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.
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