The customers of a mortgage bank expect to have their mortgage applications processed within 10 days of

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The customers of a mortgage bank expect to have their mortgage applications processed within 10 days of filing. This would be called a critical customer requirement, or CCR, in Six-Sigma terms. Suppose all defects are counted (loans in a monthly sample taking more than 10 days to process), and it is determined that there are 150 loans in the 1,000 applications processed last month that don't meet this customer requirement. Thus, the DPMO=150/1000 x 1,000,000, or 150,000 loans out of every million processed that fail to meet a CCR. Put differently, it means that only 850,000 loans out of a million are approved with- in time expectations. Statistically, 15 percent of the loans are defective and 85 percent are correct. This is a case where all the loans processed in less than 10 days meet our criteria. Often there are upper and lower customer requirements rather than just a single upper requirement as we have here.

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Operations Management For Competitive Advantage

ISBN: 1572

11th Edition

Authors: Richard B. Chase, F. Robert Jacobs

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