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Lesson 2Define
Objectives
After completing
this lesson, you will
be able to:
Define
Topic 1Project Identification
Project Selection
The five steps for selecting a project are as follows:
Identify
organizational need
Organization needs
projects to improve
and develop its
functional areas and
to serve and meet
customer needs.
Identify the
projects
Identify projects
that are aligned
with the
organizational need.
Evaluate the
projects
Evaluate the project
in the following
areas:
Net present
value
Cost benefit ratio
Internal ROR
Opportunity cost
Payback period
Review the
project
Project will be
reviewed to ensure
alignment to the
organizational
goals.
Process Elements
A business process has five elements: Supplier, Input, Process, Output, and Customer (SIPOC).
Supplier:
A person or
organization
providing
resources to
the process
concerned
Input:
Information,
material, or
services
provided by
the supplier
Process:
Set of steps
which
transforms
the inputs
into output
Output:
Final product
or service,
outcome of
the process
Customer:
A person,
process, or
organization
which uses
the output
SIPOutput Interaction
One or more changes in Supplier, Input, or the Process actions (SIP) will result in a change in the
process output.
Relations between SIPs and output provide a method to define possible cause-effect relationships.
Supplier
Input
Process
Output
SIPOCExample
SIPOC form for a call center:
Suppliers
Telecom industry
IT industry
Inputs
Process
Output
Opening call
Phone connection
Problem solution
Computer or
Customer verification
system
Head set
Probing customer
Server or dialer
CSR or TSR
Resolution
Customer
User (existing
customer)
New customer
Closing
Stockholders
Customers
Suppliers
Management
Employees
Society
8
Identify Customer
Customers are the most important part of any business. A customer is someone who:
decides to purchase;
pays;
consumes; and
It is essential to identify and understand the customer requirements so the products or services can
be designed according to these requirements.
There are two types of customersinternal and external.
Internal Customers
An internal customer is anyone within the business system who is affected by the product or the
service while it is being developed.
The satisfaction levels of the internal customers can be improved in various ways: increased internal
communication through company newsletters, awards, recognition, constant trainings, and competitive
environment.
10
External Customers
External customers are not a part of any organization; however, they are impacted by it. They are the
source of revenue for any business system and are therefore extremely important.
End users
Affected parties
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Explore the improvements and opportunities while documenting a business case along with the
high level view on what business output is anticipated and by when.
Business outcome;
Effort needed;
Timeline.
12
Strategic linkage
13
Hard Savings
Actual reductions in money being spent, such as:
Reduced budgets,
Fewer employees,
Employee morale,
Effort reduction,
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Criteria/Factors
M1
M2
M3
M4
M5
M6
M7
M8
M9
M10
M11
M12
Total
Cost
Benefits
Net (Monthly)
Cumulative
Solution to problems
Better product
Requirements are effectively met
Improved customer service
Customer satisfaction
16
Define
Topic 2Voice of the Customer
to fill the gaps and improve the various business processes in the organization;
to identify qualities that make the competitors product or service better; and
Popular and common methods are surveys conducted through questionnaires, focus groups, individual
interviews with the customers, and direct feedback from customers through call center data, emails, and
feedback forms.
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Questionnaire
Questionnaires can be given in the form of a survey. It is a method of deriving feedback from
individuals though structured questions, either personally or over emails, telephone, etc.
Following are the steps in the process:
Scope of the survey
Define the
survey group
Plan the
participants
required for the
survey.
Pick a
methodology
Depending on the
time, budget, and
demography of
the participants,
decide on a survey
methodology.
Develop a
questionnaire
Develop a brief,
professional, and
neat
questionnaire to
encourage
effective
participation.
Compilation
Scan the
questionnaires
and develop a
report.
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Low-cost approach
Phone response rate: 7090%
Faster results
Analysis of mail questionnaires requires few
trained resources
Disadvantages
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Web Survey
This is used when survey is targeted at a specific
set of people and when the sample size is easily
accessible through the Internet.
It is low cost and respondents get enough time.
Clarifications for answers are not possible.
Open-ended questions cannot be asked.
Less respondents respond.
Audio and video support is possible, so the data
quality is better.
It simplifies the compilation & data analysis of
data collected.
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Focus Group
Focus group is generally a small group of three to twelve individuals who assemble for one or two
hours to explore specific topics and questions.
Identify scope of
focus group
Analyze the
problem that
needs to be
addressed
Session
Planning stage
Finalize session
venue and time
Arrange a means
for transcription
Advertise session
details
Arrange for
refreshments
Facilitate
introductions
State the agenda
and transcription
factor involved
Record the
session
Retreat to an
observatory
Compilation
Study
transcription
material
Make notes
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Disadvantages
23
Interview
Interview is a technique of questioning and probing an individual to gather information. It is informal
and encourages the interviewees to voice their opinion. Even though quite common for collecting
Compilation
Gather feedback
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Disadvantages
Time consuming
Requires a trained and experienced interviewer
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Weightage
Telephone
Survey
Web
Survey
Interview
12
6
20
5
5
15
10
3
2
2
10
5
5
100
8
8
3
5
3
7
1
7
0
3
1
7
8
471
8
8
9
10
10
5
6
0
10
10
10
1
8
744
6
9
1
1
4
8
10
10
10
3
1
9
4
522
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Customer Complaints
There are pros and cons for gathering information from customer complaints.
Advantages
Disadvantages
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Weightage
Product complaint
15
15
2
10
10
10
8
10
2
8
10
100
8
4
3
1
1
1
1
1
4
1
1
260
Expedited service
request
9
8
9
10
10
6
6
10
10
2
10
817
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Data is directly collected from the primary source, reducing the scope for miscommunication or
loss of information.
Data is captured after understanding the organizational purpose, making data relevant.
Data is collected instantaneously when there is a requirement, making it up-to-date and valid.
The tools help to get enough information about customer requirement through which the process for
improving or creating the product or service that the customer requires can be developed.
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Voice of Customer
The Voice of Customer (VOC) is a technique to organize, analyze, and profile the customers
requirements.
Who is the
Customer?
Household
Member
What the
customer
said (VOC)
When is the
need felt?
Where is the
need felt?
AC should be
silent
Sound sleep
At Night
In the
bedroom
To remain fresh
next morning
AC should be
efficient
Good
cooling
At Night
In the
bedroom
AC should be
economic
Affordability
N/A
N/A
Limited Finance
N/A
Why is the
need felt?
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Customer requirements when translated into critical process requirements that are specific and
measurable are called Critical To Quality (CTQ) factors.
output characteristic;
Y metric;
target; and
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Critical to Quality
Critical to Quality factors are quality parameters set by the organization relating to the customers
needs. CTQ tree is a diagram-based tool that helps develop and deliver quality products and services.
Identify Performance
Requirements
Identify the minimum
performance requirements.
Satisfy the requirements for
each quality driver to provide a
quality product.
Remember the things that may
affect your ability to deliver
these.
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its customers.
It helps companies to design and build more competitive products in less time and lesser costs.
Customer
requirements
Organizations
strengths &
weaknesses
Areas where
most of the
work is to
be done
Where the
focus should
be
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Phases of QFD
Quality function deployment involves four phases. The output of a phase is the input of the next
phase.
Customer
Requirements
Key Parts
Characteristics
Input
Output
Product Planning
Product Design
Input
Output
Input
Output
Process Planning
Process Control
Technical
Requirements
Key Process
Operations
Input
Output
Establishing process control plans, maintenance
plans, and training plans to control operations
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36
Structure of QFD
Quality function deployment or House of Quality (HOQ) comprises six steps:
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HOQ.
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High priority requirements are rated 1 and low priority requirements are rated 0.
For every requirement, calculate the sum of customers who voted it as high priority.
Customers
1
Sum
% Sum
18.2%
Inexpensive
36.3%
Protects hood
27.3%
Doesnt rust
18.2%
11
100%
Totals
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existing products.
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the Company.
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Step 5Roof
The fifth part of the HOQ matrix is Roof.
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Step 6Targets
This summarizes the conclusions drawn from the data from
the entire matrix and team discussions.
product.
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Post-HOQ Matrix
The output of the first HOQ matrix can be the first stage of the first QFD phase.
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Define
Topic 3Project Management Basics
Problem Statement
The first step of project initiation is defining the problem
statement.
Gap
Required State
Actual State
The problem statement cannot contain solutions or causes for the problem.
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Project Charter
A project charter is a written document that defines a teams mission, scope of operation, objectives,
time frame, and consequences for the project. It is a formal approval from the senior management to
Review
The project charter is
reviewed by a Black
Belt.
Approve
The Black Belt is
responsible to get the
Champions approval
for the project charter.
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Project Plan
A project plan is the final approved document which is used to manage and control the various
processes within a project and ensure seamless project execution. The project manager uses the
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They are planned and documented in the define phase and are reviewed by the management;
The deliverables are then tracked and delivered by project team, within the stipulated time along
with the relevant information;
The project team reviews the project status with the management at the end of each phase; and
On the basis of the review, the feedback and guidance are provided by the leadership team.
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Define phase
Analyze phase
Improve phase
Control phase
Standardize the
processes across
the organization.
Develop the control
charts
Implement
monitoring plans
for the project
Establish the
response plan
Transfer ownership
Close the project
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Pareto Chart
Pareto chart, also known as eighty-twenty rule or vital few,
trivial many, is a histogram depicting the frequency of
occurrence of events.
80/20
quality.
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53
Pareto ChartsExample
A hotel receives plenty of complaints from its customers and the hotel manager wishes to identify the
key areas of complaints.
Cause
Number
Percentage
Cumulative
Cleaning
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54.69%
54.69%
Check-in
19
29.69%
84.38%
Pool timings
6.25%
90.63%
Minibar
4.69%
95.31%
Room
service
3.13%
98.44%
Other
1.56%
100.00%
Total
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100.00%
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Risk
Risk is an uncertain event or consequence that will probably occur during a project.
Risk impacts at least one of the four main project objectives (time, cost, quality, and scope).
Risk can be positive and enhance the success of the project as well as negative and pose a threat
to a projects success.
Risk probability: The likelihood that a risk will occur is called risk probability. To assess any risk is to
assess the probability and impact of the risk.
Risk consequences: Risk consequences are the effects on project objectives if there is an
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Evaluate risk
Identified
potential risks are
evaluated using
the quantitative
methods under 3
criteria
occurrence,
severity, and
detection.
Prioritize and
prevent
Identified risks are
prioritized based
on their RPN
number. Counter
or prevention
measures for the
risk are
brainstormed.
Implement
The identified
counter measures
are implemented.
Monitor and
control
The whole project
will be monitored
and controlled so
that the risk and
its impact are
under control.
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Description
Qualitative method
Quantitative
method
Used to evaluate the cost, time, and probabilistic combination of individual uncertainties.
Feasibility
Potential impact
RPN
RPN of a failure is the product of its probability of occurrence, severity, and detectability.
Avoiding risk
If the potential impact is huge, then avoiding the risk is the best option.
Mitigating risk
The loss from mitigating a risk is much less than loss from temporarily avoiding the risk.
Accepting risk
If a risk cannot be avoided or mitigated, then it has to be accepted. The risk will be accepted if
it doesnt greatly impact the cost, time, and product objective.
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When risk is identified in a task, slack time is provided as a buffer. Thus identifying risks helps in
setting up actual timeline for a project.
Identifying risks helps in setting realistic expectations from the project by communicating the risk
probability and consequence to stakeholders.
Contingency plans can be developed for identified risk. The project team is then well prepared to
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Responsibility
Executive sponsor
Source or conduit for project resources, usually the recipients of the benefits the project will produce
Process owners
Work with the Black Belts to improve their respective process, provide functional expertise
Champions
Upper level managers that control and allocate resources to promote process improvements
Consultant who offers expertise in the use of Six Sigma tools and methodologies to team leaders
Black Belts
Leaders of individual Six Sigma projects, a mentor to Green Belts by educating them in Six Sigma tools
Green Belts
Executive
Manages and leads the team to ensure smooth working of tasks, has the power to execute decisions
Coach
Facilitator
Acts as a guide and helps the team to understand their common objective
Sponsor
Supports the event or the project by providing all the required resources
Team member
Contributes to the performance of the team and actively participates to fulfil project objectives
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Project Closure
Every project requires closure because without a formal closure process, project teams can fail to
recognize the end, and then the project can drag on, sometimes at great expense.
Project closure ensures the following:
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Affinity Diagram
The affinity diagram method is employed by an
Sticky paper
Pay is too
low
Workers
unkind
Hours are
too long
Lighting
is poor
Air is
Stuffy
Uncomfortable
room
Dont like
the people
Cant live
on wage
Too
Repetitive
Work is not a
challenge
Poor
Compensation
Poor Work
Environment
Poor
Relationships
Lack of
Motivation
Pay is too
low
Lighting
is poor
Dont like
the people
Work is not a
challenge
Hours are
too long
Uncomfortable
room
Workers
unkind
Too
Repetitive
Cant live
on wage
Air is
Stuffy
Header
Cards
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Interrelationship Diagram
The interrelationship diagram is a technique
developed to illustrate the relationship
Inadequate
Training Time
No Standard
TQM
Method
Lack of Knowledge of
Quality Improvement
or wall.
Lack of
Focus
Lack of Quality
Strategy
Customer Focus
Confusion of
Committees without
organization
Responsibility
Not clear
Lack of
Communication of
information
Lack of TQM
Commitment by
top managers
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Tree Diagram
The tree diagram is a systematic approach
to outline and identify the tasks and
Espresso temperature
Hot but not too hot
Driver 1
Req A2
Req A1
Need
Driver 2
Req B1
Amount of ground coffee
Req B2
Correct amount
of sweetness
Driver 3
Type of sweetener
Req C1
Amount of sweetener
Req C2
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Define
Topic 4Management and Planning Tools
Matrix Diagram
Matrix diagrams show the relationship between objectives and methods, results and causes, tasks
and people, etc. They:
help determine the strength of relationships between a grid of rows and columns;
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Types of Matrices
The following are five types of matrix diagrams:
L Type Matrix
Compares one list against another, with one set of elements on the x-axis and
another along the y-axis
T Type Matrix
X Type Matrix
Compares four lists, each against two other lists, in pairs, with two sets of elements
on both the x and the y axes
Y Type Matrix
C Type Matrix
Compares one list against the two others, in pairs, with two sets of elements on the
y-axis which are split by a set of elements on the x-axis
Compares three lists, each against the other in pairs, two L type matrices joined at
the y axis
Compares three lists against one another, a combination of two L type matrices
joined in the y axis in a three dimensional space
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Q
A
Units
70
20
1 20 +2 5 +3 4 +5(1)
70+20+5+4+1
47
100
= 0.47
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Throughput Yield
Throughput Yield (TPY) is the number of acceptable pieces at the end of a process divided by the
number of starting pieces, excluding scrap and rework. TPY is used to measure a single process only.
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Total Defects per Unit (TDPU) is defined for a set of processes. RTY is calculated using the following
formula when the Total Defects per Unit (TDPU) is known:
Rolled Throughput Yield (RTY) = eTDPU
Total Defects per Unit (TDPU) = log e (RTY)
RTY is the product of each processs First Pass Yield (FPY) when the defectives are known. FPY is
the number of products which pass without any rework over total number of units.
First Pass Yield (FPY) =
Total number of units Number of Defectives units Total number of quality products
=
Total number of units
Total number of units
Rolled Throughput Yield RTY = FPY1 FPY2 FPY3 FPYn
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Process A
Process B
Process C
100
90
85
Reworked parts
5
5
0
The output from process C is sent to the customer. Calculate the FPY and RTY.
72
Define
Topic 5Business Results for Projects
There are 5 units with 5 defect opportunities each. The total number of defects are 8. Calculate DPMO.
Total number of opportunities = Units * Number of opportunities per unit = 5 * 5 = 25 total opportunities
Total number of defects
Defect per Million Opportunities (DPMO) = Total number of opportunities 106 = 25 106 = 320,000
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Cost of Quality
Cost of Quality (COQ) is the cost incurred by a process because it cannot consistently make a perfect
product.
Appraisal Cost
Cost incurred to test a
product for quality
conformance
Example: Testing,
audits, and inspection
Example: Warranty,
returned products, or
lost reputation
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Quiz
QUIZ
1
a.
d.
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QUIZ
1
a.
d.
Answer: c.
Explanation: QFD focuses on identifying the voice of the customer, whereas Project
management focuses on implementation.
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78
QUIZ
2
a.
d.
79
QUIZ
2
a.
d.
Answer: b.
Explanation: Rolled Throughput Yield is the probability of the entire process producing zero
defects.
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80
QUIZ
3
a.
d.
81
QUIZ
3
a.
d.
Answer: b.
Explanation: A company will be successful only if it meets the needs of the customers better
than the competitors. Hence we need to identify the customers to gather their
requirements.
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82
QUIZ
4
a.
Owners or stockholders
b. Potential suppliers
c.
Potential competitors
d.
Contract workers
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QUIZ
4
a.
Owners or stockholders
b. Potential suppliers
c.
Potential competitors
d.
Contract workers
Answer: c.
Explanation: The relevant stakeholders in any project are the stockholders, management,
employees, suppliers, and customers.
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84
QUIZ
5
a.
What is the main difference between risk analysis and risk management?
b. Risk analysis includes risk handling while risk management includes risk monitoring.
c.
Risk analysis refers to tools and risk management deals with consent.
d.
Risk analysis evaluates risks, while risk management is a more inclusive process.
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QUIZ
5
a.
What is the main difference between risk analysis and risk management?
b. Risk analysis includes risk handling while risk management includes risk monitoring.
c.
Risk analysis refers to tools and risk management deals with consent.
d.
Risk analysis evaluates risks, while risk management is a more inclusive process.
Answer: d.
Explanation: Risk management is a complete process, while risk analysis is more specific
and deals with evaluation of complex risks.
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86
QUIZ
6
a.
L type
b. T type
c.
X type
d.
C type
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QUIZ
6
a.
L type
b. T type
c.
X type
d.
C type
Answer: d.
Explanation: C type Matrix diagram illustrates relationships in three planes. L type, T type,
and X type are drawn on two planes.
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88
QUIZ
7
a.
Preventive cost
b. Opportunity cost
c.
d.
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QUIZ
7
a.
Preventive cost
b. Opportunity cost
c.
d.
Answer: b.
Explanation: There are four types of Cost of Quality: preventive cost, appraisal cost, internal
failure cost, and external failure cost.
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90
QUIZ
8
a.
The tangible benefits from the Lean Six Sigma project needs to be articulated in the
following terms, except:
Cost Reduction
Defects Reduction
d.
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QUIZ
8
a.
The tangible benefits from the Lean Six Sigma project needs to be articulated in the
following terms, except:
Cost Reduction
Defects Reduction
d.
Answer: d.
Explanation: The tangible benefits of Lean Six Sigma includes cost reduction, reducing
turnaround time, and reducing defects. Six Sigma Certification is not a tangible process
improvement.
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92
QUIZ
9
a.
Financial evaluation of the Lean Six Sigma project will include all of the following,
except:
d.
Effort reduction
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QUIZ
9
a.
Financial evaluation of the Lean Six Sigma project will include all of the following,
except:
d.
Effort reduction
Answer: b.
Explanation: While performing financial evaluation, the focus is on the cost reduction
and/or avoidance and the benefits due to the reduction in the effort and rework and scrap.
The new customers acquisition cannot be directly attributed in the financial evaluation.
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94
QUIZ
10
a.
Reduced budgets
b. Fewer employees
c.
d.
Employee morale
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QUIZ
10
a.
Reduced budgets
b. Fewer employees
c.
d.
Employee morale
Answer: d.
Explanation: Hard savings include reduced budgets, fewer employees, and additional
revenue opportunities. Employee morale is a part of soft savings.
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96
QUIZ
11
a.
Stakeholders
b. Process owners
c.
Suppliers
d.
Management
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QUIZ
11
a.
Stakeholders
b. Process owners
c.
Suppliers
d.
Management
Answer: a.
Explanation: Stakeholders are the people who are affected by the organizations actions.
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QUIZ
12
a.
Customers
b. Products
c.
Type of data
d.
Suppliers
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QUIZ
12
a.
Customers
b. Products
c.
Type of data
d.
Suppliers
Answer: c.
Explanation: Data collection tools will be selected based on the type of data to be collected.
100
QUIZ
13
a.
d.
101
QUIZ
13
a.
d.
Answer: a.
Explanation: The first step of project initiation is defining the problem statement.
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QUIZ
14
a.
Which of the following defines the number of defects observed in one unit?
DPU
b. DPMO
c.
RTY
d.
FPY
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QUIZ
14
a.
Which of the following defines the number of defects observed in one unit?
DPU
b. DPMO
c.
RTY
d.
FPY
Answer: a.
Explanation: DPU is an important business measure because it defines the number of
defects observed in one unit.
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104
QUIZ
15
a.
Which of the following standardizes the number of defects at the opportunity level and
allows comparison of the processes with different complexities?
DPU
b. DPMO
c.
RTY
d.
FPY
105
QUIZ
15
a.
Which of the following standardizes the number of defects at the opportunity level and
allows comparison of the processes with different complexities?
DPU
b. DPMO
c.
RTY
d.
FPY
Answer: b.
Explanation: DPMO standardizes the number of defects at the opportunity level and allows
comparison of the processes with different complexities.
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106
Summary
Here is a quick
recap of what we
have learned in this
lesson:
Project selection includes identifying organizational need, identifying the projects, and
evaluation of the projects.
Quality Function Deployment (QFD) is a process to ensure that the customers wants and
needs are heard and translated into technical characteristics.
A business case highlights the problem area and opportunity along with the expected
business outcomes.
Financial evaluation helps in evaluating and documenting a project from end to end,
from both cost and benefits perspective.
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Summary (contd.)
Here is a quick
recap of what we
have learned in this
lesson:
Cost of Quality (COQ) is the cost incurred by a process because it cannot consistently
make a perfect product.
Rolled Throughput Yield (RTY) is the probability of an entire process producing zero
defects.
Deliverables are expected from a Lean Six Sigma project at every phase, and they help us
document the expectations and keep the project on track.
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THANK YOU