Yield, DPMO & Process Sigma in Lean Six Sigma

 

1️⃣ Yield

What is Yield?

Yield measures the percentage of outputs that are defect-free.

Yield answers: How much did we get right the first time?

Formula

$$\textbf{Yield (\%)} = \frac{\text{Good Units}}{\text{Total Units}} \times 100$$

Example

• Units processed = 1,000

• Defective units = 50

• Good units = 950

$$\text{Yield} = \frac{950}{1000} \times 100 = 95\%$$

✅ 95% Yield
❌ Still means 50 customers unhappy

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2️⃣ DPMO (Defects Per Million Opportunities)

What is DPMO?

DPMO measures how many defects would occur per one million opportunities.

DPMO answers: How bad is the process when scaled up?

Formula

$$\textbf{DPMO} = \frac{\text{Number of Defects}} {\text{Units} \times \text{Opportunities per Unit}} \times 1{,}000{,}000$$

Example

• Units = 1,000

• Opportunities per unit = 5

• Total defects = 50

$$\text{DPMO} = \frac{50}{1000 \times 5} \times 1{,}000{,}000 = 10{,}000$$

🔴 10,000 DPMO → Quality problem at scale

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3️⃣ Process Sigma (Sigma Level)

What is Process Sigma?

Process Sigma translates DPMO into a statistical performance level.

Sigma answers: How capable and consistent is the process?

Higher Sigma = Fewer defects = Better quality

End-to-End Example (All Three Together)

Scenario – Loan Processing

• Applications = 1,000

• Opportunities per application = 4

• Defects found = 20

Step 1: Yield

• Defective applications = 20

• Good applications = 980

$$\text{Yield} = 98\%$$

Step 2: DPMO

$$\text{DPMO} = \frac{20}{1000 \times 4} \times 1{,}000{,}000 = 5{,}000$$

Step 3: Process Sigma

• 5,000 DPMO ≈ 4.1 Sigma

Sigma Level=NORMSINV(1−DPMO/1,000,000)+1.5 -> use excel formula