Abstract
A new economic approach to process capability assessment is presented, which differs from the commonly used engineering metrics. The proposed metric consists of two economic capability measures – the expected profit and the variation in profit of the process. This dual economic metric offers a number of significant advantages over other engineering or economic metrics used in process capability analysis. First, it is easy to understand and communicate. Second, it is based on a measure of total system performance. Third, it unifies the fraction nonconforming approach and the expected loss approach. Fourth, it reflects the underlying interest of management in knowing the expected financial performance of a process and its potential variation.
Highlights
The proposed process capability metric is designed to be a management tool that can use to help guide processes towards greater and more stable economic performance
In the recent survey article on Process Capability Indices, by Kotz and Johnson, several discussants suggested that a single metric is insufficient to adequately describe process capability and that multiple metrics are required (Kotz, 2002) (Bothe, 2002)
Assuming our company produces a product that has a stable quality characteristic distribution having mean standard deviation with a fixed process target T and constant specification limits (LSL, Upper Spec Limit (USL)), the quadratic expected loss is given by expected loss metric (EL) = c ( 2 + ( – T)2), where c is the constant estimated economic loss per unit, and T is the process target
Summary
The proposed process capability metric is designed to be a management tool that can use to help guide processes towards greater and more stable economic performance. It provides a more complete view of process performance than other capability assessment approaches, which typically focus on components of the system rather than an end-to–end measure of total system performance. This metric is the only capability metric that assesses both the expected performance and the variation of the most fundamental economic measure of. There are concerns with this metric which will be discussed
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