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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

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

Example

  • Units processed = 1,000

  • Defective units = 50

  • Good units = 950

Yield=9501000×100=95%\text{Yield} = \frac{950}{1000} \times 100 = 95\%

✅ 95% Yield
❌ Still means 50 customers unhappy

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

DPMO=Number of DefectsUnits×Opportunities per Unit×1,000,000\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

DPMO=501000×5×1,000,000=10,000\text{DPMO} = \frac{50}{1000 \times 5} \times 1{,}000{,}000 = 10{,}000

🔴 10,000 DPMO → Quality problem at scale

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

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

Step 2: DPMO

DPMO=201000×4×1,000,000=5,000\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

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