DRAFT

Six 
Case Study
Aftco, Inc.

© 2007
Institute of Industrial
Engineers

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Six Sigma Black Belt Case Study

©2007 Institute of Industrial Engineers

Introduction

This case study is designed to illustrate possible applications of tools

that are generally considered to be part of the Six Sigma Body of
Knowledge. Its intent is to supplement the class room instruction
which focuses on the mechanics of the analysis methods. As such, it
applies applicable tools to a problem. (Note: It is not presented in a
format to represent how a final black belt project should be presented.
It is designed to show possible appropriate applications of some of the
tools included in the black belt body of knowledge.)

Background

Aftco is a data entry operation with three distinct facilities located

within a major metropolitan area. At each of these operations
individuals take client supplied hand written data collection forms and
enters these into the system. The clients are all other divisions of the
organization.

The data collection facilities are under the direction of a general

manager (GM) who reports to the Vice President of Operations for the
corporation. Each data input facility has a director who performs daily
supervision, workload management, and all tasks necessary for the
facility to perform its designated work. All facilities process the same
types of forms.

Each center has computer terminals networked to the main corporate

computer. Staffing levels at each of the three facilities are shown in
the table below.

Facility Number of
Data Entry
Personnel
Riverside 24
Mountain View 30
Cliffside 22

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Problem Description

The GM has received some verbal comments from corporate that the
error rate for data input is “too high.” Based upon this nebulous
statement the GM has requested some Six Sigma Black Belt assistance
through the Six Sigma Steering Committee.

Define

The Black Belt is brought on board and forms a team of stakeholders.

The team begins the define step and develops the following charter:

Project Name Case Study

Black belt All of Us Telephone Number
Champion Master Black Belt
Start Date Week 1 Target Completion Date Week 3
Element Description Team Charter
1. Process: The process in which Data Entry
opportunity exists.

2. Project Description: Describe the Project’s Purpose Reduce Error Rate

and scope.

3. Objective: What improvement is targeted

and what will be the impact to BSL1 GOAL units
the business?
1. Data Entry Errors TBD TBD %

2.

3.

4.

4. Business Results: What is the improvement in 1. Reduction in rework costs from $ to $

business performance
anticipated and when?
5. Team members: Who are the full-time members
and any expert consultants?
6. Project Scope: Which part of the process will
be investigated?
2. Increased profitability
Data Center Directors (3)
Data Center Operators (3)
Black Belt
 Data entry

1
Baseline

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Examining the Charter

 What are your general comments on the charter?

 What specific information would you like to have?
 What information on the charter should be updated?

As part of the define stage the team decided to collect data on types of
errors, error rates, and costs. (Did this agree with your thoughts?)

In the table below is a definition of the different types of errors that

they observed.

Error Description/Definition
Type
1 Not filling in a required field
2 Filling in a required field incorrectly
2A Numbers instead of Letters
2B Letters instead of Numbers
2C Wrong Letters
2D Wrong Numbers

Measure

At this stage the measure step determined some basic cost measures:

 Data entry hourly base pay rate including benefits is $17.50.

 Standard time to process a data entry form is 9 minutes.
 Time to correct an error is budgeted at 5.25 minutes a form.

On the following pages is the error data by location.

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  Error 1  
           
Date     Center      
(Week Riverside Mountain View Cliffside  
Ending) # Proc # Errors # Proc # Errors # Proc # Errors
22-Feb 1550 154 1865 595 1190 90
01-Mar 1740 348 2426 334 1240 98
08-Mar 1804 453 2326 387 1322 105
15-Mar 1653 414 2024 809 1392 65
22-Mar 1488 722 2188 554 1422 166
29-Mar 1777 207 2069 385 1443 54
05-Apr 1595 751 2353 517 1194 85
12-Apr 1901 417 2073 521 1276 166
19-Apr 1812 142 2220 563 1283 188
26-Apr 1770 730 1856 796 1374 158
03-May 1604 969 2180 814 1324 115
10-May 1717 317 2071 277 1506 172
17-May 1786 586 1938 575 1326 59
24-May 1492 675 2175 556 1421 91
31-May 1941 644 2255 631 1188 151
07-Jun 1861 210 2066 312 1395 122
14-Jun 1619 123 1860 301 1326 108
21-Jun 1750 224 2221 281 1416 111
28-Jun 1655 229 1994 469 1429 178
05-Jul 1882 925 2376 375 1450 95
12-Jul 1658 848 2265 731 1521 51
19-Jul 1776 512 2213 373 1553 149
26-Jul 1485 412 2005 629 1489 60
02-Aug 1744 609 2146 761 1295 179
09-Aug 1657 619 2233 799 1400 153

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  Error 2A  
           
Date     Center      
(Week Riverside Mountain View Cliffside  
Ending) # Proc # Errors # Proc # Errors # Proc # Errors
22-Feb 1550 131 1865 170 1190 133
01-Mar 1740 156 2426 152 1240 45
08-Mar 1804 143 2326 68 1322 173
15-Mar 1653 156 2024 10 1392 96
22-Mar 1488 162 2188 105 1422 99
29-Mar 1777 22 2069 136 1443 75
05-Apr 1595 13 2353 87 1194 82
12-Apr 1901 109 2073 142 1276 152
19-Apr 1812 103 2220 141 1283 87
26-Apr 1770 187 1856 107 1374 53
03-May 1604 175 2180 161 1324 139
10-May 1717 135 2071 193 1506 155
17-May 1786 79 1938 41 1326 140
24-May 1492 15 2175 164 1421 110
31-May 1941 193 2255 96 1188 157
07-Jun 1861 17 2066 127 1395 158
14-Jun 1619 113 1860 43 1326 105
21-Jun 1750 87 2221 41 1416 98
28-Jun 1655 144 1994 154 1429 166
05-Jul 1882 39 2376 188 1450 106
12-Jul 1658 34 2265 152 1521 99
19-Jul 1776 5 2213 133 1553 98
26-Jul 1485 124 2005 140 1489 106
02-Aug 1744 14 2146 185 1295 147
09-Aug 1657 191 2233 171 1400 139

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  Error 2B  
           
Date     Center      
(Week Riverside Mountain View Cliffside  
Ending) # Proc # Errors # Proc # Errors # Proc # Errors
22-Feb 1550 36 1865 39 1190 17
01-Mar 1740 43 2426 18 1240 17
08-Mar 1804 40 2326 27 1322 12
15-Mar 1653 17 2024 21 1392 42
22-Mar 1488 37 2188 3 1422 17
29-Mar 1777 23 2069 3 1443 35
05-Apr 1595 43 2353 35 1194 10
12-Apr 1901 39 2073 25 1276 32
19-Apr 1812 43 2220 37 1283 40
26-Apr 1770 38 1856 43 1374 5
03-May 1604 6 2180 4 1324 27
10-May 1717 20 2071 18 1506 9
17-May 1786 37 1938 41 1326 7
24-May 1492 37 2175 34 1421 16
31-May 1941 5 2255 37 1188 13
07-Jun 1861 21 2066 27 1395 18
14-Jun 1619 11 1860 30 1326 38
21-Jun 1750 31 2221 23 1416 19
28-Jun 1655 38 1994 6 1429 25
05-Jul 1882 29 2376 27 1450 19
12-Jul 1658 39 2265 23 1521 8
19-Jul 1776 33 2213 7 1553 24
26-Jul 1485 24 2005 42 1489 31
02-Aug 1744 17 2146 22 1295 11
09-Aug 1657 44 2233 14 1400 11

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  Error 2C  
           
Date     Center      
(Week Riverside Mountain View Cliffside  
Ending) # Proc # Errors # Proc # Errors # Proc # Errors
22-Feb 1550 106 1865 27 1190 62
01-Mar 1740 105 2426 109 1240 9
08-Mar 1804 41 2326 91 1322 68
15-Mar 1653 34 2024 85 1392 46
22-Mar 1488 56 2188 45 1422 42
29-Mar 1777 68 2069 114 1443 26
05-Apr 1595 98 2353 62 1194 77
12-Apr 1901 95 2073 36 1276 29
19-Apr 1812 53 2220 25 1283 40
26-Apr 1770 103 1856 17 1374 43
03-May 1604 30 2180 47 1324 15
10-May 1717 27 2071 80 1506 32
17-May 1786 93 1938 37 1326 68
24-May 1492 9 2175 13 1421 53
31-May 1941 31 2255 99 1188 25
07-Jun 1861 45 2066 77 1395 20
14-Jun 1619 109 1860 17 1326 37
21-Jun 1750 55 2221 72 1416 11
28-Jun 1655 111 1994 107 1429 75
05-Jul 1882 98 2376 68 1450 44
12-Jul 1658 93 2265 41 1521 43
19-Jul 1776 77 2213 74 1553 27
26-Jul 1485 82 2005 82 1489 75
02-Aug 1744 44 2146 80 1295 44
09-Aug 1657 29 2233 23 1400 68

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  Error 2D  
           
Date     Center      
(Week Riverside Mountain View Cliffside  
Ending) # Proc # Errors # Proc # Errors # Proc # Errors
22-Feb 1550 72 1865 34 1190 29
01-Mar 1740 43 2426 76 1240 13
08-Mar 1804 40 2326 94 1322 29
15-Mar 1653 41 2024 87 1392 12
22-Mar 1488 10 2188 62 1422 37
29-Mar 1777 5 2069 65 1443 8
05-Apr 1595 37 2353 90 1194 23
12-Apr 1901 7 2073 52 1276 26
19-Apr 1812 57 2220 48 1283 29
26-Apr 1770 58 1856 77 1374 30
03-May 1604 35 2180 94 1324 9
10-May 1717 29 2071 38 1506 18
17-May 1786 68 1938 28 1326 13
24-May 1492 38 2175 71 1421 18
31-May 1941 31 2255 71 1188 26
07-Jun 1861 49 2066 23 1395 34
14-Jun 1619 49 1860 72 1326 17
21-Jun 1750 34 2221 68 1416 11
28-Jun 1655 23 1994 38 1429 30
05-Jul 1882 38 2376 65 1450 10
12-Jul 1658 74 2265 57 1521 11
19-Jul 1776 56 2213 79 1553 41
26-Jul 1485 7 2005 18 1489 45
02-Aug 1744 73 2146 82 1295 28
09-Aug 1657 23 2233 12 1400 24

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Analyze

Three questions arise based on this data:

1. Which error occurred most frequently?

2. Which center has the worst error rate?
3. What is the total cost?

The following Pareto chart addresses the first question.

Pareto Chart
Error Types

1
45000
0.9
40000
0.8
35000
0.7
30000
# Observations

0.6
25000
0.5
20000
0.4
15000
0.3

10000 0.2

5000 0.1

0 0
Error 1 Error 2A Error 2C Error 2D Error 2B
Group

As can be seen, error type 1 is the most frequently occurring.

The second question is best addressed with a table that shows the
error rates by error type and overall error rates for each location. The
table on the next page shows this. There are some differences
between locations and error rates.

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  Riverside Mt. View Cliffside

Error 1 28.65% 24.99% 22.25% What does this tell us
Error 2A 5.96% 5.82% 8.54% about the Centers? Is
there a statistically
Error 2B 1.76% 1.13% 1.47%
significant difference
Error 2C 3.96% 2.86% 3.16% between locations?
Error 2D 2.33% 2.81% 1.67%
Overall 42.67% 37.62% 23.53%

An analysis of variance was performed to answer that question. The

results are shown below. This confirms that there is a significant
difference in error rates for the different error types.

Anova: Two-Factor Without Replication

SUMMARY Count Sum Average Variance

Error 1 3 0.758942394 0.252980798 0.001032817
Error 2A 3 0.203200404 0.067733468 0.000234266
Error 2B 3 0.043648899 0.014549633 9.73006E-06
Error 2C 3 0.099799979 0.03326666 3.23609E-05
Error 2D 3 0.068159178 0.022719726 3.27892E-05
Overall 3 1.038150508 0.346050169 0.009841927

Riverside 6 0.853383899 0.14223065 0.029753998

Mt. View 6 0.752378402 0.1253964 0.022951816
CliffSide 6 0.60613906 0.101023177 0.01047977

ANOVA
Source of Variation SS df MS F P-value F crit
Rows 0.298711145 5 0.059742229 34.70000949 5.25858E-06 3.325834529
Columns 0.005151004 2 0.002575502 1.49592573 0.270174756 4.102821015
Error 0.017216776 10 0.001721678

Total 0.321078925 17

The total cost for errors includes two factors: the original processing
cost for the entries and the rework cost. Based on the data provided
these are tabulated on the next page.

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 DRAFT

  Riverside Mt. View Cliffside

Error 1 $ 50,872.50 $ 55,465.16 $ 12,339.91
Error 2A $ 104,347.41 $ 12,913.47 $ 12,127.94
Error 2B $ 3,121.34 $ 2,518.69 $ 2,090.59
Error 2C $ 7,032.38 $ 6,350.75 $ 4,484.59
Error 2D $ 4,143.78 $ 6,238.53 $ 2,373.22
Total $ 169,517.41 $ 83,486.59 $ 33,416.25
Overall $ 286,420.25

Based on this analysis the charter can now be revised. It is shown on

the next page.

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 DRAFT

Project Name Case Study

Black belt All of Us Telephone Number
Champion Master Black Belt
Start Date Week 1 Target Completion Date Week 3
Element Description Team Charter
1. Process: The process in which Data Entry
opportunity exists.

2. Project Description: Describe the Project’s Purpose Reduce Type 1 Error Rate
and scope.

3. Objective: What improvement is targeted

and what will be the impact to BSL2 GOAL units
the business?
5. Data Entry Type 1 Errors 1143/week 500/week No.

6. Cost $65,000 $28,437 Dollars

7.

8.

4. Business Results: What is the improvement in 3. Reduction in rework costs from $65,000 to $28,437
business performance 4. Increased profitability
anticipated and when? 5. Better quality
5. Team members: Who are the full-time members Data Center Directors (3)
and any expert consultants? Data Center Operators (3)
Black Belt
6. Project Scope: Which part of the process will  Data entry
be investigated?

More Analysis

In order to understand the most frequently occurring problem better

and to start getting to the root cause further analysis is required.

The team decided to conduct a brainstorming session to see if they

could identify some most likely causes. This is shown on the following
page.

2
Baseline

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 DRAFT

Procedures Policies

Outdated
None Work Standards

Enforced Inspection
Unintelligible

Communications

Not Filling Required

Field
Experience Attitude
Format
Training
Missing
Prompt
Ability
Skill Illegible

Personnel Processes

After discussing the causes listed the team indicated that the following
were most likely:

1. Missing data
2. Illegible data
3. Experience/skill of operators

The team also was concerned whether or not the process was stable,
that is, were the number of errors made each day and the error rate
consistent day by day? To answer that question control charts were
constructed for each of the locations.

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 DRAFT

Riverside Performance

Individuals Chart
Riverside
2500
UCL=2187.81
2000
CEN=1708.68
1500
LCL=1229.55
1000
500
0

05 05 05 05 05 05 05 05 05 05 05 05 05 05 05 05 05 05 05 05 05 05 05 05 05
20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20
2/ 1/ 8/ 5/ 2/ 9/ 5/ 2/ 9/ 6/ 3/ 0/ 7/ 4/ 1/ 7/ 4/ 1/ 8/ 5/ 2/ 9/ 6/ 2/ 9/
/2 /0 /0 /1 /2 /2 /0 /1 /1 /2 /0 /1 /1 /2 /3 /0 /1 /2 /2 /0 /1 /1 /2 /0 /0
02 03 03 03 03 03 04 04 04 04 05 05 05 05 05 06 06 06 06 07 07 07 07 08 08

p Chart

0.7
0.6
0.5
0.4 UCL=0.332695
0.3 CEN=0.300387
LCL=0.268079
0.2
0.1
0

Mountain View Performance

Individuals Chart
Mountain View
3000 UCL=2708.9
2500
CEN=2135.9
2000
1500 LCL=1562.8
1000
500
0

05 05 05 05 05 05 05 05 05 05 05 05 05 05 05 05 05 05 05 05 05 05 05 05 05
/ 20 / 20 / 20 / 20 / 20 / 20 / 20 / 20 / 20 / 20 / 20 / 20 / 20 / 20 / 20 / 20 / 20 / 20 / 20 / 20 / 20 / 20 / 20 / 20 / 20
22 01 08 15 22 29 05 12 19 26 03 10 17 24 31 07 14 21 28 05 12 19 26 02 09
0 2/ 0 3/ 0 3/ 0 3/ 0 3/ 0 3/ 0 4/ 0 4/ 0 4/ 0 4/ 0 5/ 0 5/ 0 5/ 0 5/ 0 5/ 0 6/ 0 6/ 0 6/ 0 6/ 0 7/ 0 7/ 0 7/ 0 7/ 0 8/ 0 8/

p Chart

0.5
0.4
0.3 UCL=0.284021
CEN=0.256225
0.2 LCL=0.228429
0.1
0

05 05 05 05 05 05 05 05 05 05 05 05 05 05 05 05 05
20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20
9/ 6/ 3/ 0/ 7/ 4/ 1/ 7/ 4/ 1/ 8/ 5/ 2/ 9/ 6/ 2/ 9/
/1 /2 /0 /1 /1 /2 /3 /0 /1 /2 /2 /0 /1 /1 /2 /0 /0
04 04 05 05 05 05 05 06 06 06 06 07 07 07 07 08 08

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 DRAFT

Individuals Chart
Cliffside
300
UCL=263.84
250
200
150
CEN=118.76
100
50
0
LCL=-26.32
-50 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5
00 200 200 200 200 200 200 200 200 200 200 200 200 200 200 200 00 200 200 200 200 200 200 200 200
2/2 1/ 8 / 5/ 2 / 9 / 5 / 2 / 9 / 6 / 3 / 0/ 7 / 4/ 1/ 7/ 4/2 1/ 8 / 5/ 2 / 9 / 6/ 2 / 9 /
/2 /0 /0 /1 /2 /2 /0 /1 /1 /2 /0 /1 /1 /2 /3 /0 /1 /2 /2 /0 /1 /1 /2 /0 /0
02 03 03 03 03 03 04 04 04 04 05 05 05 05 05 06 06 06 06 07 07 07 07 08 08

p Chart

0.16
0.14
0.12 UCL=0.114322
0.1 CEN=0.090317
0.08
0.06 LCL=0.066312
0.04
0.02
0

05 05 05 05 05 05 05 05 05 05 05 05 05 05 05 05 05
20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20
9/ 6/ 3/ 0/ 7/ 4/ 1/ 7/ 4/ 1/ 8/ 5/ 2/ 9/ 6/ 2/ 9/
/1 /2 /0 /1 /1 /2 /3 /0 /1 /2 /2 /0 /1 /1 /2 /0 /0
04 04 05 05 05 05 05 06 06 06 06 07 07 07 07 08 08

Examination of these charts indicates that there is no difference from

day to day for the number of errors, but that the error rate is
inconsistent from day to day. The inconsistency does not appear to
follow any type of predictable pattern. This is another piece of the
puzzle, so to speak.

Based upon the analysis performed additional measurements are

required.

Measure Again

The following data was collected in an attempt to address the

questions asked earlier regarding missing data, illegible data, and
operator experience.

Each form has 40 data entry fields. The information tabulated is by

field, based on a random sample of 400 forms which had errors on
them.

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 DRAFT

Field Mountain
Number Riverside View Cliffside
1 178 183 40 Number of missing entries
2 142 211 58
shown at the left.
3 354 92 54
4 0 0 0
5 126 152 25
6 137 122 55
7 185 144 11
8 51 87 41
9 304 133 28
10 163 110 20
11 124 88 59
12 1 2 3
13 276 100 54
14 182 225 16
15 193 223 42
16 156 31 31
17 172 39 49
18 7 23 2
19 199 316 25
20 363 231 60
21 104 115 44
22 151 250 40
23 357 103 55
24 284 307 3
25 321 326 30
26 261 141 27
27 313 340 0
28 399 293 25
29 57 55 51
30 367 262 46
31 231 53 28
32 211 10 33
33 95 239 6
34 18 157 37
35 83 309 13
36 57 231 45
37 259 228 37
38 37 335 28
39 15 27 2
40 137 296 30

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 DRAFT

Field Riverside Mountain Cliffside

Number View
1 8 11 3
2 9 9 5
3 5 6 7
4 2 4 9
5 5 8 10 This shows the number of
6 5 12 4 illegible entries on the
7 7 9 8 400 forms sampled.
8 10 9 2
9 4 5 6
10 11 12 8
11 4 5 8
12 5 6 5
13 5 5 5
14 6 3 8
15 11 10 5
16 2 9 5
17 9 5 8
18 8 10 9
19 5 5 1
20 2 10 7
21 11 6 10
22 4 9 8
23 4 3 7
24 2 4 4
25 4 8 8
26 4 7 9
27 10 12 5
28 4 8 8
29 8 6 6
30 2 6 6
31 6 5 1
32 11 3 9
33 4 6 4
34 5 7 8
35 3 9 6
36 10 5 1
37 10 9 2
38 6 5 7
39 11 5 9

Experience of employees is shown on the following page.

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 DRAFT

Months Experience for Data Entry Personnel

Employee Riverside Employee Mountain Employee Cliffside
Number   Number View Number  
R1 12 M1 9 C1 40
R2 10 M2 1 C2 20
R3 9 M3 2 C3 40
R4 6 M4 7 C4 40
R5 10 M5 3 C5 13
R6 11 M6 5 C6 58
R7 2 M7 3 C7 43
R8 12 M8 4 C8 17
R9 4 M9 13 C9 43
R10 0 M10 2 C10 32
R11 10 M11 3 C11 18
R12 8 M12 12 C12 12
R13 10 M13 8 C13 35
R14 1 M14 15 C14 54
R15 1 M15 2 C15 52
R16 12 M16 7 C16 20
R17 12 M17 1 C17 33
R18 9 M18 8 C18 38
R19 9 M19 3 C19 17
R20 3 M20 4 C20 58
R21 6 M21 7 C21 27
R22 1 M22 2 C22 48
R23 3 M23 15  
R24 7 M24 7  
M25 5  
M26 8  
M27 6  
M28 2  
M29 9  
M30 14  

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Analyze

Some questions immediately arise:

1. Are certain fields missed more than others? A Pareto analysis is

called for.
2. Is there a difference in how each office performs? Questions 1
and 2 could also be addressed by a two way analysis of variance.
3. Is there a difference in illegible results from office to office? This
can be addressed by testing some hypotheses also with an
ANOVA.

Pareto analyses by missed filed and office are shown below:

Pareto Chart - Riverside

4500

4000

3500

3000
# Observations

2500

2000

1500

1000

500

0
28 30 20 23 3 25 27 9 24 Other
Field Number

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 DRAFT

Pareto Chart - Mountain View

4000

3500

3000

2500
# Observations

2000

1500

1000

500

0
27 38 25 19 35 24 40 28 30 Other
Field

Pareto Chart - Cliffside

800

700

600

500
# Observations

400

300

200

100

0
20 11 2 6 23 3 13 29 17 Other
Field

Based on the flat appearance of the bars in the Pareto charts there
appears to be no one field that is causing the errors.

21
 DRAFT

The second question that was to be addressed was the difference

between offices. A two way analysis of variance was performed with an
 of .01. The ANVOA table is shown below.

Source of Variation SS df MS F F crit

Fields 446051.5 39 11437.22 1.706346 1.86311
Offices 521181.2 2 260590.6 38.87814 4.88808
Error 522814.8 78 6702.754

Total 1490047 119      

This shows that there is a significant difference between offices no

significant difference between fields. The obvious follow up question is
which office is better than the others. To answer that the difference
between means can be evaluated. Since there are only three offices
only three tests need to be conducted. Here are the results. Again the
tests were run at the 99% confidence level.

Mountain Riversid
  View e
Mean 164.725 176.75
Variance 11216.56346 13283.78
Observations 40 40
df 77
t Stat -0.485879948
t Critical one-tail 2.375756968
     

Riversid
  Cliffside e
Mean 31.325 176.75
Variance 342.3788 13283.78
Observations 40 40
df 41
t Stat -7.8792
t Critical one-tail 2.420803
     

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 DRAFT

Mountain
  Cliffside View
Mean 31.325 164.725
Variance 342.3788462 11216.56346
Observations 40 40
df 41
t Stat -7.847417835
t Critical one-tail 2.420802986
     

The results show that there is no significant difference between

Mountain View and Riverside. However, there was a significant
difference between both Mountain View and Riverside and Cliffside.
Obviously the error rate at Cliffside was lower.

Moving on to the third question, the ANOVA performed at the .01 level
shows that regarding the illegible forms there was no significant
difference between fields or offices.

Source of Variation SS df MS F F crit

Fields 294 39 7.538462 0.968061 1.863117
Offices 26.6 2 13.3 1.707935 4.888088
Error 607.4 78 7.787179

Total 928 119      

The results of the analyze stage now lead to the determination as to

why there is a difference between Cliffside and the other two offices.
One thought is that perhaps the experience level of the associates is
the reason. This calls for another hypothesis to be tested. If indeed the
experience at Cliffside is longer than the others a possible start to the
improvement may be in order.

This hypothesis was tested at the .01 level and the results are shown
on the next page.

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 DRAFT

Riverside and Mtn

  Cliffside View
Mean 34.45455 6.574074074
Variance 217.1169 17.30573026
Observations 22 54
df 21 53
F 12.54595
F Critical one-
tail 2.219158  

The F test shows that there is a difference in variability. The averages

show the following.

Riverside and Mtn

  Cliffside View
Mean 34.45454545 6.574074074
Variance 217.1168831 17.30573026
Observations 22 54
df 22
t Stat 8.734242756
t Critical one-
tail 2.50832455
     

This confirms that there is a difference in seniority. The follow up

question to this relates to whether there is a relationship between
seniority and error rate.

Each operator at each location was sampled for a period of time and
error rates calculated. This information appears on the next page.

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 DRAFT

Employee Employee Employee

Number Riverside Number Mountain Number Cliffside
R1 14.0 M1 14.4 C1 0.1
R2 10.0 M2 18.0 C2 4.0
R3 13.1 M3 15.7 C3 0.1
R4 13.4 M4 12.8 C4 0.2
R5 13.0 M5 15.5 C5 5.4
R6 12.9 M6 15.1 C6 0.0
R7 15.0 M7 15.5 C7 0.2
R8 12.8 M8 15.3 C8 4.6
R9 13.6 M9 13.7 C9 0.0
R10 14.0 M10 14.1 C10 1.6
R11 11.0 M11 15.5 C11 4.4
R12 13.2 M12 11.6 C12 5.6
R13 13.0 M13 14.4 C13 1.0
R14 13.9 M14 13.4 C14 0.0
R15 14.1 M15 15.7 C15 0.1
R16 9.8 M16 14.0 C16 4.0
R17 10.5 M17 12.3 C17 1.4
R18 13.1 M18 14.6 C18 0.4
R19 11.7 M19 15.5 C19 4.6
R20 13.7 M20 15.8 C20 0.0
R21 13.4 M21 15.0 C21 2.6
R22 13.9 M22 15.0 C22 0.1
R23 13.7 M23 13.4  
R24 13.3 M24 12.8  
M25 15.1  
M26 14.6  
M27 15.1  
M28 15.7  
M29 14.4  
M30 13.0  

This data was analyzed to determine if there is a significant

relationship between experience and error rate. The results of the
correlation and regression for each of the three offices are shown on
the following page. The data is also analyzed to determine if there is a
difference in error rates between the three offices.

25
 DRAFT

Cliffside

6.0
5.0
4.0
3.0 y = -0.133x + 6.42
2
2.0 R = 0.8717
1.0
0.0
0 20 40 60 80

Mountain View

20.0
Error Rate is the
15.0 dependent variable.
Experience is
10.0 independent.
y = -0.1867x + 15.726
2
R = 0.3725
5.0

0.0
0 5 10 15 20

Riverside

16.0
14.0
12.0
10.0
8.0
6.0 y = -0.2167x + 14.438
2
4.0 R = 0.4388
2.0
0.0
0 5 10 15

26
 DRAFT

A composite shows the following:

20.0
15.0 y = -0.3423x + 15.372
2
R = 0.8365
Error Rate

10.0
5.0
0.0
-5.0 0 10 20 30 40 50 60 70
-10.0
Experience

While there was no overwhelming relationship when each office was

examined individually, the composite shows a significant relationship
between experience and error rate. The more experience the lower
the error rate. Comparing the error rates for the three offices shows
that there is a significant difference, at the .01 level, between all
three.

Riversid Mountai Riversid

  e n   e Cliffside
Mean 12.92083 14.56217 Mean 12.92083 1.84733
Variance 1.813895 1.676001 Variance 1.813895 4.027708
Observations 24 30 Observations 24 24
df 52 df 40
t Stat -4.54744 t Stat 22.44526
t Critical one- t Critical one-
tail 2.400225   tail 2.423257  

Riversid
  e Cliffside
Mean 12.92083 1.836364
Variance 1.813895 4.408139
Observations 24 22
df 44
t Stat 21.49595
t Critical one-
tail 2.414134  

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 DRAFT

To summarize to date we have determined:

1. The specific type of errors that are being made.

2. The performance of individual processing offices.
3. The costs of poor quality.
4. The specific nature of the errors.
5. The relationship of experience to error rate.

Improve

Based upon this it is time to start considering improvements. These

might include looking at the following:

 Form design and instructions

 Training
 System changes

Management decided that it would not consider any system changes.

Too many downstream ramifications were anticipated. 3 It was decided
that the first option would be to concentrate on training. Since the
organization had little experience with training they decided to conduct
a simple experiment. They would develop three training courses and
send a random sample of individuals through each of the courses. The
treatment would be training. The three courses, designated A, B, and
C would be three levels of this factor. (Course A was live lecture,
Course B was on line, and Course C was a combination.) The response
variable was a measurement of the error rates before and after the
training.

On the following page are the results of the experiment. What

conclusions can be drawn?

3
Remembering the first part of Deming’s Profound Knowledge this is perhaps a wise course of action.

28
 DRAFT

Method Method Method

A   B   C  
Before After Before After Before After
5.04 5.44 7.44 2.78 3.88 6.92
8.12 8.48 10.91 4.34 8.11 5.95
8.95 4.39 10.33 4.20 7.41 7.58
5.74 7.10 9.08 5.49 5.87 5.84
8.07 7.07 10.56 6.68 7.68 6.90
8.99 7.40 10.42 6.66 7.51 7.75
8.35 6.96 9.53 4.83 6.42 5.00
8.33 7.54 7.48 4.27 3.93 7.28
7.57 10.03 10.98 6.79 8.20 7.43
7.10 7.30 11.02 8.02 8.24 8.04
7.01 10.49 8.98 4.12 5.76 5.47
9.09 9.36 11.02 6.70 8.25 5.67
8.64 8.63 9.92 4.74 6.91 7.58
6.09 8.56 10.14 5.79 7.17 6.08
7.58 7.73 8.71 6.53 5.43 6.91
8.26 7.08 9.54 5.75 6.44 6.09
8.12 8.95 9.46 5.40 6.34 6.75
6.37 9.06 12.01 5.78 9.46 9.21
7.52 7.70 10.49 4.87 7.60 8.53
7.53 9.19 9.64 5.56 6.56 5.26

The first analytical task was to determine if any of the three methods
was effective. The easiest way to determine this is by conducting a
paired comparison test. Using  = .01 again the results are shown
below for each method.

Method A

  Before After
Mean 7.622971 7.922201
Variance 1.249514 2.148123
Observations 20 20
df 19
t Stat -0.73095
t Critical one-
tail 2.539483
     

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 DRAFT

Method B

  Before After
Mean 9.884269 5.464446
Variance 1.356217 1.51229
Observations 20 20
df 19
t Stat 17.66103
t Critical one-
tail 2.539483
     

Method C

  Before After
Mean 6.858551 6.812201
Variance 2.025954 1.287163
Observations 20 20
df 19
t Stat 0.139408
t Critical one-
tail 2.539483
     

As can be seen Method B shows a statistically significant improvement

(reduction of error rate).

Part of the Improve step is to do a financial analysis. The cost of the

training is $200 per employee. Based on the existing 76 employees
this is an investment of $15,200. The error rate is reduced be an
average of approximately 45%.

Based upon the original performance data the cost of poor quality
would be reduced to the amount shown below.

30
 DRAFT

  Riverside Mt. View Cliffside

Error 1 $ 22,892.63 $ 24,958.28 $ 5,552.75
Error 2A $ 10,585.97 $ 12,913.47 $ 12,127.94
Error 2B $ 3,121.34 $ 2,518.69 $ 2,090.59
Error 2C $ 7,032.38 $ 6,350.75 $ 4,484.59
Error 2D $ 4,143.78 $ 6,238.53 $ 2,373.22
Total $ 47,776.09 $ 52,979.72 $ 26,629.09
Overall $ 127,384.91

The cost of poor quality has been reduced from $286,420.25 to

$127,384.91. This is a “savings” of approximately $159,000. Based
upon the investment of approximately $15,000 this is a prudent use of
funds. The steering committee would most likely recommend that the
project move forward.

Control

Once the training has been completed it is necessary to verify that it

has worked. To validate that the improvement is real, and approaches
the expected 45 percent reduction in error rate, additional data is
collected. As is shown below the desired impact on error has been
achieved. Organizational policy now states that all new hires are
required to undergo the training prior to being permitted to enter any
data into the system.

This data, by error types, is shown on the following pages.

31
 DRAFT

             
    Error 1  
             
Date     Center      
(Week Riverside Mountain View Cliffside  
Ending) # Proc # Errors # Proc # Errors # Proc # Errors
14-Jan 1594 72 1909 277 1234 44
21-Jan 1784 162 2470 155 1284 48
28-Jan 1848 211 2370 180 1366 51
04-Feb 1697 193 2068 376 1436 32
11-Feb 1532 336 2232 258 1466 81
18-Feb 1821 96 2113 179 1487 26
25-Feb 1639 349 2397 240 1238 41
04-Mar 1945 194 2117 242 1320 81
11-Mar 1856 66 2264 262 1327 91
18-Mar 1814 339 1900 370 1418 77
25-Mar 1648 451 2224 379 1368 56
01-Apr 1761 147 2115 129 1550 83
08-Apr 1830 272 1982 267 1370 29
15-Apr 1536 314 2219 259 1465 44
22-Apr 1985 299 2299 293 1232 73
29-Apr 1905 98 2110 145 1439 59
06-May 1663 57 1904 140 1370 52
13-May 1794 104 2265 131 1460 54
20-May 1699 106 2038 218 1473 86
27-May 1926 430 2420 174 1494 46
03-Jun 1702 394 2309 340 1565 25
10-Jun 1820 238 2257 173 1597 72
17-Jun 1529 192 2049 292 1533 29
24-Jun 1788 283 2190 354 1339 87
01-Jul 1701 288 2277 372 1444 74

32
 DRAFT

             
  Error 2A  
           
Date     Center      
(Week Riverside Mountain View Cliffside  
Ending) # Proc # Errors # Proc # Errors # Proc # Errors
14-Jan 1574 58 1927 79 1234 58
21-Jan 1764 69 2488 71 1284 20
28-Jan 1828 64 2388 32 1366 75
04-Feb 1677 69 2086 5 1436 42
11-Feb 1512 72 2250 49 1466 43
18-Feb 1801 10 2131 63 1487 33
25-Feb 1619 6 2415 40 1238 36
04-Mar 1925 49 2135 66 1320 66
11-Mar 1836 46 2282 66 1327 38
18-Mar 1794 83 1918 50 1418 23
25-Mar 1628 78 2242 75 1368 60
01-Apr 1741 60 2133 90 1550 67
08-Apr 1810 35 2000 19 1370 61
15-Apr 1516 7 2237 76 1465 48
22-Apr 1965 86 2317 45 1232 68
29-Apr 1885 8 2128 59 1439 69
06-May 1643 50 1922 20 1370 46
13-May 1774 39 2283 19 1460 43
20-May 1679 64 2056 72 1473 72
27-May 1906 17 2438 87 1494 46
03-Jun 1682 15 2327 71 1565 43
10-Jun 1800 2 2275 62 1597 43
17-Jun 1509 55 2067 65 1533 46
24-Jun 1768 6 2208 86 1339 64
01-Jul 1681 85 2295 80 1444 60

33
 DRAFT

             
  Error 2B  
           
Date     Center      
(Week Riverside Mountain View Cliffside  
Ending) # Proc # Errors # Proc # Errors # Proc # Errors
14-Jan 1623 18 1905 19 1225 8
21-Jan 1813 22 2466 9 1275 8
28-Jan 1877 20 2366 13 1357 6
04-Feb 1726 9 2064 10 1427 20
11-Feb 1561 19 2228 1 1457 8
18-Feb 1850 12 2109 1 1478 16
25-Feb 1668 22 2393 17 1229 5
04-Mar 1974 20 2113 12 1311 15
11-Mar 1885 22 2260 18 1318 19
18-Mar 1843 19 1896 20 1409 2
25-Mar 1677 3 2220 2 1359 13
01-Apr 1790 10 2111 9 1541 4
08-Apr 1859 19 1978 19 1361 3
15-Apr 1565 19 2215 16 1456 7
22-Apr 2014 3 2295 18 1223 6
29-Apr 1934 11 2106 13 1430 8
06-May 1692 6 1900 14 1361 18
13-May 1823 16 2261 11 1451 9
20-May 1728 19 2034 3 1464 12
27-May 1955 15 2416 13 1485 9
03-Jun 1731 20 2305 11 1556 4
10-Jun 1849 17 2253 3 1588 11
17-Jun 1558 12 2045 20 1524 14
24-Jun 1817 9 2186 10 1330 5
01-Jul 1730 22 2273 7 1435 5

34
 DRAFT

             
  Error 2C  
           
Date     Center      
(Week Riverside Mountain View Cliffside  
Ending) # Proc # Errors # Proc # Errors # Proc # Errors
14-Jan 1591 48 1914 11 1215 27
21-Jan 1781 48 2475 46 1265 4
28-Jan 1845 19 2375 39 1347 30
04-Feb 1694 15 2073 36 1417 20
11-Feb 1529 25 2237 19 1447 18
18-Feb 1818 31 2118 48 1468 11
25-Feb 1636 45 2402 26 1219 33
04-Mar 1942 43 2122 15 1301 13
11-Mar 1853 24 2269 11 1308 17
18-Mar 1811 47 1905 7 1399 19
25-Mar 1645 14 2229 20 1349 7
01-Apr 1758 12 2120 34 1531 14
08-Apr 1827 42 1987 16 1351 30
15-Apr 1533 4 2224 6 1446 23
22-Apr 1982 14 2304 42 1213 11
29-Apr 1902 20 2115 33 1420 9
06-May 1660 50 1909 7 1351 16
13-May 1791 25 2270 31 1441 5
20-May 1696 51 2043 45 1454 33
27-May 1923 45 2425 29 1475 19
03-Jun 1699 42 2314 17 1546 19
10-Jun 1817 35 2262 31 1578 12
17-Jun 1526 37 2054 35 1514 33
24-Jun 1785 20 2195 34 1320 19
01-Jul 1698 13 2282 10 1425 30

35
 DRAFT

             
  Error 2D  
           
Date     Center      
(Week Riverside Mountain View Cliffside  
Ending) # Proc # Errors # Proc # Errors # Proc # Errors
14-Jan 1596 31 1915 16 1233 13
21-Jan 1786 18 2476 36 1283 6
28-Jan 1850 17 2376 44 1365 13
04-Feb 1699 18 2074 41 1435 5
11-Feb 1534 4 2238 29 1465 16
18-Feb 1823 2 2119 31 1486 4
25-Feb 1641 16 2403 42 1237 10
04-Mar 1947 3 2123 25 1319 12
11-Mar 1858 24 2270 23 1326 13
18-Mar 1816 25 1906 36 1417 13
25-Mar 1650 15 2230 44 1367 4
01-Apr 1763 12 2121 18 1549 8
08-Apr 1832 29 1988 13 1369 6
15-Apr 1538 16 2225 33 1464 8
22-Apr 1987 13 2305 33 1231 12
29-Apr 1907 21 2116 11 1438 15
06-May 1665 21 1910 34 1369 8
13-May 1796 15 2271 32 1459 5
20-May 1701 10 2044 18 1472 13
27-May 1928 16 2426 31 1493 4
03-Jun 1704 32 2315 27 1564 5
10-Jun 1822 24 2263 37 1596 18
17-Jun 1531 3 2055 8 1532 20
24-Jun 1790 31 2196 39 1338 12
01-Jul 1703 10 2283 6 1443 11

36
 DRAFT

The composite error figures are shown below. It is obvious from the
data that the error has dropped. In reality it has dropped even more
than the experiment predicted.

No. No.
  Opps Errors Percentage
Before 651,434 46,354 7.12%
After 668,034 21,362 3.20%

Conclusion

This project represented the first step. While the drop from over 7%
error rate to a 3.2% one is significant, much work remains to be done.
Another project team will begin working on another project to reduce
the error rate further.

37