Operations Management Basics: Measuring quality with the capability score
To calculate the capability score (e.g. of a machine used in production or of a supplier), only three variables are needed: The lower and the upper specification level as well as the standard deviation:
LSL = Lower Specification Level = flow unit needs to have at least XXX (measurable size)
USL = Upper Specification Level = flow unit needs to have no more than XXX (measurable size)
capability score = width of the specification level (USL – LSL) / 6 * standard deviation
Because of the sixfold multiplication of the standard deviation (sigma), this is also known as the six sigma method. The capability score of a distribution can be translated into the probability of defect through the normal distribution function of standard spreadsheet software such as Excel.
These lecture notes were taken during 2013 installment of the MOOC “An Introduction to Operations Management” taught by Prof. Dr. Christian Terwiesch of the Wharton Business School of the University of Pennsylvania at Coursera.org.