0:31

Market research has determined that the customers that come in there.

Â They're mainly people who are working in the offices on Michigan Avenue and

Â near by offices.

Â Or they are tourists who are walking in there together, quick meal.

Â They expect their orders to take between 2 and 16 minutes.

Â So, what is our customer expectation?

Â The lower specification limit or the LSL for

Â customer expectation is 2 minutes, the upper specification is 16 minutes, right?

Â They're expecting that, because of the customization, it can't be 0,

Â so it's going to take at least 2 minutes for it to get done.

Â But they're expecting it to be done in a maximum of 16 minutes.

Â That's their expectation.

Â When you go and look at the actual process,

Â when this restaurant assessed their actual process,

Â they found the average turnaround time from order to arrival to be 12 minutes.

Â So this is coming from the process,

Â this is coming from data collected about the process, and

Â they find an average of 12 minutes and a standard deviation of 2 minutes.

Â So the question is,

Â is this process going to be capable of conforming to customer expectations?

Â Now remember that we are assuming that this process is in statistical control,

Â that 2 and 12 represent the inherent capability of the process.

Â So in that sense, we are quite confident of the 2 and

Â 12 when we're comparing it with the 2 and 16.

Â So the standard deviation of 2 and the mean of 12,

Â we are quite confident about that when we are comparing it with

Â the specifications limits given to us by the customer.

Â All right, so let's do some of the classifications and see what we can find.

Â So what we are going to calculate is the CP and the CPK,

Â process capability ratio and the process capability index.

Â Both of these have to be calculated at all times; you can't do one without the other.

Â All right, so let's take a look at the process capability ratio first.

Â Upper specification limit of 16, lower specification limit of 2.

Â We subtract 16- 2 and we divide that by 6 times the standard deviation?

Â Where did the 6 come from?

Â That's part of the formula that came from having + or- 3 standard deviations.

Â So we used that property of the normal distribution, and

Â the 2 is the standard deviation in the denominator.

Â 2:56

In the numerator, you have the upper and

Â lower specification limits coming from the customer.

Â Ratio works out to greater than 1.

Â You can see that the numerator is greater than the denominator.

Â So it fits into,

Â the range of the process fits into the range of the customer in this case, right?

Â Let's look at the next thing and that's going to be your process capability index.

Â Now if you notice here before we get to the process capability index,

Â I said the process has the potential of being capable.

Â Because remember what we saw in the picture earlier

Â that you can have a range that falls within the customer's specifications.

Â You can have a process range that falls within the customer range.

Â However, it might be located in terms of centering off their process,

Â it might be too much to the left or the right.

Â All right, so let's take a look at the Process Capability Index.

Â The calculations are going to be based on,

Â we need to do two calculations based on incorporating the mean of the process.

Â So here we're actually going to use that average service time of 12 minutes in

Â our calculations.

Â If you noticed in the Cp calculation, we had nothing to do with the 12 minutes,

Â we simply relied on the 2 minutes of standard deviation.

Â 4:13

So we're going to take the minimum of these two ratios.

Â And when you calculate these through, you get 1.6 and 0.67.

Â So, what is this telling us?

Â It's telling us that there's going to be a problem, right?

Â We find a ration that's less than 1.

Â It's telling us that this process is not capable of serving this customer.

Â In fact, it's telling us that the mean is too far to the right.

Â Now, how do we know that?

Â Two ways.

Â You can look at which of those two ratios I gave as a 0.67, and

Â you'll see that it was on the upper side.

Â When you did 16- 12, that's where you got the number that was less than 1.

Â So that's telling us that it is going to be on the upper side.

Â You can also simply take a look at the upper and lower specification limits.

Â And compare with the center of the process

Â that you have from the process average, right?

Â So if you look at the center of the upper and

Â lower specification limits of the customer, it's between 16 and 2.

Â So that's going to be at 9, right?

Â So you have 2 + 7, 9.

Â 7 + 9, 16.

Â So 9 is the center.

Â And then you can see the average service time of 12 minutes is higher than 9.

Â So it's too much to the right, too far to the right.

Â And that's why you have times that are going

Â to be higher than the upper specification limit coming out of this process.

Â 5:45

All right, so this gives us a quick indication that this process is not going

Â to be capable of serving these types of customers.

Â They are going to be unhappy customers.

Â So overall interpretation, the variability seems to be okay.

Â It's low enough for us to fulfill customer expectations, for

Â the restaurant to fulfill customer expectations.

Â But the average is too high.

Â What can this restaurant do?

Â It can do two things.

Â It can reduce the average, get it to 9.

Â By getting it to 9, it's going to have a process that will look capable

Â of serving the customer expectation.

Â Or you can reduce the standard deviation.

Â So if the restaurant were to make their process more predictable,

Â have the standard deviation of their process reduced, let's say from 2 to 1.

Â Right now the standard deviation is 2, if they can

Â have that standard deviation to 1, that would also make the process capable.

Â Now which one this restaurant is able to do?

Â That's going to need more information, right?

Â I mean, whether they can actually reduce the time that it takes, it may not be

Â able to reduce the average time based on the kinds of orders that it gets and

Â the kinds of things it needs to do to produce those orders.

Â Can it reduce the standard deviation?

Â Maybe based on different training of different

Â people who are working in the kitchen and

Â different training of different people who are serving and taking orders outside.

Â There might be some things that can be done to reduce the variation,

Â to reduce the standard deviation of the process.

Â And if that can be reduced,

Â then the process will become capable of serving these kinds of customers.

Â You'll get a ratio that is going to be greater than 1.

Â Both in the case of CP and CPK.

Â All right, so in summary what we're saying is that

Â the process is capable when you have a process capability ratio,

Â as well as a process capability index, both being 1 or greater.

Â 1 is a minimum, greater than 1, better.

Â The higher the better.

Â