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Performance Rating and the Six-Sigma Theory

A manager states that his process is really working well. Out of 1,500 parts, 1,477 were produced free of a particular defect and passed inspection. Based upon Six-Sigma theory, how would you rate this performance, other things being equal.

Please provide an example!

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Hi,

Interesting question! Let's take a look at two examples first, and then apply the information to your question:

Example: The current average industry runs at four sigma, which corresponds to 6210 defects per million opportunities. Depending on the exact definition of "defect" in payroll processing, for example, this sigma level could be interpreted as 6 out of every 1000 paychecks having an error. As "four sigma" is the average current performance, there are industry sectors running above and below this value. Internal Revenue Service (IRS) phone-in tax advice, for instance, runs at roughly two sigma, which corresponds to 308,537 errors per million opportunities. Again, depending on the exact definition of defect, this could be interpreted as 30 out of 100 phone calls resulting in erroneous tax advice. ("Two Sigma" performance is where many noncompetitive companies run.) On the other extreme, ...

Solution Summary

Based on the Six-Sigma theory, this solution explains the following problem in a step-by-step format: A manager states that his process is really working well. Out of 1,500 parts, 1,477 were produced free of a particular defect and passed inspection. Based upon Six-Sigma theory, how would you rate this performance, other things being equal.

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