Analyse Material

Process Optimization .
Cost Reduction
Innovation
Six Sigma Green Belt Training

Module – Analyse Phase
GENAXIS SDN BHD PROPRIETARY INFORMATION

The information contained in this document is GENAXIS proprietary information and is disclosed in confidence. It is the property of
GENAXIS and shall not be used, disclosed to others or reproduced without the express written consent of GENAXIS. If consent is given for
reproduction in whole or in part, this notice and the notice set forth on each page of this document shall appear in any such reproduction in
whole or in part. The information contained in this document may also be controlled by Malaysia export control laws. Unauthorized export
or re-export is prohibited.
Green Belt Training Moduleã 2010, Genaxis Sdn Bhd, Malaysia. All rights reserved. Genaxis Proprietary Information – Subject to the restrictions on the cover page 1
Module Objectives
By the end of this module, participants should be able to:
Understand what and why hypothesis
Type of hypothesis testing in 6 sigma project
Discuss the hypothesis testing process
Understand the risks in hypothesis testing
Discuss how the p-value is used for decision making
Understand how hypothesis testing can be used on our projects to

“move down the funnel” thus screening out unimportant input
variables
Looking for Differences
• The essential questions are often:

- “Is this different than this?”, or
- “Is this bigger (or smaller) than this?”
• Graphical methods may help, but statistical tests are
needed to verify with certainty.
• Hypothesis testing involves using statistics to determine if
there truly is a difference.
• We’ll often need to make decisions about differences in
averages and differences in variability.
• A factor the “CAUSE” difference in the process output is
defined as “SIGNIFICANT FACTOR” …Thus looking for
difference in hypothesis is a “FUNNELLING PROCESS” in
6 sigma project .
Hypothesis Testing…Huh?
Imagine you are a professional golfer and

have been offered an endorsement contract
with a new ball manufacturer, GoGolf SDN BHD Ugh…
Statistics
However, you’re worried that this manufacturer
is new and its product may adversely affect
your game
You played 4 rounds with this ball, below are
your scores Your average
Did this new ball increase my average?

How sure can I be?
Why Learn Hypothesis Testing
In General many problems require a decision to accept or
reject a statement about a parameter.
In spesific , 6 sigma projects require hypothesis test to
determine a factor significant or not to the project Y
Is the observed
difference real
or by chance?
Cycle
Time
15.7 Is the change
(minutes) in X has an
11.3 effect on Y?
Before Changes After Changes
What is hypothesis testing ?
Hypothesis
HypothesisTest:
Test: AAstatistical
statisticaltest
test to
todetermine
determine ifif
there’s
there’saadifference
difference between
betweendatadatasets.
sets.AAdecision
decision
aids
aidsin
inuncertain
uncertainsituation.
situation.
Hypothesis tests always compare two options:
• The null hypothesis (Ho) says,
‘There is no difference between the two data sets.’
• Application in 6 sigma : If changing the setting of a factor
does not affect to the mean or spread of the process output ,
thus the factor is NOT SIGNIFICANT
• The alternative hypothesis (Ha) says,
‘There is a difference between the two sets of data
• Application in 6 sigma : If changing the setting of a factor
does affect to the mean or spread of the process output ,
thus the factor is SIGNIFICANT’
Hypothesis Test in 6 Sigma
Before  Process output data set during an input is set at current operation setting
After  Process output data set when the same input is set at another operation setting
After Before After

Shift
Variation
Before reduction
Mean Shifts Variation Shift
Case 1 : Case 2 :
The factor is significant in The factor is significant in
shifting the process reducing the process
output mean ( accuracy ) . output variation ( precision ).
Thus by controlling this factor Thus by controlling this factor
at appropriate setting , it can at appropriate setting , it can
improve the process output improve the process output
accuracy precision
Hypothesis Test in 6 Sigma
Before  Process output data set during an input is set at current operation setting
After  Process output data set when the same input is set at another operation setting
After After
Before
Before
Shift Variation
reduction
No Shift
Mean and Variation Shifts
in Mean or Variation
Case 1 :
Case 2 :
The factor is significant in
The factor is not significant in
shifting the process
shifting the process mean
output mean ( accuracy ) and also
(accuracy) nor reducing the process
reducing the variation .
output variation ( precision ).
Thus by controlling this factor
Thus this factor can be ignored in
at appropriate setting , it can
term of improvement .
improve the process output
accuracy & precision .
Thus …
Hypothesis testing enable us to move “down the funnel” by analyzing

the dataset that consists of process input settings ( data ) versus
process output data . The Rule Of Thumb as below :
– There is no difference: Do not focus on the variables that changed

between the two groups of data – Screen them out
– There is a difference: Focus on the input variables that are

different between the groups
Data can come from a couple sources
– Passive: A process is sampled or historic sample data is obtained
– Active: A modification is made to a process and then sample data

is obtained
Can Hypothesis Testing Lead Us
To The Wrong Conclusions?
In hypothesis testing, relatively small samples are used to answer
questions about population parameters (inferential statistics)
There is always a chance that the selected sample is not

representative of the population; therefore, there is always a chance
that the conclusion obtained is wrong
With some assumptions, inferential statistics allows the estimation of

the probability of getting an “odd” sample and quantifies the
probability (p-value) of a wrong conclusion
Let’s go through the process of Hypothesis Testing via

an example…
Hypothesis Testing Example
Ho: Age doesn’t matter in a company’s hiring practices
Ha: Age does matter in a company’s hiring practices
Ho: Return rate is the same for Customer A and Customer B

Ha: Return rate is not the same for Customer A and Customer B
Ho: Project X Avg. Cycle Time = Project Y Avg. Cycle Time

Ha: Project X Avg. Cycle Time  Project Y Avg. Cycle Time
Ho = _______________________________________
Ha = _______________________________________
Hypothesis
State
Stateaa“Null
“NullHypothesis”
Hypothesis”(H
(Hoo))
Gather
Gatherevidence
evidence(a
(asample
sampleof
ofreality)
reality)
DECIDE:
DECIDE:
What
Whatdoes
doesthe
theevidence
evidencesuggest?
suggest?
Reject
RejectHHoo?? or
or Don’t
Don’tReject
RejectHHoo??
Decision Errors
In deciding to Reject or Not, we could make one of two decision errors
Your
YourDecision
Decision
Accept Ho Reject Ho
Ho True Type I
Correct
Correct Error
-Risk)
The
The
Truth
Truth
Type II Error
-Risk) Correct
Correct
Ho False
Example:
A Trial
Jury’s
Jury’sDecision
Decision
He’s Not Guilty He’s Guilty Consequence:

Innocent Man
Actually Type I Goes to Jail
Innocent Correct
Correct Error
-Risk)
The
The
Truth
Truth
Type II Error
Correct
Actually Guilty
Consequence: Criminal goes Free
Example:
Airport Security
Alarm’s
Alarm’sDecision
Decision
No Bad Stuff In
Bag Bad Stuff In Bag
Type I Consequences:
No Bad Stuff In Customer held
Correct _____________
Bag Correct Error up at security
_____________
-Risk)
The
The
Truth
Truth
Type II Error
Correct
Bad Stuff In Bag
Consequences: Weapon on plane

_____________
Using the p-value for
Hypothesis Testing

p-value: Probability that the observed results could occur by chance

By default p-value = a which is 0.05
Small
Smallp-value
p-value
 H is rejected
Large
Largep-value
p-value
 Ho is rejected
o  H is not rejected
 Ho is not rejected
 HHa is accepted and I have p- o
a is accepted and I have p-

 HHa is rejected
value a is rejected
valuechance
chanceof
ofbeing
beingwrong

wrong
Traditionally for Six Sigma: IfIfppis

islow,
low,
If p  0.05, we reject the Null Hypothesis and accept HHo must
mustGO!
GO!
o
the Alternative Hypothesis
p-values are Everywhere!
Test for Equal Variances for All
F-Test Probability Plot of All
Test Statistic 0.20
Normal
Data1 P-Value 0.000 99.9
Mean 4.318
Levene's Test
StDev 0.4640
data
Test Statistic 92.73 99 N 460

P-Value 0.000 AD 7.234
Data2 95 P-Value <0.005
90
80
0.20 0.25 0.30 0.35 0.40 0.45 0.50
70
Percent
95% Bonferroni Confidence Intervals for StDevs 60
50
40
30
20
10
Data1
5
data
Data2
0.1
3.0 3.5 4.0 4.5 5.0 5.5 6.0
3.0 3.5 4.0 4.5 5.0 5.5 6.0 All
A ll
Summary for All
A nderson-D arling N ormality Test
A -S quared 7.23
One-way ANOVA: All versus data P -V alue < 0.005
Source DF SS MS F P M ean 4.3177
S tD ev 0.4640
data 1 43.503 43.503 360.27 0.000 V ariance 0.2153
Error 458 55.303 0.121 S kew ness 0.655323
Kurtosis -0.014033
Total 459 98.806 N 460
M inimum 3.0859
1st Q uartile 3.9984
S = 0.3475 R-Sq = 44.03% R-Sq(adj) = 43.91%
M edian 4.2009
3rd Q uartile 4.6338
3.2 3.6 4.0 4.4 4.8 5.2 5.6 M aximum 5.8671
Individual 95% CIs For Mean Based on
95% C onfidence Interv al for M ean
Pooled StDev 4.2752 4.3602
Level N Mean StDev --+---------+---------+---------+------- 95% C onfidence Interv al for M edian
Data1 230 4.0102 0.1994 (--*-) 4.1554 4.2434

95% C onfidence Interv al for S tD ev
Data2 230 4.6253 0.4491 (-*--) 95% Confidence Intervals
0.4358 0.4961
--+---------+---------+---------+------- Mean
4.00 4.20 4.40 4.60

Median
4.15 4.20 4.25 4.30 4.35
Hypothesis and Decision Risk
P Value Is Extremely Important
Remember This Key Saying….
If P is Low, Ho
Must Go!
Types of Hypothesis Testing
Comparing Means
1 Factor 2 Factors 3 or
more
factors
1 Sample 2 Samples 2 or
more
 Known  Not known Independen Paired samples
t
1-Sample 1-Sample 2-Sample Paired One-Way Two-Way ANOVA
Z-test t-test t-test t-test ANOVA ANOVA GLM
StatAnova  One Way Anova

StatBasic StatisticsPaired t
StatBasic Statistics2-Sample t
StatBasic Statistics1-Sample t
StatBasic Statistics1-Sample Z
Hypothesis Testing Of
Variation – Road Map
Comparing Variances
1 Sample 2 Samples More than 2 Samples
1 Variance Test 2 Variance test Test for Equal Variance
Descriptive
Statistics F-test/Levene’s test Bartlett’s test/Levene’s test
Process Flow Of A Hypothesis Test
Define the problem and state objectives
State a “Null Hypothesis” (Ho)
State the “Alternate Hypothesis” (H a)
Establish significance level ()
Collect sample data
Calculate test statistic and/or p-value
DECIDE:
What does the evidence suggest?
Reject Ho? or Fail to reject Ho?
Example: Web Server Efficiency
A corporation has several web servers; there have been consistent complaints
about the efficiency of these servers – None perform significantly better or
worse than the others
The manager responsible for the operation of these servers decided to spend
$10k modifying one of them (Server 1) to improve its efficiency – Before
spending more money, time, and resources in modifying the rest of the servers
the manager wants to know if she has “significantly” improved the efficiency of
Server 1
She has sought the help of a Black Belt to answer this question – The Black
Belt suggested collecting sample data on the efficiency (measured using data
on availability of server, processing speed etc.) of Server 1 (modified) and
Server 2 (unmodified); the collected data is given in the file Servers.xls
Based on the data, how do we determine if there is a “real”

improvement in the efficiency of Server 1?
Example: Server Efficiency
Server 1 Server 2
86.1 80.2
84.9 78.7
87.8 83.6
84.2 87.2
83.5 82.1
81.4 84.7
83.3 84.5
84.7 81.5
88.4 83.4
81.0 84.7
Is the efficiency of Server 1 higher than that
of Server 2?
In SigmaXL, SigmaXL  Statistical Tools -  Descriptive Statistics
Practical Question: Will the modifications on Server 1 improve its efficiency

when compared to the current process, represented by
Server 2?
Review descriptive statistics on file: Servers.xls
Is Server 1 different from Server 2?
Let’s take a look graphically first.
Frequency
2
1
0
81.0 82.0 83.0 84.0 85.0 86.0 87.0 88.0
Server 1
3
Frequency
2
1
0
78.7 80.7 82.7 84.7 86.7
Server 2
• Is the mean efficiency for Server 1 significantly higher than that of Server
2?
• Are the means close enough to have occurred just by chance?
• We must show that the values we observed were so unlikely to come
from the same population, that they must come from two
different populations
State a “Null Hypothesis” (Ho)
Collect sample data
DECIDE:
Reject Ho? or Fail to reject Ho?
Forming A Hypothesis
Null Hypothesis (H0) Alternative Hypothesis (Ha)

– No difference/no change – Difference/change occurred
– Factor not statistically significant – Factor statistically significant
– Population follows a normal – Population does not follow a
distribution normal distribution
Assume H0 to be true until proven otherwise.

Burden of proof rests with Ha.
Practical Language
– Null Hypothesis, H0: No difference in average efficiency
of servers
– Alternate Hypothesis, Ha: Average efficiency of Server 1 higher
than Server 2
Statistical Language
H0: 1 = 2
Ha: 1 > 2
State a “Null Hypothesis” (H0)
Collect sample data
DECIDE:
Reject H0? or Fail to reject H0?
Significance Level
The significance level (a) is the risk you are willing to take of saying a
difference exists, but you are incorrect
Statisticallyspeaking, the data supported rejection of the null Ho, but

we were wrong in doing so
There is an  % chance that we are wrong when we say

that Server 1 is more efficient than Server 2.
How Should We Select a?
Impact of Error Possible Risk Range

Minor Rework 0.1 0.05
Major Rework 0.05 0.01
Injury/ 0.01 0.001

Litigation
Death 0.001 0.0001
What level of risk can you

afford?
Collect sample data
DECIDE:
Process Flow Of A
Hypothesis Test
Collect sample data
DECIDE:
Decision Criteria
If test statistic is greater than critical statistic, reject the null
hypothesis
– Or in other words…
p < , reject the null hypothesis
p > , fail to reject the null hypothesis
Interpretation
p-value = 0.199
Since p-value > -value (0.05), fail to reject H0; no difference
Conclude that no evidence of statistically significant improvement in

efficiency for server 1
Choosing the Correct Tools
The data types for input & output will determine

which tools might be useful
Hypothesis Testing Road Map
XX(Factor)
(Factor)
Single X Several X’s
X (Factor) treated as: X (Factor) treated as:

X (Factor) treated as: X (Factor) treated as:
Continuous Discrete Continuous Discrete

Single
Continuous
• T-Test
Continuous • Scatterplot •
Homogeneity • DOE
Y • Simple • Multiple • 2,3,4,5,...-

Y (Response)
Y (Response)
of Variance
Y (Response)
Y (Response)
Regression • 1-Way Regression Way
• Curve Fitting ANOVA
ANOVA
(Response)
• Goodness of
YY(Response)
Discrete
• Multiple
Discrete
• Logistic Fit • Multiple

Regression • Test of Logistic Logistic
Independenc Regression Regression
e
Several
Multivariate
MultivariateStatistics
Statistics
Y’s (not
(not“Multi-Vari”Charts)
“Multi-Vari”Charts)
Click to edit Master title style
Process Optimization . Cost Reduction

Innovation
 Click to edit Master text styles
– Second level
 Third level
Hypothesis
– Fourth level Of Mean
» Fifth level

Why Learn Hypothesis Tests Of Mean?
Make data driven decisions with defined confidence to determine if input
significantly affect the center of tendency of a process by shifting the
mean or median .
Mean is used as center of tendency for a normal distribution
Median is used as center of tendency for a non-normal distribution ( later

module )
Determine if a statistically significant difference of means exists between
– A sample and a target
– Two independent samples
– Paired samples ( Dependent samples )
What Are Hypothesis Tests Of Mean?
Test Method for analyzing the differences between:

1-Sample Z A sample mean and a target value when population standard
deviation is known.
1-Sample t A sample mean and a target value when the population

standard deviation is not known.
2-Sample t Means obtained from two independent samples.
Paired t Mean differences obtained from paired samples.
Note: Above tests are used when the response variable is continuous.
Hypothesis Testing
Of Means – Road map
Comparing Means
1 Factor 2 Factors 3 or
more
factors
1 Sample 2 Samples 2 or
more
 Known  Not known Independent Paired samples
1-Sample 1-Sample 2-Sample Paired One-Way Two-Way ANOVA

Z-test t-test t-test t-test ANOVA ANOVA GLM
Check Point (1) – Random
The datasets MUST

be random ( Do not influence
By special cause effect )
A non random DATA required

Data cleaning ( Brushing data that due to special cause
Effect only )
Before the use of hypothesis
Of mean .
Check Point (2) – Normality
The datasets MUST

be normally distributed
A non-normal DATA required

Data transformation ( Reciprocal method )
Of mean .
Check Point (3) – Variance Check
Only before proceeding with

2 sample – T , you need to
decide whether the 2 datasets
are equal variance or not .
2 sample – T test in Minitab
required this information !
1-Sample t-test
Single Mean Comparison
target
vs.
value
  NOT known
Practical Question “Is the population

(example) statistically different from
the target value?”
Statistical Question
Ho:  = target value
Ha:   target value
1-Sample t-test
Hypothesis test about the unknown population mean using

information from one sample
Population standard deviation not known and distribution is normal
Note: Normality assumptions relaxed when the number of sample

observations is large (generally true when sample size >30)
Example: Delinquent Mortgages
A bank holds 1432 delinquent mortgages on residential properties –

The Black Belt investigating the loan process wants to know if the
mean appraised value (current) of the properties is greater than
$175,000
A preliminary random sample of 38 delinquent properties were

appraised – The sample produced a mean appraised value of
$181,769
Use the data in mortgage.xls to determine if there is enough

evidence that population mean appraised value is greater than
$175,000?
Practical Problem
Is the mean appraised value of all 1432 properties higher than $175,000 in
spite of the sample mean value of $181,769?
Statistical Problem
Is the population mean of appraised value greater than $175,000?
Null hypothesis: Mean appraised value of properties = $175,000
Alternate hypothesis: Population average value is greater
than $175,000
Is there sufficient evidence to show that the population average of
properties is greater than the $175,000 at a significance level of 5%?
Otherwise we will maintain the current belief – e.g., the null hypothesis
State the hypotheses and significance level
Ho:  = $175,000
Ha:  > $175,000
 = 0.05
What hypothesis test is appropriate?
– These hypotheses deal with mean values
– Only one factor for examination – Appraised value
– Comparing population mean against a target value using
1-Sample data
– Data follows a normal distribution
– Population standard deviation NOT known
– Use 1-Sample t-test
P-value > 0.05  Data

normally distributed
In SigmaXL  Statistical Tools  1-Sample t
Choose greater than for

Alternative (Ha:  > $175,000)
Interpretation
p-value = 0.132
Since p-value > -value (0.05) fail to reject Ho
Infer Ho true: Not enough evidence that average appraised value of
properties with delinquent mortgages is higher than $175,000
2-Sample t-test
2-Sample Comparison
vs.
1 2
Practical Question “Are the two populations

(example) statistically different?”
Ho: 1 = 2
H: 1  2
Example: Teller vs. ATM Costs
As part of an investigation to study the transaction costs of tellers vs.

ATMs, a bank has collected a random sample of 45 teller transaction
costs and 53 ATM transaction costs
The data is given in file ATMTeller.xls
Perform a hypothesis test to determine if average value teller

transaction cost is higher than ATM transaction costs by at least $0.35
Practical problem
Is average cost of teller transactions higher than average cost of ATM
transactions by at least $0.35?
Statistical problem
Is the population mean for teller transaction cost higher than the
population mean of ATM transaction costs by at least $0.35?
Null hypothesis: Difference between mean value of teller transaction

costs and mean value of ATM transaction costs is equal to $0.35
Alternate hypothesis: Difference between mean value of teller

transaction costs and mean value of ATM transaction costs is greater
than $0.35
Ho: Teller - ATM = $0.35
Ha: Teller - ATM > $0.35

 = 0.05
– These hypotheses deal with mean values
– Only one factor for examination – Transaction cost
– Comparing population means based on two independent sets of
sample data
– Samples are normally distributed
– Use 2-Sample t-test
P-value > 0.05  Data normally

distributed
Graphically , the mean of

2 distributions is different.
2.2
But how confidence to say
the different is ??? 2
Need to refer to p-value 1.8
1.6
1.4
1.2
0.8
0.6
0.4
0.2
Teller ATM
In SigmaXL Statistical Tools  2-Sample t
Interpretation
p-value 0.0183
Since p-value < -risk (0.05), reject the null hypothesis
The difference between Teller cost and ATM costs is greater than
$0.35

Innovation
– Second level
Hypothesis
 Third
level Testing Of
– Fourth level
» Fifth level Variance

Hypothesis Testing Of
Variation – Road Map
Comparing Variances
2 Samples More than 2 Samples
2 Variance test Test for Equal Variance
F-test/Levene’s test Bartlett’s test/Levene’s test
Comparison Of Variance: 3 Scenarios
1. Two Sample Comparison

vs.
Variances of two independent
populations compared to
each other. s 2 s2 2
1
2. More than Two Sample Comparison
Variances of more than two independent populations compared to

each other.
vs. vs.
s2 1 s2 2 s2 3
2 Variance Test
Check Point (1) – Random
The datasets MUST

be random ( Do not influence
By special cause effect )
A non random DATA required

Data cleaning ( Brushing data that due to special cause
Effect only )
Of mean .
Example: High Potential Analyst
A key success factor for financial analysts at Sigma Finance Consulting,

Inc. is their ability to accurately predict earnings per share (EPS)
values of various corporations – The quality of these forecasts is
typically expressed as Absolute Percentage Forecast Error (APFE) =
100 * ABS (predicted EPS-actual EPS)/actual EPS
During annual performance evaluations, Sigma Finance assesses each

analyst’s capability by measuring mean and standard deviation of
his/her Absolute Percentage Forecast Error (APFE) for the prior year
It is known that a high potential analyst will have an APFE standard
deviation of less than 3%
A VP wants to know if the rookie analyst George has proven himself

(beyond reasonable doubt) to be a high potential analyst using the
above criteria
APFE data for a random sample of 18 corporations forecasted by

George is included in a MINITAB™ worksheet APFE.xls
Perform an appropriate hypothesis test at 5% significance level to

answer the VP’s question
P-value > 0.05 Data normally

distributed
Interpretation
p-value 0.6768
Since p-value > -risk (0.05), accept the null hypothesis
The variance is equal
2 Variance Test Exercise
The hardness of water is measured in terms of the calcium ion

concentration (in parts per million). The hardness of the water in both
hot and cold water pipes in a manufacturing process was measured. A
technician claims that the hardness of cold water is more consistent than
hot water. The calcium ion concentrations of the various samples taken
are given below:
Hot Water Cold Water Test the null hypothesis that the
133.5 134.0 hot and cold water samples have
135.4 134.7
137.2 136.0 the same variability in calcium ion
138.4 131.7 concentration vs. the alternate
136.3 134.6 hypothesis that they are not same.
137.1 135.2
133.3 135.9 Use data file Caion.xls
136.5 135.6
137.5
139.4
Hypothesis Tests For 2 Or More
Variances
2 Or More Sample Comparison
vs. vs.
21 23 23

Practical Question “Are the
(example) populations’ variations
statistically different?”
H o:  12 =  22 =  32
H a: At least one s2i is different
Example: Receivables Variation
Corporate finance is concerned about the excessive month-to-month

variability in accounts receivables for its Strategic Business Units (SBU)
– As part of the investigation, a Black Belt is asked to find out if we
have enough evidence to show that variances (2) of monthly
outstanding accounts receivables are not the same for various
business units
The Black Belt has collected outstanding receivables data for 18

months of four different business units with similar financial profile –
The data (in MM) is recorded in Receivables.xls
Perform a hypothesis test at 5% significance level to determine if the

population variances of receivables for the SBUs are different
H o :  21 =  22 =  23 =  24
Ha: At least one of the 2i is different
 = 0.05
– These hypotheses deal with variances
– Comparing population variances based on four different sample data
– This data follows a normal distribution
– Apply Test for Equal Variance, choose Bartlett’s results
In SigmaXL  Statistical Tools  Test for Equal Variances  Bartlett (All normal)
In SigmaXL  Statistical Tools  Test for Equal Variances  Bartlett (at least one
is not normal)
In this case, all are normal
Interpretation:
p-value = 0.417 (F-test)
p-value > -value (0.05): Fail to reject Ho
Insufficient evidence that variations in receivables for four SBUs are

statistically different from each other

Innovation
– Second level
 Third Hypothesis
level Testing
– Fourth level
Chi Square
» Fifth level

Why Chi-Square Test For Independence?
Tests the hypothesis of independence between two variables
– Probabilities of items or subjects being classified for one variable are

tested for dependence on the classifications of the other variable
Random and Independent Sampling
Nonparametric test
– Does not require assumption of normality
– Used for attribute data
Example :
Do female feels differently than males about 3 different criteria ( appearance,
performance , fixed price ) used in choosing a car or do they feel basically
The same
Test For Independence Procedure
State the practical problem

– “Is the Y variable independent of the X variable?”
– Each combination has equal probability
State the statistical problem
– Ho: Y independent of X (no difference)
– Ha: Y dependent of X (at least one combination is different)
Calculate the test statistic 2 observed
Determine the critical value of 2 test statistic
– Reject the null hypothesis if 2 observed > 2 critical
or
– Reject the null hypothesis if p-value < -value
Translate statistical conclusion into a practical solution
Survey Example
1000 Adults were surveyed to determine their opinion on an issue

– 246 were agree
– 405 were oppose
– 349 were neutral
The split of males and females was also recorded
– 447 were male
– 553 were female
Data Types
– Gender is a binomial variable
– Political view is an ordinal variable with three values
This combination of two variables creates six possible categories
State The Problem
Null Hypothesis: The two variables, opinion and gender, are

independent variables; each combination has equal probability
– P (agree|female) = P (agree|male) and
– P (oppose|female) = P (oppose|male) and
– P (neutral|female) = P (neutral|male)
Alternative: The two variables , opinion and gender , are dependent

variables .
– P (agree|female)  P (agree|male) and/or
– P (oppose|female)  P (oppose|male) and/or
– P (neutral|female)  P (neutral|male)
Analysis In MINITAB
SigmaXL  Statistical Tools  Chi-Square Test – Two Way Table
Interpreting MINITAB Results
Results for: Test of Association Examples
Chi-Square Test: Agree, Oppose, Neutral
Observed
Expected
Chi-Sq
p-value < 
Evidence to
Opinion and gender are dependent ( Ha ) reject the Null.
Exercise: Black Belt Projects
A sample of Black Belts were asked to rate both their Six Sigma® project
performance and the average weekly hours spent with the Project
Champion discussing project details. The results are shown in the
following table. Test at the 1% level the null hypothesis of no association
between the two sets of ratings.
Flip Chart Your Analysis: If you need prompting, answers are in the
Appendix..
Time with Champion PROJECT PERFORMANCE

HOURS Low Medium High
< 0.1 17 21 12
0.1 - 1 31 53 21
>1 17 42 71
Analyze Of Variance
( ANOVA )
When to Use ANOVA?
• The ANOVA is used to test the relationship between

two sources of variation (KPIV vs. KPOV). A
discrete X and continuous Y. The relationship can
be statistically described as follows :
X(KPIV, Input)
Discrete Continuous
Y(KPOV, Response)
Continuous Discrete
Chi Square Logistic
Regression
Analyze
1 X and 1 Y S E E S E C T IO N 1 S E E S E C T IO N 4
Sim ple
ANO VA Linear
Regression
1 Discrete X
at 3 or more levels & S E E S E C T IO N 2 S E E S E C T IO N 3
a continuous Y
• ANOVA allows for 3 or more groups comparison

The basic ANOVA Question
Main Question: Do the (means of) the quantitative
variables depend on which group (given by categorical
variables) the individual is in?
µ2
µ1 µ
3
Ho: mpop1 = mpop2 = mpop3 = . . .

Ha: at least one is different
One-Way ANOVA Example –
MINITAB Analysis
SigmaXL  Statistical Tools  One-
Way ANOVA
The data…
One-Way ANOVA Example – MINITAB
Analysis (Cont’d)
Example #2
A rope manufacturer wants to determine whether the percentage of cotton in a

synthetic rope fiber has an effect on the tensile strength of the rope. Other
variables have been determined to be minor contributors and thus held
constant for this study. It is known that the percentage of cotton should be
between 10 and 40 for the rope to maintain other desirable properties
(abrasion resistance, etc). Increasing the tensile strength makes the rope hold
more load.
Objective is to study the effects of changing the cotton content on the tensile
strength
The Experiment:
– Factor = % Cotton Content
– Levels = 15%, 20%, 25%, 30%, 35%
– Alpha Risk = 5% (.05)
– Sampling = five samples for each level of cotton percentage
– In order to ensure that there are no influences due to lurking
variables(hidden variable/noise), we will randomize the order of the tests,
25 runs in all
Example #2
(Cont’d)
Test was run in randomized order and

the data was collected
Cotton Content.xls
We’ll analyze the data, first graphically,

then using One-Way ANOVA
Example #2
One-Way ANOVA In MINITAB
We can get additional plots simultaneously with performing the
One-Way ANOVA.
SigmaXL  Statistical Tools 

One-Way Anova
Example #2 – ANOVA Output
Mean/CI - Tensile Strength

24.30
22.30
20.30
18.30
16.30
14.30
12.30
10.30
8.30
6.30
15 20 25 30 35
Some Statistical Items To Cover
Via The Example
The hypothesis tested in a One-Way ANOVA is of equal means
– Ho: m15% = m20% = m25% = m30% = m35%
– Ha: At least one m is not equal
Since p-value is < .05, we reject Ho and conclude that there is

evidence that one or more mean is different
– This agrees with our initial graphical assessment via the Xbar-R
chart
Before we’re done, we need to validate the

assumptions of ANOVA thus putting us on solid
statistical ground with our conclusions.
ANOVA Assumptions
When using ANOVA, we make the following assumptions regarding the

residuals
– Independence
– Normally distributed
– Equal variance (an in-control Range chart is a good indication of this)
How important are these assumptions?
– Patterns in the residuals (lack of independence) can point to serious

problems with the analysis and any conclusions you make
How do we check these assumptions?
Residual analysis or residual diagnostics
Optional Exercise – Credit Processing
A financial services company has four different sites that process credit cases.
The question has been asked if the sites are performing the same or differently.
The table below contains productivity data on the average number of cases
worked per hour for a sample of employees at each of the four sites.
File: Credit Processing.xls
Follow the process shown prior to
analyzing the data; first graphically
then using ANOVA.
Is there reason to believe the sites
are performing differently?
How would you improve productivity?
Correlation &
Regression
Regression Analysis
 Used to fit lines and curves to data

 The fitted lines
– Quantify the relationship between the process variables (X’s)
and process performance (Y)
– Help identify the vital few X’s
– Enable predictions to be made
– Identify the impact of controlling the process variables (X’s)
 Produces an equation to match the line
Terms
Correlation
– A measure of linear association
– Used when both X and Y are continuous
r values range from:
– Perfect positive relationship = 1
– No relationship = 0
– Perfect negative relationship = -1
Regression
– Provides the basis for predicting the values of a variable from
the values of one or more other variables
– Used with a continuous Y and continuous Xs, or continuous Y
and categorical Xs
r2 - proportion of variation of Y explained by the prediction equation
Correlation Illustrated
20 0 2 4 6 8 10
0
15
-5
10 -10
-15
5
-20
0
-25
0 2 4 6 8 10 -30
Correlation = 1 Correlation = - 1
12
10
8
6
4
2
0
0 2 4 6 8 10
Correlation = 0
Correlation Example
Correlat.xls
Two test stations are used to measure power supply voltage.
Is there a correlation?
SigmaXL>Statistical Tools>Correlation Matrix
Correlation of Station 1 and Station 2 = 0.959, P-Value = 0.000
The two are highly correlated (.959)
Is this reasonable?
Are you comfortable with .959?
What does it mean to you?
How does the data actually look?
How would you find out?
Multiple Factor Correlation
A Black Belt evaluating a yarn spinning process wants to determine

the key process input variables (KPIVs; the “x’s”) for skein strength
(the “y”).
Her team used a cause and effect matrix to select fiber strength, fiber
length, and fiber finish as likely contributors.
Yarn.xls
SigmaXL>Statistical Tools>Correlation Matrix
Minitab Correlation
Multiple Regression Analysis
 Two or more process variables (X’s) may have an influence upon

process performance (Y).
 Multiple regression is used whenever there are two or more
possible predictor variables.
 The general form of the multiple regression equation is:
Y = b0 + b1 X 1 + b2 X 2 + ... + bn X n
Que Time Example
A call center manager would like to be able to predict the average

waiting time for the resolution of customer inquiries. Data has been
collected on two factors:
1. Number of calls in the queue
2. Problem complexity
Callque.xls
 What is/are the important factor(s)?

 What is the prediction equation?
 What are the implications?
Que Time Example (cont.)
SigmaXL>Statistical Tools >Regression > Multiple Regression
Que Time Example (cont.)
The probability the

differences attributed to
problem complexity
could have occurred by
chance.
Let’s remove problem complexity from the model.
Reduced Model
Regression Analysis: Average Time in hours versus Inquires in the Queue
A More Complex Example: Water Usage
Seventeen observations regarding water usage at a

manufacturing plant are given. There are five known process
variables and one performance variable, Y:
X1 = average monthly temperature (oF)

X2 = amount of production (pounds)
X3 = number of plant operating days in the month
X4 = number of persons on the monthly plant payroll
X5 = unknown variable that process owner said may be important
Y = monthly water usage
Use the data to mine for the “vital few” process variables that
may influence water usage.
Water.xls
Questions 1 and 2
1. Which, if any, of the normally cited performance indicators in the

file influence CEO compensation?
CEO-COMPENSATION.xls
Note: this is real data.
2. You are planning to relocate. You have collected data on the
actual selling price of 20 houses in the general area of interest.
Realestate.xls You have located a house with 3,250 square
feet, with a neighborhood rating of 4 and a condition of 3. How
much should you offer?
Non-Parametric
Statistics
What We Will Learn
 How to use the following Nonparametric tests:

– 1-Sample Sign Test
– 1-Sample Wilcoxon
– 2-Sample Mann-Whitney Test
– Kruskal-Wallis Test
– Friedman Test
 Use as alternative statistical tests.
Cautions
1. The power of nonparametric tests are less than the power of

t-tests when populations are normally distributed.
2. For a given confidence level, confidence intervals based on
nonparametric statistics will usually be wider than confidence
intervals based on normal distribution statistics.
3. However, if the sample data is from a non-normal population the
normal distribution statistics (e.g., t-tests) may give incorrect values
for P values of tests or confidence levels of confidence intervals.
One-Sample Sign Test
 Used to determine if the median of distribution is equal to a specified

target (similar to a one-sample t-test).
 Less powerful than a t-test for normal data.
 Less powerful than the Wilcoxon test if the data is symmetric.
1-Sample Sign Test Example
The historic median time to complete a phone transaction has been 55

seconds. A new process has been introduced. The time required to
complete the transactions can be found in: nonpara.xls
SigmaXL >Statistical Tools > Nonparametrics Tests > 1 Sample Sign
Ho New process  55
Ha New process < 55
1-Sample Sign Test Output
Sign Test for Median: New Process
Do we reject or fail to reject the

null hypothesis?
Do we adopt the new process?
1-Sample Wilcoxon
 Used to determine if a median is equal to a target.

 Distribution is assumed to be continuous and symmetric.
 More powerful than the T test for non-normal distributions.
 Takes into account the magnitude of the calculated difference from
the hypothesized median.
Example
A delivery company has offered to deliver all individual software

packages for a standard price (eliminating the necessity for weighing
individual packages) if the median weight is less than 11 pounds.
1,000 samples are collected. Can the offer be accepted?
Use data from nonpara1.xls
Data = Nonpara column titled Weight

Test for normality, and create a histogram.
The data is not normal, but it is continuous and symmetric, therefore a

1-Sample Wilcoxon test will be used.
The Result
SigmaXL >Statistical Tools

> Nonparametrics Tests >
1 Sample Wilcoxon
With a P value of 0,
we reject the null
and conclude that
the median weight
is below 11lbs.
2-Sample Mann-Whitney Test
 Extends the 1-sample Wilcoxon test to 2 samples.

 Can be used on ranked as well as continuous data.
Example:
After six months (and many changes to the product mix), the delivery
company ask for verification that the median package weight was
still below 11 lbs.
Verify that the data is not normal and is symmetric.
Perform a 2-Sample Mann-Whitney test.
Use data from nonpara2.xls
Comparing Two Samples
SigmaXL >Statistical Tools > Nonparametrics Tests > Mann Whitney
Session Window Output
Mann-Whitney Test and CI: Weight, Weight 1
Cannot reject at alpha = 0.05
While the median has increased, the confidence interval contains 0;

and the significance level is > .05. Therefore, we conclude the
difference in the medians is not statistically significant.
Kruskal-Wallis Test
An alternative to one-way ANOVA when the data is not normal.

Assumes data are from independent populations, continuous and the
same shape.
Example: You wish to purchase a bicycle helmet; you obtain impact

force by helmet type on the WWW. How would you decide which
helmet to buy? Use data from Helmet.xls
Can ANOVA be used?

Test for normality
SigmaXL > Graphical Tools > Histogram & Descriptive Statistics
Test for independence
SigmaXL > Statistical Tools > Correlation Matrix
Conducting the Test
Data is not normal, but is independent, continuous and relatively the

same shape. Therefore, a Kruskal-Wallis test can be used.
SigmaXL >Statistical Tools > Nonparametrics Tests > Kruskal-Wallis
Kruskal-Wallis Output
Kruskal-Wallis Test: Impact versus Helmet
29.35
27.35
Median/CI - Impact
25.35
23.35
21.35
19.35
17.35
15.35
1 2 3
There is a significant difference among the helmet

types.
Summary
Normal Data Non-normal data

(Nonparametric tests)
T test 1-Sample Sign Test
1-Sample Wilcoxon Test
2 Sample T Test 2-Sample Mann Whitney
Test
One-way ANOVA Kruskal-Wallis Test
Tollgate Check List
Analyse Phase Presentation Slides
• Project Charter
• Sigma Value
• FMEA from Measure Phase
• Y = f(X1 + X2 + X3 …..Xn)
• Validation of root causes (Graphical & Statistical)
• Action Plan for Improve Phase
• Just Do It
• Project Execution Plan
• Issues / Challenges / Barriers

Analyse Material

Uploaded by

Document Information

Original Description:

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Analyse Material

Uploaded by

Copyright:

Available Formats

Process Optimization .

Six Sigma Green Belt Training

GENAXIS SDN BHD PROPRIETARY INFORMATION

By the end of this module, participants should be able to:

Understand what and why hypothesis

Type of hypothesis testing in 6 sigma project

Discuss the hypothesis testing process

Understand the risks in hypothesis testing

Discuss how the p-value is used for decision making

Understand how hypothesis testing can be used on our projects to

• The essential questions are often:

Imagine you are a professional golfer and

Did this new ball increase my average?

Before Changes After Changes

After Before After

Hypothesis testing enable us to move “down the funnel” by analyzing

– There is no difference: Do not focus on the variables that changed

– There is a difference: Focus on the input variables that are

Data can come from a couple sources

– Passive: A process is sampled or historic sample data is obtained

– Active: A modification is made to a process and then sample data

There is always a chance that the selected sample is not

With some assumptions, inferential statistics allows the estimation of

Let’s go through the process of Hypothesis Testing via

Ho: Return rate is the same for Customer A and Customer B

Ho: Project X Avg. Cycle Time = Project Y Avg. Cycle Time

In deciding to Reject or Not, we could make one of two decision errors

He’s Not Guilty He’s Guilty Consequence:

Consequence: Criminal goes Free

Consequences: Weapon on plane

Traditionally for Six Sigma: IfIfppis

Test Statistic 92.73 99 N 460

Data1 230 4.0102 0.1994 (--*-) 4.1554 4.2434

4.00 4.20 4.40 4.60

4.15 4.20 4.25 4.30 4.35

P Value Is Extremely Important

Remember This Key Saying….

StatAnova  One Way Anova

1 Sample 2 Samples More than 2 Samples

1 Variance Test 2 Variance test Test for Equal Variance

Define the problem and state objectives

State a “Null Hypothesis” (Ho)

State the “Alternate Hypothesis” (H a)

Establish significance level ()

Collect sample data

Calculate test statistic and/or p-value

Based on the data, how do we determine if there is a “real”

In SigmaXL, SigmaXL  Statistical Tools -  Descriptive Statistics

Practical Question: Will the modifications on Server 1 improve its efficiency

Is Server 1 different from Server 2?

Let’s take a look graphically first.

Define the problem and state objectives

State a “Null Hypothesis” (Ho)

State the “Alternate Hypothesis” (H a)

Establish significance level ()

Collect sample data

Calculate test statistic and/or p-value

Null Hypothesis (H0) Alternative Hypothesis (Ha)

Assume H0 to be true until proven otherwise.

Define the problem and state objectives

State a “Null Hypothesis” (H0)

State the “Alternate Hypothesis” (H a)

Establish significance level ()