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

Exercise 16

Six Sigma Interpretation To what probabilities do each of the following sigma levels correspond, based on a standard normal curve: 3 sigma, 4 sigma, 5 sigma, and 6 sigma? (Hint: Use the NORMSDIST function in Excel. Note that this function returns the standard normal cumulative distribution function. The distribution has a mean of 0 (zero) and a standard deviation of one.) Check figures: for three sigma, the two-tailed probability equals 0.27%; for six sigma, the two-tailed probability level is 0.0000002%. To what level of defects per million do each of the two-tailed probabilities correspond to? What is the point of these calculations?