄1 Sqr(x1 - x̄1) Machine 2 x2 - x̄2 Sqr(x2 - x̄2) Machine 3 x3 - x̄3 Sqr(x3 - x̄3)
150.00 -1.00 1.00 153.00 2.17 4.69 156.00 0.50 0.25
151.00 0.00 0.00 152.00 1.17 1.36 154.00 -1.50 2.25
152.00 1.00 1.00 148.00 -2.83 8.03 155.00 -0.50 0.25
152.00 1.00 1.00 151.00 0.17 0.03 156.00 0.50 0.25
151.00 0.00 0.00 149.00 -1.83 3.36 157.00 1.50 2.25
150.00 -1.00 1.00 152.00 1.17 1.36 155.00 -0.50 0.25
151.00 150.83 155.50 152.4
4
4.00 18.83 5.50
-1.44 2.07 -1.61 2.58 3.06 9.36
 SSbetween = (2.07+2.58+9.36)x6 =84.06

ANOVA
SST= SSbetween(or treatment) +SSwithin(or error) Machine 1 Machine 2 Machine 3
150 153 156
151 152 154
 SST= 84.06 +28.33 =112.39 152 148 155
152 151 156
151 149 157
150 152 155
 Degrees of freedom x̄1 = 151.00 x̄2 = 150.83 x̄3 = 155.50
 Total df = df treatment + df error

 (N-1) = (C-1) + (N-C)
 df treatment = 3-1=2, df error =18-3=15
 df total =17
ANOVA
 Mean Sum of Square = SS / df
MSbetween = SSbetween(or treatment) /df treatment Machine 1
150
Machine 2
153
Machine 3
156
 MSbetween = 84.06 / 2 =42.03 151

152
152
148
154
155
152 151 156
151 149 157
150 152 155
MSwithin = SSwithin(or error) /df within x̄1 = 151.00 x̄2 = 150.83 x̄3 = 155.50
 MSwithin = 28.33 /15 = 1.89
 F= Msbetween / Mswithin = 42.03/1.89 =22.24

ANOVA
 F = MSbetween / MSwithin =
42.03/1.89 = 22.24
 Compare this with F critical

 F (2, 15, 0.95) = 3.68
 Reject Null Hypothesis
 DEMONSTRATE MS Excel
ANOVA
150 153 156
151 152 154
152 148 155
F = 22.24 152 151 156

151 149 157
One-Way ANOVA & Means
Matrix: 150 152 155
H0: Mean 1 = Mean 2 = ... = x̄1 = 151.00 x̄2 = 150.83 x̄3 = 155.50
Mean k
Ha: At least one pair Mean i ≠
Mean
j
Summary Information Machine 1 Machine 2 Machine 3

Count 6 6 6
Mean 151 150.83 155.50
Standard Deviation 0.894427 1.941 1.048808848
UC (2-sided, 95%, pooled) 152.20 152.03 156.70
LC (2-sided, 95%, pooled) 149.80 149.64 154.30
ANOVA Table
Source SS DF MS F P-Value
Between 84.111 2 42.056 22.26 0.0000
5
Within 28.333 15 1.889
Total 112.44 17
ANOVA
 Practice Exercise: Fill in the values
for ?A to ?E in this ANOVA Table:
ANOVATable
Source SS DF MS F
Between 84.111 ?C ?D ?E
Within ?A 15 1.889
Total ?B 17
 STOP the video and try to find out

the values. Once done, go ahead
and start the video
ANOVA Table
Source SS DF MS F
A N OVA Between 84.111 ?C= 2 ?D = 42.056?E= 22.265
Within ?A= 28.333 15 1.889
Total ?B= 112.44 17
• ?A=15x1.889=28.333
• ?B=84.111+28.33=112.44
• ?C=17-15=2
• ?D= 84.111/2 =42.056
• ?E=42.045/1.889 =22.265
• To test if the sample is coming from a
Goodness of population with specific distribution.
• Other goodness-of-fit tests are
Fit Test (Chi • Anderson-Darling
• Kolmogorov-Smirnov
Square) • Chi Square Goodness of Fit can be used for any
time of data: Continuous or Discrete.
H0: The data follow a specified
distribution.
Ha: The data do not follow the specified

Goodness of distribution.
Fit Test (Chi

Square) Calculated Statistic:
Critical Statistic: Chi square for k-1

degrees of freedom for specific alpha.
Goodness of Fit Test (Chi Square)
 A coin is flipped 100 times. Number
of heads are noted. Is this coin
biased?
Expected Observed
50 51
50 52
50 56
50 82
50 65
biased?
Expected Observed O-E (O-E)2 (O-E)2/E
50 51 1 1 0.02
50 52 2 4 0.08
50 56 6 36 0.72
50 82 32 1024 20.48
50 65 15 225 4.5
X2 = 25.8
 A coin is flipped 100 times. Number of
heads are noted. Is this coin biased?
X2cal= 25.8
X2(4,0.95)= 9.49
biased?
X2cal= 25.8
X2(4,0.95)= 9.49
Reject Null Hypothesis
 Coin is biased
Contingency Tables
 To find relationship between
two discrete variables.
Smoker Non
Smoker
Male 60 40 100
Female 35 40 75
95 80 175
Operator 1 Operator 2 Operator 3

Shift 1 22 26 23 71
Shift 2 28 62 26 116
Shift 3 72 22 66 160
122 112 115 347
Contingency Tables
 Null hypothesis is that there is no
relationship between the row and
column variables.
 Alternate hypothesis is that there is a
relationship. Alternate hypothesis
does not tell what type of
relationship exists.
Shift 1 22 26 23 71
Shift 2 28 62 26 116
Shift 3 72 22 66 160
122 112 115 347
Contingency Tables
 Calculate Chi square statistic.

Shift 1 22 26 23 71
Shift 2 28 62 26 116
Shift 3 72 22 66 160
122 112 115 347
Contingency Tables
OBSERVED
Shift 1 22 26 23 71
Shift 2 28 62 26 116
Shift 3 72 22 66 160
122 112 115 347
EXPECTED
Shift 1 122x71/347 112x71/347 115x71/347 71
Shift 2 122x116/347 112x116/347 115x116/347 116
Shift 3 122x160/347 112x160/347 115x160/347 160
122 112 115 347
Contingency Tables
EXPECTED
Shift 1 122x71/347 112x71/347 115x71/347 71
Shift 2 122x116/347 112x116/347 115x116/347 116
Shift 3 122x160/347 112x160/347 115x160/347 160
122 112 115 347
EXPECTED
Shift 1 24.96 22.91 23.53 71
Shift 2 40.78 37.44 38.44 116
Shift 3 56.25 51.64 53.02 160
122 112 115 347
Contingency Tables
OBSERVED EXPECTED
Operator 1 Operator 2 Operator 3 Operator 1 Operator 2 Operator 3
Shift 1 22 26 23 71 Shift 1 24.96 22.91 23.53 71
Shift 2 28 62 26 116 Shift 2 40.78 37.44 38.44 116
Shift 3 72 22 66 160 Shift 3 56.25 51.64 53.02 160
122 112 115 347 122 112 115 347
Opera Opera
(O-E)2/E Operator 1
t or t or
2 3
Shift 1 (22-24.96)2/24.96 = 0.35 0.42 0.01 71
Shift 2 (28-40.78)2/40.78 = 4.00 16.11 4.03 116
Shift 3 (72-56.25)2/56.25 = 4.41 17.01 3.18 160 X2 = 49.52
122 112 115 347
Contingency Tables
 Calculate Chi square statistic = 49.52
 Degrees of freedom = (r-1)(c-1) = 4
 Chi square critical = 9.49
 Reject null hypothesis
 There is a relationship between the
shift and the operator.
Contingency Tables
• Practice Exercise:
Smoker Non
• Calculate the Expected value for Non
Smoker Male?
Smoker
• What will be the degrees of freedom in Male 60 40 100
this example?
Female 35 40 75
95 80 175
Smoker Non
Smoker
Contingency
Tables
Male 60 40 100
Female 35 40 75
95 80 175
• Practice Exercise:
• Calculate the Expected value for Non Smoker Male? = 80x100/175 =
45.71
• What will be the degrees of freedom in this example? (2-1)(2-1)=1
• Parametric
• Assumes about the population from which
the sample has been drawn (e.g. Normally
distributed)
• Data is ratio or interval level
Parametric • Non Parametric
• Makes no assumption about the
vs Non population from which the sample has
been drawn
Parametric • Normally or small size data. No minimum
sample size.
• Data is ratio, interval, nominal or ordinal
level
• Less power (More likely to make Type II
error)
Parametric vs Non Parametric
Parametric Non Parametric

Data Level Interval, Ratio Nominal, Ordinal,
Interval, Ratio
Measurement of Mean Median
central tendency
Distribution Normal Unknown
Parametric vs Non Parametric Tests
Parametric Non Parametric

1-sample Z-test, 1-sample 1-sample Sign test, 1-
t-test sample Wilcoxon test
Independent Sample T Mann-Whitney Test
Test
Paired Sample T Test Wilcoxon Signed-Rank Test
One-way ANOVA Kruskal-Wallis Test
• Failure Mode and Effect Analysis:
• The FMEA is a design tool used to
FMEA systematically analyze potential failures and
identify the their effects.
• Identify
• Prioritize
FMEA Concept
FMEA
Design FMEA Process FMEA

Identifies failures associated Identifies failures associated
with: with:
• Product malfunctions • Product quality Design Process

• Product life • Process reliability FMEA FMEA
• Safety hazards • Customer dissatisfaction
FMEA
Concept
FMEA
Design Proces
FMEA s
FMEA
- System
Productio Assemb
- Subsyste n ly
m
FMEA FMEA
- Compone
nt - System - System
FMEA - Subsyste - Subsyste
m m
- Compone - Compone
nt nt
FMEA FMEA
• Failure Mode and Effect Analysis:
FMEA • It is proactive tool (Before the problem

happens / not the after effect analysis)
• It is a living document
FMEA
Process / Failure Mode Failure Severity Cause(s) of Occurrence Current Detection R Recommende
Requirement Effect (1-10) failure mode (1-10) Controls (1-10) P d actions
(KPIVs) N
Perfume (1-10) • Unclear (1-10) • Review and 4 96
Making •Inconsistent specificatio 3 approve
quality 8 n specification
• Receiving •Wrong by design
ingredients • Substandard 6 • Third party 4 192
material certification
supplied by • In house test
supplier lab
• Mixing
• Risk Priority Number (RPN)
• Severity (1-10) x Occurrence (1-10) x Detection
(1-10)
FMEA • Severity
• Severity 1 – No effect/ client might not even
notice it
• Severity 10 – Serious safety hazard without
warning
• Occurrence
• Occurrence 1 – Rare event, no data of such
type of failure in past
• Occurrence 10 – Failure almost inevitable
FMEA • Detection
• Detection 1 – Current system almost certainly
detect the problem (automation)
• Detection 10 – Current system can not detect
the problem
• Identify key processsteps
• Identify failuremode
• Identify failureeffects/severity
• Identify causes/occurrence
FMEA • Identify controls/detection
• Calculate RiskPriority Number(RPN)
• Prioritize by RPN–Higher RPNfirst
• Determine actionplan
• RecalculateRPN
• Update FMEA when there is plan to change /
actual change of :
• Design
FMEA • Application
• Material
• Process
• FMEA is a living document

Gap Analysis
 Difference between
 Where we are, and
 Where we want to be
Desire
Ga d
p State
Curre
nt
State
Gap Analysis
 Defining Current State
 Internal Measurements Strength Weakness
 SWOT Analysis (Strengths,

Weaknesses, Opportunities and Opportunity Threat
Threats)
 PEST Analysis (Political, Economic,
Social, and Technological factors)
Political Social
Governmen Culural
t aspects
Interventio Economic Technological
n How Automation
business and
operates innovation
Defining Future State
Gap Analysis
Benchmarking
• Bridging the gap
Gap Analysis • Prioritization

• Hoshin Kanri (X Matrix) for Strategy
deployment
Implementing ISO 9001 or
other Management Systems
Commonly
Used Gap
Analysis MBNQA, EFQM Excellence
Model, Deming Prize
Root Cause • RCA is a structured process to identify root
Analysis causes of an event that resulted in an
undesired outcome and develop corrective
(RCA) actions.
• 1. Identify the event to be
investigate
d and gather preliminary information (D)
Root Cause •
•
2. Charter and select the team (D)
3. Describe what happened (M)
Analysis • 4. Identify the contributing factors (A)
(RCA) • 5. Identify the root causes (A)
• 6. Identify and implement changes to
eliminate the root causes (I)
• 7. Measure and monitor the success (C)
Five Whys
Policy of
Oil spill Leakage Gasket Sub
ordering to
on from damage standard
floor pump d gasket lowest
bidder
Cleaning Maintenanc
staff on e
leave overdue
Poor
Pump too old
Housekeepi
ng
Frequenc
y
10
0
1
2
3
4
5
6
7
8
9
Application opportunity
Concepts clear
Pareto Chart
Engaginginstructor
Complaint
Meeting expectatations
Instructor knoledgeable
Learning Valuable
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Fault Tree Analysis
OR AND
gate gate
Image
from
Cause
andEffect
Diagrams
Types of Wastes
Philosophy
• Waste exist in all processes at all
levels in the organization.
• Waste elimination is the key to
successful implementation of lean.
• Waste reduction is an effective way to
increase profitability.
Muda, Mura, Muri
Muda
an activity that is wasteful and
doesn't add value or is
unproductive
Mura
Any variation leading to
unbalanced situations.
Muri
Any activity asking
unreasonable stress or effort Wastes
from personnel, material or
equipment.
Muda
• Muda is a traditional Japanese term
for an activity that is wasteful and
doesn't add value or is unproductive
• Type I Muda: (Incidental Work)
• Non-value-added tasks which seam to
be essential. Business conditions
need to be changed to eliminate this
type of waste. Wastes
• Type II Muda: (Non-Value-Added Work)

• Non-value-added tasks which can be
eliminated immediately.
Mura
• MURA: Any variation leading to
unbalanced situations.
• Mura exists when
• workflow is out of balance
• workload is inconsistent
• not in compliance with the
standard. Wastes
Muri
• MURI: Any activity asking
unreasonable stress or effort from
personnel, material or equipment.
• For people, Muri means too heavy a
mental or physical burden.
• For machinery Muri means expecting a
machine to do more than it is capable of
or has been designed to do. Wastes
Eight Types of Wastes
Transportation Over Processing
Unnecessary movement of Processing beyond the
people or parts between demand
processes. from the customers.
Inventory Over Production

Materials parked and not Producing too much, too
having value added to them. early and/or too fast.
8 Types
of Wastes Defects
Motion
Unnecessary movement of Sorting, repetition or
people making scrap
or parts within a process.
Wait Time Under Utilized Staff

People or parts waiting for Failure when it comes
a work cycle to finish. to exploiting the knowledge
and talent of the employees.
Types of Wastes (TIMWOOD +1)
1. Transportation
2. Inventory
3. Motion
4. Wait time 8 Types
of Wastes
5. Over-Processing
6. Over-Production
7. Defects
8. Under-utilized staff
1.Transportation
• Unnecessary movement of
people or parts between
processes.
8 Types
of Wastes
2. Inventory
• Materials parked and not having value
added to them.
8 Types
of Wastes
3. Motion
• Unnecessary movement of people or
parts within a process.
8 Types
of Wastes
4. Waiting time
• People or parts waiting for a work cycle
to finish.
8 Types
of Wastes
5. Over processing
• Processing beyond the demand from
the customers.
8 Types
of Wastes
6. Overproduction
• Producing too much, too early and/or
too fast.
8 Types
of Wastes
7. Defects
• Sorting, repetition or makingscrap
8 Types
of Wastes
8. Unexploited knowledge
• Failure when it comes to exploiting
the knowledge and talent of the
employees.
8 Types
of Wastes
Introduction Define Define: Identify the CTQs, Key Process Output
Variables (KPOVs) or Y for focus
to Improve
and Control Measure Measure: Collect Baseline data for Y, and also
understand what could be the Key Process Input
Variables (KPIVs) or X impacting Y
Analyze Analyze: Validate the impact of X on Y, and

understand the reasons for variation in X
Improve Improve: Identify possible improvement actions

for increasing the sigma level of X and validating
those improvements through hypothesis testing
Control Control: Full scale implementation of

improvement action plan; set up controls to
monitor the system so that gains are sustained
• By the end of the Analyze Phase, you will know the reasons causing X
to vary, and you would have prioritized them (using Pareto Charts or
DOE for example) and statistically validated them (Hypothesis tests).
• Example: Let us assume our key output variable is Average Handle Time
(Y) during service calls, which impacts the financial fortunes of the
company.
Piloting • With analysis, we found that Hold Time is the key input variable
(X) for Average Handle Time. Controlling the Hold Time would
mean impacting Average Handle Time.
• In the Analyze Phase, we will discover reasons for variation in

the Hold Time.
• The reasons could have been prioritized with the help of Pareto
Charts and, moving to the Improve Stage, we know what are the
main factors influencing changes in X.
• Example: Less training being provided to employee’s results in High Hold
Time.
• How to take care of the “Less training” issue?
• Solution 1 --- Call all new employees for a refresher training

program
• Solution 2 --- Update the company intranet with all information
including changes
Piloting • Solution 3 --- Instruct Team’s supervisor to conduct regular

briefings during team meetings
• Solution 4 --- Ensure availability of Team supervisor to
employees
• Important: Each of these standalone solutions could be implemented.
• For this example, let us assume the company implemented Solution 1

Solution 2
• Solution 3 Solution 4.
• At the moment, these solutions are brainstormed ‘only on paper’
solutions. Real world effectiveness of these solutions needs to be seen.
• To check the effectiveness of these solutions, we do a test run on one

team to see how well the measures work.
• We measure data for a certain period of time (15 days to a month) to

gauge effectiveness. Verify amount of time by checking for appropriate
Piloting sample size for hypothesis testing that change has been effective.
• If effective (as shown through hypothesis testing), expand the project

enterprise-wide.
• Important: This is known as Piloting. Often done to alleviate the risk of

an improvement failing. Example: if the improvement effort would have
failed, only one team is at risk and not the entire business operation.
• Effectiveness of a solution to be checked using a
Paired t-test.
• If solution is effective, the same solution to be

phased into the entire enterprise.
• All results and challenges to be documented in
the Project Charter.
Piloting
• Also, effectiveness of the solution enterprise-wide to
be checked using Paired t-test at each phase.
• Important: If the solution is not statistically proven

effective, the team may need to brainstorm for another
set of options to solve the problem.
Design of Experiments
(DOE)
An Introduction
• Designed experiments are a series of planned and scientific experiments that test
various Input variables and their eventual impact on the Output variable.
• Design of Experiments can be used as a one-stop method for analyzing all influencing
factors, to arrive at a robust and a successful model.
• Designed experiments are preferred over OFAT (One Factor at a Time) experiments
because they don’t miss interactions (explained in this chapter).
• With techniques like Blocking, you can eliminate experimental mistakes. However, trials
should be randomized to avoid concluding Factor A is significant when time or sequence
may have influence over the response’s results.
• With techniques like Replication, you can test the variability given the same conditions
to improve the robustness of the model.
Basic Terms – 1
• Example: Determine factors related to consistent plastic part hardness, such as mold temperature
• Dependent Variables: Responses that vary as a result of changes made in the independent variable.
Example: plastic part’s hardness.
• Response: An outcome of an experimental treatment that varies as changes are made to levels
and factors.
• Independent Variables: Factors that are intentionally varied by the experimenter. In the above example,
mold temperature will be varied in the experiment.
• Factors: Factors (independent variables) are the items changed during an experiment in order
to see their impact on the output
• Factors may be quantitative or qualitative
• Levels: Levels are the values (or conditions) of the factors that are tested during the experiment
• most experiments test factors at 2 or 3 levels
•
•
Basic Terms – 2
 Treatment: A certain combination of factor levels whose effect on the response
variable is of interest.
Example --- Output Hardness of the plastic compound (Hardness is the response)
Input Oven temperature and type of raw material (Temperature and type are
Factors)
Temperature can be varied at two levels: 700 Degrees and 900 Degrees. They are thus
quantitative factors. Raw material types are attributes, and used as plastic with filler and
plastic without fillers. They are qualitative factors.
Thus, number of levels for this experiment is 2:
 Error: The variation in experimental units that have been exposed to the same
treatment is attributed to experimental error. This variability is due to the
uncontrollable factors.
 Experimental unit: is the quantity of material (in manufacturing) or the number served
(in a service system) to which one trial of a single treatment is applied .
• Repetition: Running several samples during one experimental setup
without change in the setting (short-term variability)
• Replication: Repeating experimental trials after running other trial

setups (long-term variability)
• Repetition & Replication: Provide an estimate of the experimental

error (CCV and measurement error)
Basic Terms – • This estimate will be used to determine whether observed
differences are statistically significant
3 • Example:
• Three (or three groups of) parts are manufactured during one
trial at 700 deg using plastic with fillers. This is repetition.
• After making parts using plastic without fillers, you come back
and make more parts at 700 deg using plastic with fillers. This is
replication.
• With combined analysis, experimental error can be determined
and will tell you if the differences in readings are statistically
significant or not.
DOE – A
Plastic
Molding
Example
• Objective: To achieve uniform Part Hardness at a

particular target value (i.e., reducing the variations)
Components
of DOE in the
Molding
Example
Full Factorial Experiment –Example
 Based on the understanding of various terms in the previous example, let’s consider
another example for full factorial experiment
 A full factorial experiment is any experiment in which all possible combinations of factor
levels are tested.
 This two-way heat treating experiment is a simple example of a full factorial design:
 Note: This above simplified example is used to illustrate the concepts of main factor and
interaction effects.
Full
Factorial
Experiment
–Example
• An analysis of the means will help us determine:

• How a change in draw temperature creates a difference in
the average part hardness (Main Effect)
• How a change in oven time creates a difference in the
average part hardness (Main Effect)
• How interaction between temperature and time effects
the average part hardness (Interaction effect)
 After conducting the experiment with two factors, two levels and two repetitions we get
the values as outlined in the boxes below for y1, y2 etc.
Main Effect
Interaction Effect
 Results: The interaction plot shows that we should select low temperature and high
oven time to achieve the highest desired output of hardness. The parallel lines indicate
the output if no interactions occur between the main effects.
• Number of experiments in a DOE setting is known as Runs
• Full factorial experiment without replication on 5 factors and

2 levels
• Number of runs = 25 = 32
• Full factorial experiment with 1 replication on 5 factors
Design of and 2 levels = 32 + 32 = 64
Experiments - • Half fractional factorial experiment without replication on 5

factors and 2 levels
Runs • Number of runs = 25-1 = 16

• Half factorial experiment with 1 replication on 5 factors
and 2 levels = 16 + 16 = 32
• Do you see the difference between Full Factorial Experiment

and Half Fractional Factorial Experiment in terms of number of
runs?
Design of
Experiments --- 01 02 03 04
Which Choose
•Choose Full Factorial
Experiments as it tests all
Choose
•Choose Half Fractional
Factorial Experiments if
Choose
•Choose Screening
Designs followed by
Choose
•Choose Taguchi’s and
Plackett Burman Designs
Experimental
factors at all levels. you wish to save time. Response Surface for a very complex
Designs for a highly model.
optimized and a robust
model.
Method?
Design of Basics of Design of Experiments
Experiments
- Summary Factor, Level, and Response
Blocking, Randomization, and

Replication
Main and Interaction Effect
Different types of Designs

• SPC helps to monitor and control a process.
• Monitoring and controlling the process
Statistical ensures that it operates at its full potential.
Process • At its full potential, the process can make as

much conforming product as possible with a
Control (SPC) minimum waste
• Products conforming to specification are
acceptable products
• Two phases of SPC
• Understanding the process variation
Statistical • Monitoring and Controlling
Process • Finding the trend

• Too early
Control (SPC) • Too late
• Key factor is the cause of variation: Common

Cause or Special Cause
Statistical • Common Cause or Special Cause
Process • Help us in understanding when and when
not to take action.
Control (SPC)
Statistical Process Control (SPC)
COMMON CAUSES SPECIAL CAUSES
Many Causes Few Causes

Each Having minimum Impact Each Having SignificantImpact
Un-economical to eliminate Economically viable toeliminate
Also Called: Also Called:

Random, Chance, Signal, Systematic,
Non-assignable Assignable
Selection of Variables
 What are you interested in?
 Is this an important characteristic leading
value to client?
 Is client specifically asking to control a
particular variable?
 Is this the most difficult to maintain?
Statistical Process Control (SPC)
 Univariate Control Charts
 Individual chart for key characteristics
 Multivariate Control charts

 Monitoring multiple parameters on a single
control chart
 T² Hotelling method is used to generate
multivariate charts.
 Details of multivariate are not part of this
course
• Subgroups
• In control chart we select some number of
units (say 5 units) each time, summarize
the variable and plot it on the control
chart.
Rational • For example in X-bar, R chart, we calculate
the mean and range of these subgroup
Subgrouping variables.
• Subgroup is the snapshot of the process at
that time.
• Measurements within a subgroup must be
taken close together in time but still be
independent of each other.
Two types of variation:
Rational Within subgroup: the variation

within subgroups is because of
Subgrouping common cause variation.
Between subgroup: the

variation between subgroups is
caused by special causes.
• Control Limits (UCL, LCL) are calculated
• based on variation “within” subgroups.
Rational • Subgroup should be from single stable source.

Too much variation in subgroup will lead to too
Subgrouping wide control limits.
• Subgroups should be time based and not
randomly selected from already produced
items. This is a time snapshot of the process.
• Subgroup size:
• Subgroup size of 5 is more common
Rational • Small subgroup size > meaningful process
Subgrouping shifts may go undetected.
• Too large subgroup size > insignificant process
shifts gives false alarm
• Variables / Measurements
• I-MR or X-MR chart (Individual, Moving
Range)
• X bar - R chart (Average – Range)
Control Chart • X bar - s chart (Average – Standard
deviation)
Selection • Attributes / Counts
• np Chart (Number of defectives)
• p Chart (Proportion defectives)
• c Chart (Number of defects)
• u Chart (Number of defects per unit)
Data Type
Attribute - Counts Variable - Measurements
# Pieces # Occurrences
# Defectives # Defects
Constant Variable Constant Variable n>9 n =2 to 9 n=1
np chart p chart c chart u chart Xbar - s Xbar - R I-MR/X-MR
n is subgroup size
Variable Measurements
Variable - Measurements
n>9 n =2 to 9 n=1
Xbar - s Xbar - R I-MR/X-MR

I-MR or X-MR Chart
Individual Control Limits Moving Range Control Limits
Practical Proof ofd2 Value
Individual Control Limits Moving Range Control Limits
Range)
deviation)
Xbar – RChart
Xbar Control Limits Range Control Limits
Calculating A2 Value
• A2 = 3 /d2 sqrt (n) Xbar Control Limits
Xbar – sChart
Xbar Control Limits Range Control Limits
Data Type
n is subgroup size
Range)
deviation)
Data Type
n is subgroup size
np and p Chart
Variable Attribute
Total Defectives and Percent Defective
Binomial Distribution
Subgroup size is normally big compared to
variable charts
# Pieces
# Defectives
Constant Variable
np chart p chart
np Chart
Equal Subgroup size Control Limits
 Control limits are straight lines
12 10.931
10
NP - Defectives
8
6 4.680
4
2
0.000
0
p Chart
Unequal Subgroup size Control Limits
Control limits change with the number of items in
the subgroup (subgroup size)
 Larger Subgroup – narrow control limits
 Smaller Subgroup – wider control limits
0.100
P - Unplanned Return
0.080
0.053
0.060
0.040
0.021
0.020
0.000
0.000
Attribute Measurements
Attribute - Counts
Constant Variable Constant Variable
np chart p chart c chart u chart

c and u Chart
Total Defects / Defects per Unit
Poisson Distribution
Subgroup size is normally big compared to
variable charts
# Occurrences
# Defects
Constant Variable
c chart u chart
c Chart
Equal Subgroup size Control Limits
Average Defects
20.192
20
C - Defects
15
10.480
10
5
0.768
0
u Chart
Defects per Unit Unequal Subgroup size Control Limits
Control limits change with the number of items in
the subgroup (subgroup size)
 Larger Subgroup – narrow control limits

 Smaller Subgroup – wider control limits 0.206
0.200
0.150
U - Defects
0.105
0.100
0.050
0.004
0.000
Control ChartAnalysis
What is the problem with this process?
110.00
109.00
107.45
108.00
107.00
106.00
X-Bar: Shot 1 - Shot 3
105.00
104.00
103.00
102.00 100.91
101.00
100.00
99.00
98.00
97.00
96.00
94.36
95.00
94.00
Control ChartRules
 Nelson Rules
Rule Pattern Probable Cause
1 1 point more than 3 Stdev from CL New person, wrong setup
2 7 points in a row on same side of CL Setup change, process change
3 7 points in a row all increasing or all decreasing Trend, Tool wear
4 14 points in a row alternating up and down Over control, tempering
5 2 out of 3 points more than 2 Stdev from CL (same side) New person, wrong setup
6 4 out of 5 points more than 1 Stdev from CL (same side) Small shift similar to Rule 1, 5
7 14 points in a row within 1 Stdev from CL (either side) Process change
8 8 points in a row more than 1 Stdev from CL (either side) Process change
Rule Pattern
Rule 1 1 1 point more than 3 Stdev from CL

2 7 points in a row on same side of CL
3 7 points in a row all increasing or all decreasing
4 14 points in a row alternating up and down
5 2 out of 3 points more than 2 Stdev from CL (same side)
7 14 points in a row within 1 Stdev from CL (either side)
8 8 points in a row more than 1 Stdev from CL (either side)
110.00
1
109.00
107.45
108.00
A
107.00
106.00 5
105.00 5
B
104.00
103.00
C
102.00
101.00
100.91
C
100.00 2
99.00
6 2
B
98.00
97.00
A
95.00
3
94.36
96.00
94.00
Rule Pattern

110.00
1
109.00
107.45
108.00
107.00
106.00 5
105.00 5
104.00
103.00
102.00 100.91
101.00
100.00 2
99.00
6 2
98.00
97.00
96.00 3
95.00 94.36
94.00
Rule Pattern

110.00
1
109.00
107.45
108.00
107.00
106.00 5
105.00 5
104.00
103.00
102.00 100.91
101.00
100.00 2
99.00
6 2
98.00
97.00
96.00 3
95.00 94.36
94.00
Rule Pattern

108.00 107.32
107.00
106.00 4
105.00 4 5
104.00
103.00 4
102.00
100.65
101.00
100.00
99.00
98.00
97.00
96.00
95.00 93.98
94.00
93.00
Rule Pattern

110.00
1
109.00
107.45
108.00
107.00
106.00 5
105.00 5
104.00
103.00
102.00 100.91
101.00
100.00 2
99.00
6 2
98.00
97.00
96.00 3
95.00 94.36
94.00
Rule Pattern

110.00
1
109.00
107.45
108.00
107.00
106.00 5
105.00 5
104.00
103.00
102.00 100.91
101.00
100.00 2
99.00
6 2
98.00
97.00
96.00 3
95.00 94.36
94.00
Rule Pattern

106.80
107.00
106.00
5 5
105.00
104.00
103.00
102.00 7
100.45
101.00
7
100.00
99.00
98.00
97.00
96.00
95.00 94.11
94.00
93.00
Rule Pattern

107.44
108.00
107.00
106.00
105.00 8
104.00
103.00
101.71
102.00
101.00
100.00
99.00
98.00
97.00 95.98
96.00
95.00
Rule Pattern
1 1 point more than 3 Stdev from CL

Rule 1,2,7,8 2 7 points in a row on same side of CL
 Probability of Rule 1 4 14 points in a row alternating up and down
 (1-0.9973) = 0.0027
 Probability of Rule 2 7 14 points in a row within 1 Stdev from CL (either side)
 (0.5)7 = 0.0078 8 8 points in a row more than 1 Stdev from CL (either side)
 Probability of Rule 7
 (0.68)14 = 0.0045
 Probability of Rule 8
 (1-0.68)8 = 0.0001
Total • OEE shows the efficiency of your production
system
Productive • Overall equipment effectiveness
Maintenance • (OEE) = Availability x Performance x Quality
(TPM) • Main objective of TPM is increase the OEE

• Overall equipment effectiveness (OEE) =
Total Availability x Performance x Quality
Productive • How do we increase the Overall Equipment

Effectiveness
Maintenance • No Breakdowns
(TPM) • No Small Stops or Slow Running
• No Defects
The Six Big Losses
• Overall equipment effectiveness (OEE) = Availability Unplanned stops / Equipment
Availability x Performance x Quality failure
Availability Planned stops / Setup and
adjustments
Performance Small stops
Performance Slow running
Quality Production rejects
Quality Startup rejects
Total Productive Maintenance (TPM)
Operator
Operator
I Use
TPM
Maintenance
Maintenance
We Maintain
I Maintain
Total Productive Maintenance (TPM)
Autonomous maintenance Early Equipment Management

Knowledge and understanding of
Operators responsible for routine
manufacturing equipment gained
maintenance, such as cleaning,
through TPM towards improving the
lubricating, and inspection.
design of new equipment.
Planned Maintenance
Scheduled maintenance based on Quality maintenance
predicted and/or measured failure Catch defects early by error
rates. detection and prevention designed
5S
in the production processes.
Safety Health Environment

Focused Improvement Maintain a safe and healthy
Small groups of employees work working environment.
together to achieve regular,
incremental improvements
Training and Education TPM in Office Functions

Fill in knowledge gaps necessary Extend TPM beyond shop floor
to achieve TPM goals. Applies to to administrative functions.
operators, maintenance
personnel and managers.
Visual • Visual Controls are used to convey the
information.
Controls • Helps management and employees to
see the factory floor status at a glance.
• Examples: graphs, charts, signs, gauges,
digital displays, colors, shapes,
numbers, letters, arrows, lines
Identification – what is it?
Informational – What is the current

Visual status?
Controls -
Types Instructional – How the task to be
performed?
Planning – What is the plan?

Visual Controls - Andon
• A “Visual Control” device that indicates the “Status” of
a machine, line, or process.
• ANDONS typical color-codes:
• Green (Normal Operations)
• Yellow (It is time for a changeover or planned
maintenance)
• Red (A problem has occurred, the machine or line
is down)
Visual Controls - Andon
 Jidoka (automation with a human
touch)is the ability to stop the work if
there is any problem. This prevents
defects at the earliest, and correcting
the problem.
 ANDONS is the device to indicate that
there is a problem.
• Control Plan helps in maintaining the process
characteristics.
Control Plan • Process owner needs to be involved in the

making of Control Plan.
• Control Plan should be reviewed and revised
time to time, based on lessons learned.
Controls Plan Example
• Lessons learned
Sustaining • Documentation
Improvement •
•
Training for process owners and staff
Ongoing evaluation
• Once all 5 phases of DMAIC are complete, you
would want to review the project:
Lessons • What went right?
Learned • What went wrong?

• What could be done to improve future
projects?
• Areas to be evaluated could include:
• Project selection
• Did project meet its objective?
Lessons • Was the management engaged?
Learned • Team composition
• Is there a need to have more training?
• Reporting
• Implementation
Documentation Structure
Quality Manual
Procedures
Standard Operating Procedures
Work Instructions Records

• As a part of Control Phase, document and
standardize the new process
• This might require revising the existing
procedures, SOPs, WIs.
Documentation • Revised documentation goes through the
review and approval process.
• Employees are to be trained in the new
process if required.
• Training as a part of Control Phase
• When the new processes are to be
Training implemented as a part of Six sigma project.
Employees need to be trained.
• Training also helps in buy-in by employees
who are affected by new processes.
• Benefits
• Team understands the new process
Training • Consistent work process

• Buy-in by stakeholders is necessary for the
successful implementation of the new
process
Ongoing • Control Charts
• Control Plans
Evaluation • Performance Indicators
• DMADV
DFSS • DMADOV
Methodologies
• IDOV
DMADV
DEFINE MEASURE ANALYZE DESIGN VERIF

Define the Measure Analyze Detail Y
process Critical to designs design of Verify
or design Quality the chosen
goals aspects product or design
process
D M A D OV
DEFINE MEASURE ANALYZE DESIGN OPTIMIZE VERIF

Define the Measure Analyze Detail Refine the Y
process Critical to designs design of design Verify
or design Quality the chosen
goals aspects product or design
process
IDOV
IDENTIFY DESIGN OPTIMIZE VERIF

Define the Detail Analyze Y
Voice of design of designs Verify
Customer the chosen
product or design
process
• Activities to
• Design for Manufacturing/Manufacturability
(DFM)
Design forX • Design for Assembly
• Design for Maintainability
• Design for Cost
• Design for Logistics
80% of costs are fixed at
the time of design
Conflicting Xs with each

other – Integrated product
development teams
Design forX
Activities to
•Reduce number
of parts and ease
of assembly
•Part features
D e s i g n for
Manufacturin g /Assemb ly
• Activities to
• Reduce down time

Design for • Ease of detecting issue
Ease and low cost of maintenance
Maintainability •
• Availability of parts
• Standardized replacement parts
• Reduced skill level for maintenance
• Ability of an item to serve the purpose over a
period of time.
Design for • Reducing the probability of failure

Look at the past data to analyze how it can fail
Reliability •
• Improve reliability – stress, wear out
• Important factors for critical activities
• Airlines, medical equipment, automobile.
• Summary
Design for • Design for useful life

Consider early failures
Reliability •
• Consider wear out
• Remove weaknesses
Design for Logistics
Activities to
 Facilitate easy transport and
storage
 Easy to track – Bar codes
 Standardized
 Packing material - reuse
• Minimizing environmental impact
Design for
• Repair, Reuse, Recycle
Environment • Disposal
• Some common actions
• Reduced number of parts

• Joining 2 parts as one – Adverse effect on
maintainability
Design forX • Minimize fasteners
• Use standard parts – industry standard
• Low lead time, more reliable, cheaper,
easily available
• Standardized – Grouped
• Robust Design
Robust •
•
Control and Noise Factors
Three Types of Noise Factors
Design • Taguchi Loss Function
• Design Process Stages
• The idea behind robust design is to improve
the quality of a product by minimizing the
Robust effects of variation without eliminating the
causes.
Design • Robust design has minimum sensitivity to
variations in uncontrollable factors.
• Control factors
• factors which can easily be controlled.
Control and • such as in welding – electrode selection,
position, preheating etc.
Noise • Noise factors
Factors • are factors that are difficult or impossible or too
expensive to control.
• Such as weather, humidity during welding
• Noise factors are primarily response for
causing a product’s performance to deviate
Control and from its target value.
Noise • Parameter design seeks to identify settings of

the control factors which make the product
Factors insensitive to variations in the noise factors.
• Make the product more robust, without
actually eliminating the causes of variation.
• Outer Noise
• Consumer’s usage conditions, Temperature
change, Shock, Vibration, Humidity, Light
Noise • Inner Noise
Factors • Deterioration, Rusting

• Between Product Noise
• Piece to piece variation where they are supposed
to be the same
• L = k (y - m)2
• y = critical performance parameter value,
• L is the loss associated with a particular
Taguchi parameter y,
• m is the nominal value of the parameter
Loss specification,
Function • k is a constant that depends on the cost at

the specification limits (can be determined
conservatively by dividing the cost of scrap in $, by
the square of the lower or higher tolerance
values).
Pre-Control Charts
 Use specification limits instead of
statistically-derived control limits to
determine process capability over time.
 Used during the initial setup process.
 Easier to setup, implement and interpret
Pre-Control Charts
• Pre-Control Limits (LPCL and UPCL) are
50% of the tolerance.
• To establish process control, 5 items
should fall in the Pre-Control Limits.
• After that 2 successive units are
periodically samples.
• Continue if both fall in green or
one in green and one in Yellow.
• Stop and adjust process if both fall in
Yellow, or one fall in the red zone.
• A typical Control Chart needs 20-25 samples
with 4 to 5 items as the subgroup size.
• You need roughly 100 measurements to define
control limits.
Short-run SPC • What if there are a very few pieces

manufactured?
• Use Short-run Chart
Short-run SPC
 Short-run SPC focuses on the process
rather than the product.
 Example: Different diameter items
produced
 E.g Eight items with 300, 400 and 500 mm
each
 Options:
 100% inspection – Expensive
 First-off inspection – What about
process variation?
 Last-off inspection – Too little too late
 Separate control chart – limited data
Short-run SPC
302.634 Run A 504.188 Run B 400.548 Run C
300.558 Run A 506.879 Run B 403.193 Run C
301.604 Run A 506.189 Run B 392.790 Run C
298.130 Run A 517.210 Run B 399.538 Run C
298.824 Run A 479.511 Run B 392.192 Run C
301.384 Run A 495.170 Run B 403.812 Run C
302.373 Run A 506.851 Run B 393.457 Run C
298.685 Run A 489.671 Run B 401.051 Run C
Short-run – Difference Chart
Stamp Data
302.634
Run
Run A
Nominal
300
Difference
2.6338 Assumption: Each run has similar variance
300.558 Run A 300 0.5579
301.604 Run A 300 1.6043
298.130 Run A 300 -1.8704
298.824 Run A 300 -1.1757 I-MR Chart of C4
301.384 Run A 300 1.3837 UCL=21.16
20
302.373 Run A 300 2.3729
298.685 Run A 300 -1.3154 10
Individual Value
504.188 Run B 500 4.1884 0
_
X=-0.15
506.879 Run B 500 6.8792
-10
506.189 Run B 500 6.1887
517.210 Run B 500 17.2103 -20 LCL=-21.45
479.511 Run B 500 -20.4891 1 3 5 7 9 11 13 15 17 19 21 23
495.170 Run B 500 -4.8304 Observation
506.851 Run B 500 6.8514

40
489.671 Run B 500 -10.3293 1
400.548 Run C 400 0.5483 30

403.193 Run C 400 3.1932 UCL=26.17
ang
e
392.790 Run C 400 -7.2102 20
Mov ing
R
399.538 Run C 400 -0.4623 10 __
MR=8.01
392.192 Run C 400 -7.8076
403.812 Run C 400 3.8119 0 LCL=0
393.457 Run C 400 -6.5428 1 3 5 7 9 11 13 15 17 19 21 23
401.051 Run C 400 1.0513 Observation

Z-MR Chart
Stamp Data Run Nominal Difference
302.634 Run A 300 2.6338
300.558 Run A 300 0.5579
301.604 Run A 300 1.6043
298.130 Run A 300 -1.8704
298.824 Run A 300 -1.1757
301.384 Run A 300 1.3837
302.373 Run A 300 2.3729
298.685 Run A 300 -1.3154
504.188 Run B 500 4.1884
506.879 Run B 500 6.8792
506.189 Run B 500 6.1887
517.210 Run B 500 17.2103
479.511 Run B 500 -20.4891
495.170 Run B 500 -4.8304
506.851 Run B 500 6.8514
489.671 Run B 500 -10.3293
400.548 Run C 400 0.5483
403.193 Run C 400 3.1932
392.790 Run C 400 -7.2102
399.538 Run C 400 -0.4623
392.192 Run C 400 -7.8076
403.812 Run C 400 3.8119
393.457 Run C 400 -6.5428
401.051 Run C 400 1.0513

Lean Six Sigma Black Belt

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Lean Six Sigma Black Belt

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Lean Six

1924 1985 1987 1992 1995 2002

Dr Mikel J Harry wrote a paper relating early failures to quality

1900 1910 1950-60 2000

Benefits Improved Quality/Customer Satisfaction

Reduced Cycle Time

Safe Workplace Environment

Improved Employee Morale

Six Sigma • What are we falling short of meeting customer

Project • What are the major wastes?

Low Hanging Fruit

Qualifications • There is a gap between current and desired /

Aligned to 4 High=5 Medium = 3 4*5 = 4*1 =

Strategic Plan Six Sigma helps in achieving

Select projects which helps in

VMOSA • Action plans (who will do what by when)

PART OF RISK MANAGEMENT

Master Master Black Belts, identified by champions, act as

Black Belts operate under Master Black Belts to

Yellow Belts participates

Champions Black Belt

 Charters or champions chartering

 Identifies, sponsors and directs Six Team Members /

Sigma projects Yellow Belts

 Holds regular project reviews in

Champion Black Belt

Communicates leadership vision

 Six Sigma technical expert Green Belts

Green Belt Black Belt

 Part-time Six Sigma change agent.

 Six Sigma champion in local area

Yellow Belt Black Belt

Learns and applies Six Sigma

Actively participates in team tasks Team Members /

Financial Analyst Black Belt

Validates the baseline status for each

Validates the sustained results / savings Team Members /

Compiles overall investment vs. benefits

Organizations • Cause of Six Sigma failures

Organizations Project or Product Organizations

UNFREEZE CHANGE RE-FREEZE

UNFREEZE CHANGE RE-FREEZE

Accept that change is

Assessment • Are employees willing to change?

Employees High Economic condition Letter from CEO Departmental

• one's business processes and performance metrics

• industry bests and best practices from other

Strategic How companies

• Easy access to sensitive information

Alignment with the strategy

A suitable and willing partner

Balanced • Four perspectives

Internal Processes Learning/Growth

Year 01 Year 02 Year 03 Year 04 Year 05

$1,000 $1,000 $1,000 $1,000 $1,000

Year 01 Year 02 Year 03 Year 04 Year 05

$1,000 $1,000 $1,000 $1,000 $1,000

Time to recover the investment

Year 01 Year 02 Year 03 Year 04 Year 05

$1,000 $1,000 $1,000 $1,000 $1,000

Cost of Capital = 10%

Year 01 Year 02 Year 03 Year 04 Year 05

Cost of Capital = 10%

Aligned to 4 High=5 Medium = 3 45 = 41 =