SIX SIGMA AND LEAN

IIM, AMRITSAR
PGP MANAGEMENT

Umesh Vyas
Batch 2019-21; Term V
Oct 2020 to Dec 2021
3 & 4. Basic
Statistics
Deming’s 14 Points
1. Create constancy of purpose for improving products and
services
2. Adopt the new Philosophy
3. Cease dependence on inspection to achieve quality
4. End the practice of awarding business on price alone,
instead minimize total cost by working with a single
supplier
5. Improve constantly and forever every process for planning,
production and service
6. Institute training on the job
7. Adopt and institute leadership
Deming’s 14 Points
7+
1. Drive out fear
2. Bring down barriers between staff areas
3. Eliminate slogans, exhortations and targets for the
workforce
4. Eliminate numerical quotas for the workforce and
numerical goals for management
5. Remove barriers that rob people of the pride of
workmanship and eliminate annual rating or merit system
6. Institute a vigorous program of self improvement for
everyone
7. Put everyone in the company to work accomplishing the
transformation
Three professors (a physicist, a chemist and a
statistician) are in a room with a fire.
…….
Statistically Speaking

https://www.youtube.com/watch?
v=Ycm_a9hOFZc&t=6s&ab_channel=DonMcMill
an
Topics of Statistics
• Types of Data
• Central Tendency
• Variation
• Degrees of Freedom
Why Statistics
Typical Business Reporting
Problems
• With Targets/Specs
– Facts of Life OK, No problem
– Budget/Planning; Do not use as target
– Arbitrary; DO NOT use as target
• % diff
– Depends on size of base
– Each line has different inherent variation
– Comparing with past, problem may be with past not this
one
Fooled by Randomness
Very frequent checking
Process Behavior Charts
40
Upper Control Limit
Measurement

(UCL)
30

20 Average

10

Lower Control Limit

0 (LCL)
0 10 20
Time Order of Sample

UCL = Average + 3 SD
LCL = Average – 3 SD
Nelson Rules – for ‘Unpredictable’
• 1 point is more than 3 SD from mean
• 9 or more points in a row are on same side of
mean
• 6 or more points increasing/decreasing (trend)
• 14 or more points oscillate
• 2 of three in a row outside 2 SD
• 4 of 5 in a row outside 1 SD
• 15 points in a row within 1SD
• 8 points in a row with none within 1 SD
Data Types
• Discrete (Counted, specific
values) vs Continuous
(Measured, any values -
decimals)
• Eg. No of students is discrete,
their weight, age, height are
continuous
Central Tendency
• Mean – the average
• Median – the center value
in an ordered set
• Mode – the most frequent
Variation
• Range
• Quartile
• Variance
• Standard Deviation
• Coefficient of Variance
• Range
– Maximum number – Minimum number

• Quartile
– First Quartile (Q1) is middle value of
first half of data
– Third Quartile (Q3) is middle value of
second half of data
Variance, SD and CV
• Var - Average of squared difference with mean
• SD – Square root of Variance
• Coefficient of Variance = SD/Mean
Normal Distribution
Mean, Median, Mode same. Symmetrical
Degrees of Freedom (df)
• Minimum no of variables reqd to
estimate that we are free to vary
• For mean – n
• For SD – n-1