Cost Management: A Strategic Emphasis 5th Edition by David Stout, Edward Blocher, Gary Cokins

Exercise 14

Assume that a plasma TV company is working at a three-sigma level of quality in terms of each of 100 component parts in each TV it manufactures. Because of the high price associated with these TV sets, the company defines a product defect as any unit with one or more defective components. (That is, a good-quality output is defined as a TV set with zero defective parts.) On average, what is the probability of producing a unit with zero defects? (Show calculations.)

Step 1 of 2

Sigma is basically a short-form of standard deviation. Here, six sigma means six standard deviation from the normal value, and three sigma means three standard deviation from the mean value.