MGT604

Six Sigma Mission

To reduce cycle time, reduce the error rate, reduce costs, reduce investment, improve service level, improve throughput, reduce lead time, increase productivity, change the output metric of some process etc. In statistical terms, this translates to the need to move the process mean and/or to reduce the process standard deviation. You will be making decisions about how to adjust key process input variables based on sample data, not population data that means you are taking risks. How will you know your key process output variable really changed, and is not just an unlikely sample? The central limit theorem helps us) The goal of the DMAIC Analyze phase is to identify potential root causes for the process problem being addressed and then confirm actual root causes with data.

Analyze

In many cases, clues to the factors affecting performance are already available based on the work that was done in Define and Measure. Perhaps the team demonstrated that the problem is isolated to one group, and they know that group is using older equipment. Or analysis of the process map may have revealed some fairly obvious sources of inefficiency and delay in the process. However, this is not sufficient to confirm what is causing the problem for two reasons. One is that, as in all phases of DMAIC, suspicions and hypotheses must be confirmed with data. Not only must the team confirm that these factors are present, they must also confirm that changes in these factors substantially impact the outcome. The other is that the goal of Analyze is to determine root causes, which requires digging deeper than what is apparent on the surface.

Terminologies Population: Totality of observations with which we are concerned Sample: Subset of Population
Each sample of numbers is drawn from a population of numbers, and generally speaking, it is the population of numbers, and not the samples that we really want to know about Probability: It is used to quantify the likelihood or chance, that an outcome of a random experiment occurs E.g. Chance of rain today is 30% Random Experiment: An experiment that can result in different outcomes, even though it is repeated in the same manner every time.

Sample vs. Population Statistical Sample

The thing you know about

Population Parameter
The thing you want to know about. We never know for certain that the information about the central tendency and dispersion of our sample are actually accurate estimates of the central tendency and dispersion of our population (population parameters). Instead, all we can work out is the probability that the sample statistics are good estimates of the population parameters. The conclusion drawn from inferential statistical methods are not certainties and truths, but estimates and probabilities Descriptive Statistics: It comprises those methods concerned with collecting and

describing a set of data so as to yield meaningful information. Statistical Inference: Statistical inference comprises those methods concerned with the analysis of a subset of data leading to predictions or inferences about the entire set of data. 1. In the field of statistical inference the statistician is interested in arriving at conclusions concerning a population when it is impossible or impractical to observe the entire set of observations that make up the population. E.g. the average length of likfe of a certiain brand of light bulb, it would be impossible to test all such bulbs if we are have any let to sell. That is why we have to rely on theory of sampling. 2. If our inferences from the sample to population are to be valid, we must obtain samples that are representative of the population (Not the one which is most convenient to us). 3. To eliminate any possibility of bias a random sample is chosen. 4. Statistics provide a methodology to detect differences through Hypothesis Testing 5. Examples might include differences in suppliers, shifts or equipment

Types of differences:
1. Practical 2. Statistical

DETAILS

Hypothesis Testing
1. Its main function is to suggest new experiments and suggestions. a. In social Sciences, the direct information of population parameter (s) is rare, Hypothesis testing is the often used strategy to find out whether the sample data offer such support for a hypothesis that generalization can be made b. Thus hypothesis testing enables us to make probability statements about population parameter(s). c. Hypothesis is an assumption or a supposition to be proved or disproved d. Its a predictive statement capable of being tested by scientific methods, thus relates an independent variable to some dependent variable e. E.g. Students who receive counseling will show better performance than students who dont f. Hypothesis converts the business problems in to statistical problems g. It is statement about the parameters of one or more populations h. A hypothesis is a predetermined theory about the nature of, or relationships between variables. Statistical tests can prove (with a certain degree of confidence) that a relationship exits. i. The truth and falsity of a statistical hypothesis never known with certainty unless we examine the entire population. j. Many problems in engineering and business require that we decide whether to accept or reject a statement about some parameter. The statement is called a hypothesis, and the decision making procedure about the hypothesis is called hypothesis testing. The objective of Hypothesis testing is k. To determine whether a population parameter is changed l. Conformance testing

Steps to Hypothesis testing

1. 2. 3. 4. 5. 6. 7. 8.

State the practical problem State the statistical problem Ho:__=__ Ha:__not equal to,>,<__ Select the appropriate statistical test and risk levels Establish the sample size required to detect the difference State the statistical solution State the practical solution

Common Pitfalls to Avoid

1. The decision is about Ho not Ha 2. The conclusion statement is whether the contention of Ha was upheld 3. The Ho is on trial 1. Population parameters are unknown and has be estimated from sample. 2. Estimate of a population parameter can be a single value (point estimate) or a range of values (range estimate). 1. Property of Efficiency 2. Property of Unbiasdness 3. Property of Sufficiency (The estimator should use as much as possible information from the sample) 4. Property of Consistency (The estimator should approach the population parameter as the sample size increases

Estimation

Estimators Properties

Hypothesis Testing & Confidence Interval (CI)

CI provides a range of likely values for u/ at a stated confidence level, where as hypothesis testing is an easy framework for displaying the risk levels such as P value associated with a specific decision.

Power of a Test

The tests ability to correctly reject the null hypothesis

T Tests

1. To compare a mean against a target 2. To compare means from two different samples (machine one to machine two) 3. To compare paired data (comparing the same part before and after a given process) 1. ANOVA: Its a method for splitting the total variation of our data in to meaningful components that measure different sources of variation 2. ANOVA is used to investigate and model the relationship between a response variable and one or more independent variables

ANOVA

Type 1 & 2 Errors

Type 1 Error: Rejection of the Ho when it is true Type 2 Error: Acceptance of Ho when it is false

Analyze Phase Goal

The goal of Analyze phase is to

1. Locate the variables which are significantly impacting our Primary Metric. Then establish root causes for X variables using inferential statistical analysis such as hypothesis testing etc 2. Gain and demonstrate working knowledge of inferential statistics as a means of identification of leverage variables