5th International Asia Conference on Industrial Engineering and Management Innovation (IEMI 2014)
Improved Rolled Throughput Yield: A Novel Method for Performance
Measurement
Jie Jin*, Yi-zhong Ma, Lin-han Ouyang, Xiao-guang Gu
School of Economics and Management, Nanjing University of Science and Technology, Nanjing, China
(ginger_jinjie@163.com)
1 Abstract - The quality level measurement of a given
process is essential to six sigma process improvement.
Indicators such as rolled throughput yield and six sigma
level have been applied to estimate the efficiency of total
process in a certain organization. As an effective indicator,
however, rolled throughput yield has not thoroughly
explored in scarce studies undertaken. In this paper, we
develop an Improved Rolled Throughput Yield (IRTY) that
takes the effect of appraisal cost and external failure cost of
each sub-process on process weights into account. Moreover,
the rework and scrap cost are also incorporated into the
proposed approach. The uniqueness of the proposed
approach is that the determination of process weights is
based on the cost of poor quality. A numerical example is
illustrated to present the procedure and the effectiveness of
the proposed approach.
Keywords - Process weights, rolled throughput yield, six
sigma, total process
I INTRODUCTION
Nowdays, the global market is highly competitive and
in order to survive, organizations need to produce
products and services of high quality to achieve customer
satisfaction and loyalty to stimulate top-line business
growth [1-2]. The six sigma methodology focus on
reducing variation, measuring defects and improving the
quality of products and processes [3]. Originated in
Motorola in 1987, started with manufacturing, six sigma
has been adopted by many other global firms such as GE,
Allied Signal, Sony, Microsoft and Samsung, and
expanded its realm to variety of fields such as healthcare,
banking, servicing [4-10].
Academic research such as Schroeder et al. have tried
to determine which elements in six sigma make it
effective [11]. The improvement procedure generally
known as DMAIC (Define, Measure, Analysis, Improve,
Control) is regarded as a novel and effective contribution
to quality management [12]. In the all five phases, the
Measure phase is crucial for discovering opportunities for
improvement, which can be used to improve and enhance
the quality level of corporation. Rolled Throughput Yield
(RTY), as a new six sigma metric that measure the overall
performance of process, plays a significant role in the
performance measurement of an organization.
On the basis of summing up the computation of
qualified rate in the past manufacturing industry, Graves
(1998) proposed Total Process Yield that was the earlier
1
This work is supported by the State Key Program of National Natural
Science of China (No. 70931002), the Youth Program of National
Natural Science of China (No. 71301075) and colleges and universities
in Jiangsu Province plans to graduate research and innovation projects
(No.CXZZ13-210).
E. Qi et al. (eds.), Proceedings of the 5th International Asia Conference on Industrial Engineering
and Management Innovation (IEMI2014), Proceedings of the International Asia Conference on Industrial Engineering
and Management Innovation 1, DOI 10.2991/978-94-6239-100-0_45, Atlantis Press and the authors 2015
state of RTY. Hereafter, he further explained how RTY
was related to rework, scrap, warranty and customer
satisfaction and described the use of RTY for monitoring
[13-14]. Some scholars have studied the combination of
RTY with other methods, e.g. Dasgupta (2003) integrated
RTY into the proposed supply chain performance
measurement by using six sigma metrics [15]. Chien Lin
(2008) also applied RTY to measure supply chain process
performance in the supply chain performance
measurement framework [16]. Abdelhamid (2003) and
Hwang (2006) demonstrated the application of RTY to
the Last Planner System in Lean Construction and to
projects in integrated manufacturing execution systems
respectively [17-18]. In the above studies, however, the
importance of each sub-process was treated equally, the
difference of each sub-process in overall performance
measurement were ignored. Since each sub-process is
unique in nature in one way or another, and
interdependent, the quality level of each sub-process at a
time may not be the same [19]. Therefore, it is wise and
necessary to take the process weights into consideration in
overall performance measurement of an organization.
Based on this consideration, Ravichandran (2006)
assigned weights for all critical processes based on their
importance and then determined the weight-based sigma
level of an organization at a given point of time by using
process weights and defects per million together.
Following his work, there remained a number of queries
on how to determine the process weights. In 2007,he
proposed an approach in which both internal and external
performances of the products and processes in terms of
costs involved were used to determine cost-based process
weights [20] Furthermore, Abbas (2012) proposed a new
six sigma-based performance measure called Enhanced
rolled Throughput Yield (ERTY). Unlike all previous
methods, ERTY paid particular attention to such factors
as the difference between scrap and rework cycle, the cost
of scrap and rework and the sequence of stages [21].
Unfortunately, the effect of appraisal cost and external
failure cost of each sub-process on process weights is
ignored. In order to gain a more plausible result, however,
it is more appropriate to consider these factors in practice.
This paper presents a model called Improved Rolled
Throughput Yield (IRTY) that not only pays attentions to
the cost of rework and scrap but also to the appraisal cost
and external failure cost of each sub-process to calculate
the overall performance of an organization. From the
perspective of cost of poor quality, an effective metric for
six sigma organizations to assess the actual overall
performance and find opportunities for six sigma
improvement was designed based on the RTY index.
239
240
The organization of this paper is given as follows. In
Section 2, basic concepts and limitations of RTY are
reviewed. Sections 3 gives an improved RTY method that
considers the cost of poor quality. In Section 4, a
numerical example is presented to illustrate the
computation of IRTY. Finally, a few concluding remarks
are presented in Section 5.
II ROLLED THROUGHPUT YIELD
In general terms, RTY estimates the probability that a
unit, whether a service or physical product, pass through a
process defect-free [14, 22]. It is fairly obvious that RTY is
closely related to rework and scrap: an increase in rework
or scrap units implies a reduction in the probability of a
unit passing the process without failures. Similarly, an
increase or decrease in the probability also has significant
effect on customer satisfaction and warranty while
customer satisfaction is the ultimate goal of every
organization in global market. RTY which evaluates the
performance of processes from the view of system rather
than that of a single process is an important metric.
Therefore, RTY can truly describe the overall
performance of processes.
Scarp
Fig.1. The typical diagram of a serial process
Suppose that a process consists of n sub-processes.
Fig.1 shows the typical diagram of a serial process. For
each sub-process, First Time Yield (FTY) refers to the
probability of a unit completing the sub-process without
reworking or scraping. Assuming that each sub-process is
independent of each other, then the RTY of process could
be easily obtained by multiplying the FTY of each sub-
process:
n part and value-added part in the prevention costs. Hence,
RTY= Pi (1)
i=1
where Pi denotes the FTY of sub-process i.
Indeed, the calculation result of formula (1) can reflect
the capability of a given process to a certain extent, but it
amplifies the effect of a single sub-process on overall
performance. Suppose that there is a serial process
consists of n sub-process. The FTY of sub-process i is
only 50% while that of others is 100%, but all the
unqualified output of sub-process i can be repaired
through reworking. According to formula (1), RTY=0.5.
However, the final yield is 100% which means no
unqualified products are delivered to customer. It is the
ignorance of process weights that lead to the deficiency in
describing the overall performance. Although Abbas
(2012) studied the process weights by considering the
rework and scrap costs, he ignored the effect of appraisal
cost and external failure cost. In order to incorporate the
two costs into the construction of RTY, Section 3 gives an
improved RTY method.
J. Jin et al.
III IMPROVED ROLLED THROUGHPUT YIELD
Suppose that there is a serial process consists of n sub-
process, the final yield of product depends on the
performance of each sub-process while each sub-process
has its own characteristic at a time. Namely, the
importance of each sub-process is different. If the outputs
of any sub-process do not meet the defined criteria, they
will be clarified as unqualified outputs. If they are
checked out to be unqualified, they should be either
corrected or scrap. Otherwise, they should be considered
in the next process and inflict losses. These losses caused
by unqualified outputs are the invisible factory which is
exactly what RTY wants to reveal. With these in mind,
this paper presents a method in the view of cost of poor
quality.
Cost of poor quality refers to the losses caused by poor
quality or the additional costs we have to pay in that we
did not do it right at the first time. It includes prevention
cost, appraisal cost and failure cost. Table I lists the
composition of cost of poor quality.
TABLE I
THE COMPOSITION OF THE COST OF POOR QUALITY
Prevention cost (No value added
Cost of part)
conformity Appraisal cost (No value added
Cost of part in pre-testing)
poor quality Appraisal cost (Analyze the cause
Cost of of failure)
nonconformity Failure cost (Internal and external
failure)
Prevention cost refers to the no value added part in the
upfront costs that we have to pay for prevention,
including the costs of customer surveys, process control,
product design, etc. Most of the prevention costs are
usually paid for all the processes before the start of
production rather than one single process except for the
costs of process control which are paid during the whole
process of production. Moreover, it seems difficult to
clearly define the boundaries between non value-added
prevention costs are not considered in determining the
process weights in this paper.
Appraisal cost refers to the cost that is paid for testing
whether the process output meet the specifications and
finding the failure causes. In practice, there are a lot of
inspection methods available used for testing and
operators make decisions depend on many factors such as
appraisal cost that have significant effect on the selection
of inspection method. Since the losses caused by
unqualified outputs that are produced in previous
processes are affected by the selection of inspection
method, the sub-process that has higher appraisal cost
than others should have a higher priority during the
process of optimization, namely, it is more important than
others.
Failure cost refers to the losses caused by unqualified
outputs, including internal and external failure cost.
Assuming that the output of sub-process i do not meet the
specification, if it is checked out before entering sub-
process i+1, then it turns to rework or scrap that
Improved Rolled Throughput Yield: A Novel Method for Performance Measurement 241

constitutes the internal failure cost. Otherwise, it goes to
sub-process i+1 and causes a loss that constitutes the
external failure cost. In a serial process, the probability of
that the unqualified output of sub-process i goes through
sub-process i and sub-process i+1 and has not been
detected is extremely tiny so that we could exclude it
beyond our consideration. Therefore, we suppose that the
unqualified output produced by sub-process i must be
unqualified after the production of sub-process i+1 if it
escaped the test of sub-process i, and it will be detected in
the test of sub-process i+1. Then we could measure the
external failure cost by using the sum of the appraisal cost
and process cost of sub-process i+1.
The notation is summarized below.
Si Unit scrap costs of sub-process i ;
Ri Unit rework costs of sub-process i ;
Ci Unit process costs of sub-process i ;
Di Proportion of scraps in unqualified outputs of
sub-process i ;
that the importance of sub-process has nothing to do with
the present yield of sub-process, so the high number of
defects due to insufficient process capability has no effect
on the determination of process weights. In order to avoid
the repeated calculation, we take the failure proportion
into account. There are some differences in calculation of
failure costs between sub-process n and other sub-
processes. The output of sub-process n is the product of
all sub-processes that directly face to external customer,
thus the external failure costs of sub-process n should be
beared by all sub-processes rather than sub-process n.
Based on this consideration, the external failure costs of
sub-process n are assigned to each sub-process based on
the process weights. Considering the above issues, the
equation of the weight can be obtained:
wi X  Fi  Ti
wi n
X  ( Fi  Ti )
(3)
i 1
n

Ei Proportion of rework outputs in unqualified where w i 1

i 1
outputs of sub-process i ;
Ji Proportion of undetected outputs in After simplification, the equation can be expressed as:
unqualified outputs of sub-process i ; Fi  Ti
Fi Failure costs of sub-process i ; wi n

(F  T )
(4)
Ti Appraisal costs of sub-process i ; i 1
i i

wi Weight of sub-process i ; thus, the proposed IRTY can be written in following form:
n
FTY of sub-process i ;
n
Pi
Number of sub-process ;
IRTY P
i 1
i
wi
(5)

X External loss of process . Weight of each sub-process is calculated by formula

In this model, the importance of each sub-process is (5), then we can obtain the IRTY that describes the
determined according to failure costs and appraisal costs. overall performance of process. The proposed method that
Failure costs of sub-process i can be written in the pays particular attention to cost of poor quality provides a
following form: guideline for top managers to make strategic decisions,
Fi D i Si  E i Ri  J i (Ci 1  Ti 1 ) , i 1, n  1 (2)
where D i  Ei  J i 1 , Fn D n S n  E n Rn .
Formula (2) describes the sum of losses caused by the
failure of sub-process i, including the cost of rework and
scrap and external failure costs of sub-process i that
constitute the architecture of unit failure costs of sub-
process i. It is not too hard to aware of that the loss caused
by a unit output of sub-process can only be one of three
costs mentioned above. Meanwhile, we should understand
Scrap
Scrap
Scrap
1 2 3 4
Rework Rework
Fig.2. The diagram of a serial process
Fig.2 shows us a serial process consists of six sub-
processes. If the outputs of sub-process 2 and 3 are tested
to be unqualified and they could be repaired, then they
will be returned to sub-process 1 for reworking. Similarly,
some opportunities for middle managers to improve
existing process, a criterion for operators to strive to
achieve. It should be noted that sub-processes in parallel
also exist in actual production process. If we want to
calculate the IRTY of a hybrid process, then we need to
calculate the FTY of parallel process first and view it as
the FTY of sub-process of serial processes, and then we
can calculate the IRTY using the formula (5).
IV NUMERICAL EXAMPLE
Rework
5 6
Rework
Scrap
Scrap
Scrap
if the unqualified outputs that can be repaired stem from
sub-process 5 or sub-process 6 are tested to be unqualified,
they will be returned to sub-process 4 for reworking. As
for sub-process 4, it is sub-process 3 where it performs
242 J. Jin et al.

unqualified but repairable outputs will be returned to. proposed IRTY can give more reliable and reasonable
Table II presents the parameter values of each sub-process results.
and corresponding results calculated by using formula (2) This research can be further extended to systems with
and (4). In order to facilitate the analysis, the proportion more complicated process such as a hybrid process.
of external failure costs of each sub-process is 5%. As can
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