Binomial Probability Distribution: A Fixed Number of Observations (Trials), N A Binary Outcome

Binomial Probability Distribution
 A fixed number of observations (trials), n

 e.g., 15 tosses of a coin; 20 patients; 1000 people surveyed
 A binary outcome
 e.g., head or tail in each toss of a coin; disease or no disease
 Generally called “success” and “failure”
 Probability of success is p, probability of failure is 1 – p
 Constant probability for each observation
 e.g., Probability of getting a tail is the same each time we
toss the coin
Binomial distribution
Take the example of 5 coin tosses. What’s the probability that you flip
exactly 3 heads in 5 coin tosses?
Solution:
One way to get exactly 3 heads: HHHTT
What’s the probability of this exact arrangement?

P(heads)xP(heads) xP(heads)xP(tails)xP(tails) =(1/2)3 x
(1/2)2
Another way to get exactly 3 heads: THHHT

Probability of this exact outcome = (1/2)1 x (1/2)3 x
(1/2)1 = (1/2)3 x (1/2)2
In fact, (1/2)3 x (1/2)2 is the probability of each

unique outcome that has exactly 3 heads and 2 tails.
So, the overall probability of 3 heads and 2 tails is:

(1/2)3 x (1/2)2 + (1/2)3 x (1/2)2 + (1/2)3 x (1/2)2 + …..
for as many unique arrangements as there are—but
how many are there??
Outcome Probability
THHHT (1/2)3 x (1/2)2
HHHTT (1/2)3 x (1/2)2
TTHHH (1/2)3 x (1/2)2
HTTHH (1/2)3 x (1/2)2 The probability
5 (1/2)3 x (1/2)2
ways to HHTTH of each unique
  (1/2)3 x (1/2)2
arrange 3 HTHHT outcome (note:
heads in THTHH (1/2)3 x (1/2)2
 3 5 trials HTHTH (1/2)3 x (1/2)2
they are all
equal)
HHTHT (1/2)3 x (1/2)2
THHTH (1/2)3 x (1/2)2
10 arrangements x (1/2)3 x (1/2)2
5C3 = 5!/3!2! = 10
Factorial review: n! = n(n-1)(n-2)…

5
P(3 heads and 2 tails) =  x P(heads)3 x P(tails)2 =
 3
10 x (½)5=31.25%
Binomial distribution, generally
Note the general pattern emerging  if you have only two possible
outcomes (call them 1/0 or yes/no or success/failure) in n independent
trials, then the probability of exactly X “successes”=
n = number of trials
n X n X
  p (1  p)
X 1-p = probability
of failure
X=# p=
successes probability of
out of n success
trials
Binomial distribution: example
• If I toss a coin 20 times, what’s the probability of getting exactly 10

heads?
 20  10 10
 (.5) (.5)  .176
 10 
Binomial distribution: example
• If I toss a coin 20 times, what’s the probability of getting of getting 2

or fewer heads?
 20  20!
 (.5) (.5) 
0 20
(.5) 20  9.5 x10  7 
0 20!0!
 20  20!
  (.5)1
(.5)19
 (.5) 20  20 x9.5 x10 7  1.9 x10 5 
1 19!1!
 20  20!
 (.5) (.5) 
2 18
(.5) 20  190 x9.5 x10  7  1.8 x10  4
2 18!2!
 1.8 x10  4
Session 12
DAI
10
DEMINGS 14 Points
Point 1: Create a Vision and Demonstrate

Commitment
• An organization must define its values, mission, and vision of the
future to provide long-term direction for its management and
employees.
• Businesses should not exist simply for profit; they are social entities
whose basic purpose is to serve their customers and employees.
Point 2: Learn the New Philosophy
• Companies must take a customer-driven approach based on mutual

cooperation between labor and management and a never-ending
cycle of improvement.
Point 3: Understand Inspection
• Inspection - the principal means of quality control.

• Routine inspection acknowledges that defects are
present, but does not add value to the product.
• Inspection should be used as an information-gathering
tool for improvement, not as a means of “assuring”
quality or blaming workers.
Point 4: Stop Making Decisions Purely on
the Basis of Cost
• The supplier and manufacturer must be considered as a
macro organization.
• Deming urged businesses to establish long-term
relationships with fewer suppliers, leading to loyalty
and opportunities for mutual improvement.
• Supply Chain Management (SCM) focuses heavily on a
system’s view of the supply chain with the objective of
minimizing total supply chain costs and developing
stronger partnerships with suppliers.
Point 5: Improve Constantly and Forever
• Improved design of goods and services comes from understanding

customer needs and continual market surveys and other sources of
feedback, and from understanding the manufacturing and service
delivery process.
• Improvements in operations are achieved by reducing the causes and
impacts of variation, and engaging all employees to innovate and
seek ways of doing their jobs more efficiently and effectively.
• Deming chain reaction: When quality improves, productivity
improves and costs decrease.
• Continuous improvement
Point 6: Institute Training
• Training
- results in improvements in quality and productivity
- adds to worker morale
- demonstrates to workers that the company is dedicated to helping
them and investing in the future
Point 7: Institute Leadership
• The job of management is leadership, not supervision.
Supervision – simply overseeing and directing work

Leadership – providing guidance to help employees do their Jobs
with less effort.
Point 8: Drive Out Fear
• Fear is manifasted in many ways: fear of reprisal, fear of failure, fear

of the unknown, fear of relinquishing control, and fear of change.
• Fear encourages short-term thinking
• Fear is a cultural issue for all organizations
Point 9: Optimize the Efforts of Teams
• Teamwork helps to break down barriers between

departments and individuals.
Barriers between functional areas occurs when

managers fear they might lose power.
• Lack of cooperation leads to poor quality.

Point 10: Eliminate Exhortations
• Motivational approaches overlook the major source of many

problems – the system
• Causes of variation stemming from the design of the system are
management’s problem, not the workers’
Point 11: Enumerate Numerical Quotas and
Management by Objective (MBO)
• Many organizations manage by the numbers.
• Goals are useful, but numerical goals set for others
without incorporating a method to reach the goal
generate frustration and resentment.
• Management must understand the system and
continually try to improve it, rather than focus on short-
term goals.
Point 12: Remove Barriers to Pride in
Workmanship
• Deming believed that one of the biggest barriers to
pride in workmanship is performance appraisal
Performance appraisal destroys teamwork by promoting competition for
limited resources, fosters mediocrity because objectives typically are
driven by numbers and what the boss wants rather than by quality,
focuses on the short term and discourages risk taking, and confounds
the “people resources” with other resources.
• Three categories of performance:
Majority of performances that are within the system
Performances outside the system on the superior side
Performances outside the system on the inferior side
Point 13: Encourage Education and Self-
Improvement
• Continuing, broad education for self-improvement
• Organizations must invest in their people at all levels to ensure
success in the long term
• Developing the worth of the individual is a powerful motivation
method
Point 14: Take Action
• Any culture change begins with top management and includes

everyone
• Team-based approach
Funnel Experiment
• The Funnel Experiment is a famous experiment first developed by Dr.

Deming. It was designed to show primarily two things:
1. All processes have statistical variation
2. Improving processes to reduce variation is infinitely better than trying to
control process variation
Funnel Experiment
Funnel Experiment
Funnel Experiment
Rule 1: Do nothing
Funnel Experiment
Rule 2: Move the funnel in an equal but opposite
direction
Rule 3: Move the funnel in an equal
Funnel Experiment
but opposite direction from (0,0)

Rule 4: Move the funnel to the last
position where the last hit.
Funnel Experiment
Funnel Experiment
• The Funnel Experiment is a famous experiment first developed by Dr.

Deming. It was designed to show primarily two things:
1. All processes have statistical variation
2. Improving processes to reduce variation is infinitely better than trying to
control process variation
The Funnel Experiment
Rule 1: Set the funnel over the target

at (0,0) and leave the funnel fixed through all 50 drops.
Funnel Experiment; Rule 1
4
3
2
1
Yk
0
-4 -3 -2 -1 -1 0 1 2 3 4
-2
-3
-4
Xk
Rule 2: Move the funnel in an equal but opposite direction
from where the last marbel hit. The funnel should be moved
the distance (-xk,-yk) from its last resting point.
4
3
2
1
Yk
0
-4 -3 -2 -1 -1 0 1 2 3 4
-2
-3
-4
Xk
Rule 2: Move the funnel in an equal but opposite direction from

where the last marbel hit. The funnel should be moved the distance
(-xk,-yk) from its last resting point.
Machine/Process adjustment rules using control chart

limits.
Automatic compensating machinery

Rule 3: Move the funnel in an equal but opposite direction
from target (0,0) to where the last marble hit. Rule 3 states
that the funnel should be moved a distance (-xk,-yk) from the
target (0,0).
4
3
2
1
Yk
0
-4 -3 -2 -1 -1 0 1 2 3 4
-2
-3
-4
Xk
Rule 3: Move the funnel in an equal but opposite direction from target
(0,0) to where the last marble hit. Rule 3 states that the funnel should
be moved a distance (-xk,-yk) from the target (0,0).
Management by Objectives
Committees
Rule 4: Move the funnel to the last position where the last
marble hit. Rule 4 states that the funnel should be moved to
the resting point, (xk,yk).
4
3
2
1
Yk
0
-4 -3 -2 -1 -1 0 1 2 3 4
-2
-3
-4
Xk
Rule 4: Move the funnel to the last position where the last marble
hit. Rule 4 states that the funnel should be moved to the resting
point, (xk,yk).
Operator matches color from batch to batch

without reference to original swatch.
Operator attempts to make every piece like the

last one.
On the job training.

Basics of Statistical Process
Control
• Statistical Process Control (SPC)

• monitoring production process to
detect and prevent poor quality
• Sample UCL
• subset of items produced to use
for inspection
• Control Charts
• process is within statistical control LCL
limits
Copyright 2006 John Wiley & Sons, Inc. 4-36

Variability
• Random • Non-Random
• common causes • special causes
• inherent in a process • due to identifiable factors
• can be eliminated only • can be modified through
through improvements in operator or management
the system action

SPC in TQM
• SPC
• tool for identifying problems and make improvements
• contributes to the TQM goal of continuous improvements

Quality Measures
• Attribute
• a product characteristic that can be evaluated with a discrete response
• good – bad; yes - no
• Variable
• a product characteristic that is continuous and can be measured
• weight - length

Applying SPC to Service
• Nature of defect is different in services

• Service defect is a failure to meet customer requirements
• Monitor times, customer satisfaction

(cont.)
• Hospitals
• timeliness and quickness of care, staff responses to requests,
accuracy of lab tests, cleanliness, courtesy, accuracy of paperwork,
speed of admittance and checkouts
• Grocery Stores
• waiting time to check out, frequency of out-of-stock items, quality of
food items, cleanliness, customer complaints, checkout register
errors
• Airlines
• flight delays, lost luggage and luggage handling, waiting time at ticket
counters and check-in, agent and flight attendant courtesy, accurate
flight information, passenger cabin cleanliness and maintenance

(cont.)
• Fast-Food Restaurants
• waiting time for service, customer complaints, cleanliness,
food quality, order accuracy, employee courtesy
• Catalogue-Order Companies
• order accuracy, operator knowledge and courtesy,
packaging, delivery time, phone order waiting time
• Insurance Companies
• billing accuracy, timeliness of claims processing, agent
availability and response time

Where to Use Control Charts
• Process has a tendency to go out of control

• Process is particularly harmful and costly if it goes out
of control
• Examples
• at the beginning of a process because it is a waste of time and
money to begin production process with bad supplies
• before a costly or irreversible point, after which product is
difficult to rework or correct
• before and after assembly or painting operations that might
cover defects
• before the outgoing final product or service is delivered

Control Charts
• A graph that establishes

control limits of a process • Types of charts
• Attributes
• Control limits • p-chart
• upper and lower bands of a • c-chart
control chart • Variables
• range (R-chart)
• mean (x bar – chart)

Process Control Chart
Out of control
Upper
control
limit
Process
average
Lower
control
limit
1 2 3 4 5 6 7 8 9 10
Sample number
Normal Distribution
95%
99.74%
-3 -2 -1 =0 1 2 3

A Process Is in Control If
…
1. … no sample points outside limits

2. … most points near process average
3. … about equal number of points above
and below centerline
4. … points appear randomly distributed

Control Charts for Attributes
 p-charts
 uses portion defective in a sample
 c-charts
 uses number of defects in an item

p-Chart
UCL = p + zp
LCL = p - zp
z = number of standard deviations from
process average
p = sample proportion defective; an estimate
of process average
p = standard deviation of sample proportion
p(1 - p)
p = n
p-Chart Example
NUMBER OF PROPORTION
SAMPLE DEFECTIVES DEFECTIVE
1 6 .06
2 0 .00
3 4 .04
: : :
: : :
20 18 .18
200
20 samples of 100 pairs of jeans

p-Chart Example (cont.)
total defectives
p= = 200 / 20(100) = 0.10
total sample observations
p(1 - p) 0.10(1 - 0.10)

UCL = p + z = 0.10 + 3
n 100
UCL = 0.190
p(1 - p) 0.10(1 - 0.10)

LCL = p - z = 0.10 - 3
n 100
LCL = 0.010

0.20
0.18 UCL = 0.190
0.16
0.14
Proportion defective
p-Chart 0.12
Example 0.10
p = 0.10
(cont.) 0.08
0.06
0.04
0.02 LCL = 0.010
2 4 6 8 10 12 14 16 18 20
Sample number

c-Chart
UCL = c + zc
c = c
LCL = c - zc
where
c = number of defects per sample

c-Chart (cont.)
Number of defects in 15 sample rooms
NUMBER
OF
SAMPLE DEFECTS
190
1 12 c= 15 = 12.67
2 8
3 16 UCL = c + zc
= 12.67 + 3 12.67
: : = 23.35
: :
15 15 LCL = c + zc
190 = 12.67 - 3 12.67
= 1.99

24
UCL = 23.35
21
18
Number of defects
c = 12.67
15
c-Chart
12
(cont.)
9
3 LCL = 1.99
2 4 6 8 10 12 14 16
Sample number

Control Charts for Variables
 Mean chart ( x -Chart )

 uses average of a sample
 Range chart ( R-Chart )
 uses amount of dispersion in a
sample

x-bar Chart
x1 + x2 + ... xk
=
x= k
= =
UCL = x + A2R LCL = x - A2R
where
=
x = average of sample means

x-bar Chart Example
OBSERVATIONS (SLIP- RING DIAMETER, CM)
SAMPLE k 1 2 3 4 5 x R
1 5.02 5.01 4.94 4.99 4.96 4.98 0.08
2 5.01 5.03 5.07 4.95 4.96 5.00 0.12
3 4.99 5.00 4.93 4.92 4.99 4.97 0.08
4 5.03 4.91 5.01 4.98 4.89 4.96 0.14
5 4.95 4.92 5.03 5.05 5.01 4.99 0.13
6 4.97 5.06 5.06 4.96 5.03 5.01 0.10
7 5.05 5.01 5.10 4.96 4.99 5.02 0.14
8 5.09 5.10 5.00 4.99 5.08 5.05 0.11
9 5.14 5.10 4.99 5.08 5.09 5.08 0.15
10 5.01 4.98 5.08 5.07 4.99 5.03 0.10
50.09 1.15
Example 15.4
x- bar Chart Example
(cont.)
== x 50.09 = 5.01 cm
x =
k 10
UCL = x +=A2R = 5.01 + (0.58)(0.115) = 5.08

=
LCL = x - A2R = 5.01 - (0.58)(0.115) = 4.94
Retrieve Factor Value A2

5.10 –
5.08 –
UCL = 5.08
5.06 –
5.04 –
5.02 –
x= = 5.01
Mean
5.00 –
4.98 –
x- bar
Chart 4.96 –
Example 4.94 – LCL = 4.94
(cont.) 4.92 –
| | | | | | | | | |
1 2 3 4 5 6 7 8 9 10
Sample number

R- Chart
UCL = D4R LCL = D3R
R
R= k
where
R = range of each sample
k = number of samples

R-Chart Example
OBSERVATIONS (SLIP-RING DIAMETER, CM)
SAMPLE k 1 2 3 4 5 x R
1 5.02 5.01 4.94 4.99 4.96 4.98 0.08
2 5.01 5.03 5.07 4.95 4.96 5.00 0.12
3 4.99 5.00 4.93 4.92 4.99 4.97 0.08
4 5.03 4.91 5.01 4.98 4.89 4.96 0.14
5 4.95 4.92 5.03 5.05 5.01 4.99 0.13
6 4.97 5.06 5.06 4.96 5.03 5.01 0.10
7 5.05 5.01 5.10 4.96 4.99 5.02 0.14
8 5.09 5.10 5.00 4.99 5.08 5.05 0.11
9 5.14 5.10 4.99 5.08 5.09 5.08 0.15
10 5.01 4.98 5.08 5.07 4.99 5.03 0.10
50.09 1.15
Example 15.3
R-Chart Example (cont.)
R 1.15 UCL = D4R = 2.11(0.115) = 0.243

R= = = 0.115
k 10 LCL = D3R = 0(0.115) = 0
Retrieve Factor Values D3 and D4
Example 15.3
R-Chart Example (cont.)
0.28 –
0.24 –
UCL = 0.243
0.20 –
0.16 –
Range
R = 0.115
0.12 –
0.08 –
0.04 – LCL = 0
0– | | | | | | | | | |
1 2 3 4 5 6 7 8 9 10
Sample number
Using x- bar and R-Charts Together
 Process average and process variability must be in control.
 It is possible for samples to have very narrow ranges, but their

averages is beyond control limits.
 It is possible for sample averages to be in control, but ranges

might be very large.

Control Chart Patterns
UCL
UCL
LCL
Sample observations
consistently below the LCL
center line
Sample observations
consistently above the
center line
Control Chart Patterns (cont.)
UCL
UCL
LCL
Sample observations
consistently increasing LCL
Sample observations
consistently decreasing

Zones for Pattern Tests
UCL =
3 sigma = x + A2R
Zone A
= 2
2 sigma = x + 3 (A2R)
Zone B
= 1
1 sigma = x + 3 (A2R)
Zone C
Process =
x
average
Zone C
=
1 sigma = x - 1 (A2R)
3
Zone B
=
2 sigma = x - 2 (A2R)
3
Zone A
=
LCL 3 sigma = x - A2R
| | | | | | | | | | | | |
1 2 3 4 5 6 7 8 9 10 11 12 13
Sample number
Control Chart Patterns
 8 consecutive points on one side of the center line

 8 consecutive points up or down across zones
 14 points alternating up or down
 2 out of 3 consecutive points in zone A but still inside the control
limits
 4 out of 5 consecutive points in zone A or B

Performing a Pattern Test
SAMPLE x ABOVE/BELOW UP/DOWN ZONE
1 4.98 B — B
2 5.00 B U C
3 4.95 B D A
4 4.96 B D A
5 4.99 B U C
6 5.01 — U C
7 5.02 A U C
8 5.05 A U B
9 5.08 A U A
10 5.03 A D B

Sample Size
 Attribute charts require larger sample sizes

 50 to 100 parts in a sample
 Variable charts require smaller samples
 2 to 10 parts in a sample

Process Capability
• Tolerances
• design specifications reflecting product requirements
• Process capability
• range of natural variability in a process what we measure with control charts

Process Capability
Design
Specifications
(a) Natural variation

exceeds design
specifications; process
is not capable of
meeting specifications
all the time.
Process
Design
Specifications
(b) Design specifications

and natural variation the
same; process is capable
of meeting specifications
most of the time.
Process
Process Capability (cont.)
Design
Specifications
(c) Design specifications

greater than natural
variation; process is
capable of always
conforming to
specifications.
Process
Design
Specifications
(d) Specifications greater

than natural variation,
but process off center;
capable but some output
will not meet upper
specification.
Process
Process Capability Measures
Process Capability Ratio
tolerance range
Cp = process range
upper specification limit -

lower specification limit
=
6

Computing Cp
Net weight specification = 9.0 oz  0.5 oz

Process mean = 8.80 oz
Process standard deviation = 0.12 oz
upper specification limit -

lower specification limit
Cp = 6
9.5 - 8.5
= = 1.39
6(0.12)

Process Capability Measures
Process Capability Index
= x - lower specification limit

3 ,
Cpk = minimum
upper specification limit - x =
3

Computing Cpk
Net weight specification = 9.0 oz  0.5 oz

Process mean = 8.80 oz
Process standard deviation = 0.12 oz
=
x - lower specification limit
,
Cpk = minimum 3
=
upper specification limit - x
3
8.80 - 8.50 9.50 - 8.80

= minimum , = 0.83
3(0.12) 3(0.12)

Appendix:
Determining Control Limits for x-bar and R-Charts
SAMPLE SIZE FACTOR FOR x-CHART FACTORS FOR R-CHART

n A2 D3 D4
2 1.88 0.00 3.27

3 1.02 0.00 2.57
Fact 4 0.73 0.00 2.28
5 0.58 0.00 2.11
ors 6 0.48 0.00 2.00
7 0.42 0.08 1.92
8 0.37 0.14 1.86
9 0.44 0.18 1.82
10 0.11 0.22 1.78
11 0.99 0.26 1.74
12 0.77 0.28 1.72
13 0.55 0.31 1.69
14 0.44 0.33 1.67
15 0.22 0.35 1.65
16 0.11 0.36 1.64
17 0.00 0.38 1.62
18 0.99 0.39 1.61
19 0.99 0.40 1.61
20 0.88 0.41 1.59

Binomial Probability Distribution: A Fixed Number of Observations (Trials), N A Binary Outcome

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Binomial Probability Distribution

 A fixed number of observations (trials), n

What’s the probability of this exact arrangement?

Another way to get exactly 3 heads: THHHT

In fact, (1/2)3 x (1/2)2 is the probability of each

So, the overall probability of 3 heads and 2 tails is:

Factorial review: n! = n(n-1)(n-2)…

• If I toss a coin 20 times, what’s the probability of getting exactly 10

• If I toss a coin 20 times, what’s the probability of getting of getting 2

Point 1: Create a Vision and Demonstrate

• Companies must take a customer-driven approach based on mutual

• Inspection - the principal means of quality control.

• Improved design of goods and services comes from understanding

• The job of management is leadership, not supervision.

Supervision – simply overseeing and directing work

• Fear is manifasted in many ways: fear of reprisal, fear of failure, fear

• Teamwork helps to break down barriers between

Barriers between functional areas occurs when

• Lack of cooperation leads to poor quality.

• Motivational approaches overlook the major source of many

• Any culture change begins with top management and includes

• The Funnel Experiment is a famous experiment first developed by Dr.

but opposite direction from (0,0)

• The Funnel Experiment is a famous experiment first developed by Dr.

Rule 1: Set the funnel over the target

Funnel Experiment; Rule 1

Funnel Experiment; Rule 2

Rule 2: Move the funnel in an equal but opposite direction from

Machine/Process adjustment rules using control chart

Automatic compensating machinery

Funnel Experiment; Rule 3

Funnel Experiment; Rule 4

Operator matches color from batch to batch

Operator attempts to make every piece like the

On the job training.

• Statistical Process Control (SPC)

Copyright 2006 John Wiley & Sons, Inc. 4-36

Copyright 2006 John Wiley & Sons, Inc. 4-37

Copyright 2006 John Wiley & Sons, Inc. 4-38

Copyright 2006 John Wiley & Sons, Inc. 4-39

• Nature of defect is different in services

Copyright 2006 John Wiley & Sons, Inc. 4-40

Copyright 2006 John Wiley & Sons, Inc. 4-41

Copyright 2006 John Wiley & Sons, Inc. 4-42

• Process has a tendency to go out of control

Copyright 2006 John Wiley & Sons, Inc. 4-43

• A graph that establishes

Copyright 2006 John Wiley & Sons, Inc. 4-44

Copyright 2006 John Wiley & Sons, Inc. 4-46

1. … no sample points outside limits

Copyright 2006 John Wiley & Sons, Inc. 4-47

Copyright 2006 John Wiley & Sons, Inc. 4-48

20 samples of 100 pairs of jeans

Copyright 2006 John Wiley & Sons, Inc. 4-50

p(1 - p) 0.10(1 - 0.10)

p(1 - p) 0.10(1 - 0.10)

Copyright 2006 John Wiley & Sons, Inc. 4-51

0.18 UCL = 0.190

0.02 LCL = 0.010

Copyright 2006 John Wiley & Sons, Inc. 4-52

Copyright 2006 John Wiley & Sons, Inc. 4-53

Copyright 2006 John Wiley & Sons, Inc. 4-54

Copyright 2006 John Wiley & Sons, Inc. 4-55