Understanding Sigma

Defining Sigma:
Sigma in statistical process control stands for Standard Deviation, often denoted by greek letter σ or
alphabet “S” . Variation in a process is measured by Standard Deviation. Standard Deviation means
howmuch are the data points (of the entiry we are measuring) deviating from the mean . Smaller
the deviation, better it is.

The standard deviation of a sample of numerical observations is a measure of the spread or range
of the sample values. It is derived from the distance of each point in the sample from the sample
mean (positive distance to the right, negative to the left). These distances are the deviations of the
title - they are deviations from the sample mean. If we sum the squared deviations, and then divide
by one less than the sample size, we get what is known as the sample variance. Typically this is
denoted by ‘S²’. The sample variance is a useful measure in itself of the variability in the sample
values, but its units of measurement are the square of those of the sample values themselves. The
standard deviation of a sample is the (positive) square root of the sample variance, and is usually
denoted by ‘S or Greek Letter σ’. It is a measurement on the same scale as that of the original
sample values. The standard deviation cannot be less than zero. If the standard deviation of a
sample is zero, then all sample values are the same. If the sample values are not all the same then
they must exhibit some form of variability. How much variability the sample values exhibit is
encapsulated by the standard deviation. If the standard deviation is small, then the sample values
cluster close to the sample mean. If the standard deviation is large then the sample values are
widely dispersed.

Using the formula for standard deviation (below) we can calculate a standard deviation value. With
this value, we can move along the normal distribution curve in either the positive or negative
direction by a unit the size of a single standard deviation (1σ).

Where

x̅ = Sample Mean

n = Sample Size

Xi =ith Value of the Variable X

Referring to our normal distribution curve, the shaded area under the curve represents 100% of
the data. If we are at the zero point (the center of the curve) a large portion of the data points will
be concentrated there.

As we move along the curve in either direction, our scope includes a larger portion of the area
under the curve, and therefore, a larger portion of the data points. The very far ends of the curve
represent outliers, or data points that are anomalous or infrequent.

Standard Deviation can be difficult to interpret as a single number on its own. Basically a small
standard deviation means that the values in a statistical data set are closed to the mean of the data
set, on average and a large standard deviation means that the values in the data set are farther
away from the mean, on average.

A small standard deviation can be a goal in certain situation where the results are restricted, for
example, in product manufacturing and quality control. A particular type of shaft of a milling
machine that has to be 2 inch in diameter to fit properly had better not have a very big standard
deviation during the manufacturing process. A big standard deviation in this case would mean that
lots of shafts end up in the trash because they don’t fit right; either that or the milling machine will
have problem after commisioning.

But in situations where you just observe and record data, a large standard deviation isn’t
necessarily a bad thing; it just reflects a large amount of variation in the group that is being studied.
For example, if you look at salaries for everyone in a certain company including everyone from the
trainees to the CEO, the standard deviation may be very large. On the other hand, if you narrow the
group down by looking only at the trainiees and lower staffs, the standard deviation may be
smaller, because the individuals within this group have salaries that are less variable. The second
data set isn’t better, it’s just less variable.

Similar to the mean, outliers affect the standard deviation as the standard deviation is calculated
from mean.

Below are some properties that might help in understanding and interpreting the standard
deviation:

 The more spread out or dispersed the data is, the larger will be the range, the variance, and
the standard deviation.
 The more concentrated or homogeneous the data is the smaller will be the range, the
variance, and the standard deviation.
 If the values are all the same (so that there is no variation in the data), the range, variance,
and standard deviation will all be zero.
 The range, variance, or standard deviation will always be greater than or equal to zero
References:

The Certified Six Sigma Black Belt Handbook-ASQ

www. asq.org
www.advanceinnovationgroup.com
www.nwasoft.com

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