Defects per Million Opportunities and Yield

Posted on October 22, 2009 by

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Defects per Million Opportunities (DPMO) is the flip side of Yield. DPMO is the number of defects in a million opportunities and Yield is the percentage of the output that is non-defective. For example, in Katy’s Cookie Factory, exactly one million chocolate chip cookies are made each week. They seem to have a problem with peanut butter chips being added to the cookies instead of chocolate chips. They are getting numerous customer complaints about this problem. They discover that each week there are 250,000 cookies of the 1,000,000 cookies that mistakenly have peanut butter chips instead of chocolate chips. This means the DPMO is 250,000. This is one-fourth of a million cookies that have defects which means the rest of the cookies, three-fourths of a million (750,000), have no defects. These three-fourths of a million defect-free cookies translates into a Yield of 75%.

After investigating the problem, Katy discovers that a food bin was mislabeled as “peanut butter chips” that should have been labeled “chocolate chips.” She corrects the labeling. The next week, of the one million cookies made only 10,000 cookies mistakenly had peanut butter chips. This means that 990,000 cookies did not have that defect. So the DPMO is 10,000 and the Yield is 99%.

The lower the DPMO (which corresponds to higher Yield), the higher the Sigma Level. The stretch goal of Six Sigma is for the organization to be operating at the Six Sigma level which is only 3.4 DPMO. Originally Katy was operating at Sigma Level 2 and she improved that to Sigma Level of almost 4. She has more improvements to make in order to have only 3.4 cookies out of a million without this defect. If she reaches that mark, the factory will then be operating a Six Sigma level.