What is Six Sigma?

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Six Sigma is a methodology for process improvement developed by a scientist at Motorola in the 1980s. Six Sigma practitioners use statistics, financial analysis, and project management to achieve improved business functionality and better quality control by identifying and then correcting mistakes or defects in existing processes. The five phases of the Six Sigma method, known as DMAIC, are defining, measuring, analyzing, improving, and controlling.

Definition

Six Sigma is a process improvement method aimed at reducing defects in products or services through statistical analysis. Its goal is to achieve only 3.4 defects per million operations, reaching six standard deviations.

Origin

Six Sigma originated in the 1980s, developed by scientists at Motorola. It combines statistics, financial analysis, and project management to identify and correct errors in processes.

Categories and Features

The Six Sigma method includes five phases known as DMAIC: Define, Measure, Analyze, Improve, and Control. Each phase has specific tools and techniques to identify and reduce defects.

Case Studies

General Electric (GE) is a notable success story of Six Sigma. By implementing Six Sigma, GE saved billions of dollars in the 1990s. Another example is Honeywell, which improved its production processes and product quality through Six Sigma.

Common Issues

Investors may encounter issues such as misunderstanding statistical tools and having unrealistic expectations of process improvements when applying Six Sigma. It is crucial to understand that Six Sigma requires ongoing effort and comprehensive organizational support.

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Chi-Square Statistic

A chi-square (χ2) statistic is a test that measures how a model compares to actual observed data. The data used in calculating a chi-square statistic must be random, raw, mutually exclusive, drawn from independent variables, and drawn from a large enough sample. For example, the results of tossing a fair coin meet these criteria.Chi-square tests are often used to test hypotheses. The chi-square statistic compares the size of any discrepancies between the expected results and the actual results, given the size of the sample and the number of variables in the relationship.For these tests, degrees of freedom are used to determine if a certain null hypothesis can be rejected based on the total number of variables and samples within the experiment. As with any statistic, the larger the sample size, the more reliable the results.

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Rival Good

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An education IRA is a tax-advantaged investment account for higher education, now more formally known as a Coverdell Education Savings Account (ESA). Under this educational savings vehicle, parents and guardians are allowed to make nondeductible contributions to an education individual retirement account (IRA) for a child under the age of 18.

Education IRA

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