Correlation

❖ Y = f(X),
❖ where Y is Dependent variable or the result
(output)
❖ X is Independent variable, input or the
controllable variable

❖ For example in the study of marks

obtained by students in a subject (Y) vs
hours of study (X)
Correlation
Correlation
 Correlation
❖ Demonstration:
❖ Calculate Pearson’s Correlation coefficient
using MS Excel

Column 1 Column 2
Column 1 1
Column 2 0.879350768 1
 Correlation Coefficient
❖ Correlation
❖ Measures the strength of linear
relationship between Y and X
❖ Pearson Correlation Coefficient, r (r
varies between -1 and +1)
❖ Perfect positive relationship: r = 1
❖ No relationship: r = 0
❖ Perfect negative relationship: r = -1
Correlation Coefficient
 Correlation vs Causation
❖ Correlation does not imply causation
❖ a correlation between two variables does
not imply that one causes the other
 Correlation – Confidence Interval
❖ Population correlation (ρ) – usually
unknown
❖ Sample correlation (r)
 Correlation – Confidence Interval
❖ Since r is not normally distributed, there
are three steps to find out confidence
interval
❖ Convert r to z’ (Fisher’s Transformation)
❖ Calculate confidence interval in terms of z’
❖ Convert confidence interval back to r

❖ z’ = .5[ln(1+r) – ln(1-r)]
❖ Variance = 1/N-3
 Correlation – Confidence Interval
❖ N=10, r=0.88 find confidence interval
❖ Step 1.
❖ Convert r to z’
❖ z’ = .5[ln(1+r) – ln(1-r)]
❖ z’ = .5[ln(1+0.88) – ln(1-0.88)]
❖ z’= . 5[0.63 – (-2.12)] = 1.375
 Correlation – Confidence Interval
❖ N=10, r=0.88 find confidence interval
❖ Step 2. Confidence interval for z’
❖ Variance = 1/N-3 = 1/7 = 0.1428
❖ Standard error = Sqrt (0.1428) = 0.378
❖ 95% confidence Z = 1.96
❖ CI = 1.375 +/- (1.96)(0.378)
❖ Lower Limit = 0.635
❖ Upper Limit = 2.11
 Correlation – Confidence Interval
❖ N=10, r=0.88 find confidence interval
❖ Step 3. Convert back to r
❖ z’ Lower Limit = 0.635
❖ z’ Upper Limit = 2.11

z’ = .5[ln(1+r) – ln(1-r)]

❖ r Lower Limit = 0.56

❖ r Upper Limit = 0.97
 Coefficient of Determination
❖ Coefficient of Determination, r2
❖ Proportion of the variance in the
dependent variable that is predictable
from the independent variable
❖ (varies from 0.0 to 1.0 or zero to 100%)
❖ None of the variation in Y is explained by X,
r2 = 0.0
❖ All of the variation in Y is explained by X,
r2= 1.0

❖ r = 0.88, r2 = 0.77
 Regression Analysis
❖ Quantifies the relationship between Y
and X (Y = a + bX)
 Regression Analysis
❖ Quantifies the relationship between Y
and X (Y = a + bX)
Hours Studied (X) Test Score % (Y) XY X2 Y2
20 40 800 400 1600
24 55 1320 576 3025
46 69 3174 2116 4761
62 83 5146 3844 6889
22 27 594 484 729
37 44 1628 1369 1936
45 61 2745 2025 3721
27 33 891 729 1089
65 71 4615 4225 5041
23 37 851 529 1369
SUM 371 520 21764 16297 30160
 Regression Analysis
❖ Quantifies the relationship between Y
and X (Y = 15.79 + 0.97.X)
Hours
Test Score
Studied XY X2 Y2
% (Y)
(X)
20 40 800 400 1600
24 55 1320 576 3025
46 69 3174 2116 4761
62 83 5146 3844 6889
22 27 594 484 729
37 44 1628 1369 1936
45 61 2745 2025 3721
27 33 891 729 1089
65 71 4615 4225 5041
23 37 851 529 1369
SUM 371 520 21764 16297 30160
 Regression Analysis
❖ For a student studying 50 hrs what is the
expected test score %?
 Residual Analysis
❖ Y = 15.79 + 0.97.X
 Residual Analysis – No pattern

Residual
20

15

10

0
0 10 20 30 40 50 60 70
-5

-10

-15

Residual
 Confidence Interval - Slope

❖ Confidence interval
❖ 95% confidence interval, representing a
range of likely values for the mean
response.
❖ Prediction interval
❖ 95% prediction interval, represents a range
of likely values for a single new
observation.
 Multivariate Tools
❖ Simple Linear Relation
❖ Y = a + bX
❖ Multiple Linear Regression
❖ Y = a + b1X1 + b2X2+ ……..+ bnXn
❖ Multicollinearity
❖ When two input variables (predictor
variables - Xs) are correlated.
❖ Multivariate
❖ Two or more dependent variables (Ys)
 Multivariate Tools
❖ Factor analysis / Principal Component
Analysis
❖ Discriminant analysis
❖ Multiple analysis of variance (MANOVA)
 Multivariate
❖ Application
❖ Climate: Min temp, max temp, humidity,
precipitation – for a day
❖ Medical – Systolic BP, Diastolic BP, Pulse
rate, Age – of a patient
 Multivariate
❖ Application
❖ Classification of individuals – easy when
there are limited number of variables.

❖ Dimension reduction – Reducing large

number of variable to manageable number.

❖ Cause-effect relationship
 Multivariate
❖ Tools
❖ Classification of individuals
❖ Discriminant Analysis

❖ Dimension reduction
❖ Principal Component Analysis/ Factor
Analysis

❖ Cause-effect relationship
❖ MANOVA
 Discriminant Analysis
❖ Explains how clusters are different
 PCA / Factor Analysis
❖ Principal Component Analysis/ Factor
Analysis
❖ To reduce number of variables
❖ By grouping highly correlated variables
together
 MANOVA
❖ The MANOVA (multivariate analysis of
variance)
❖ To analyze data that involves more than
one dependent variable at a time.
❖ Tests the effect of one or more
independent variables on two or more
dependent variables.
❖ MANOVA is simply an ANOVA with
several dependent variables.
 Errors of Statistical Tests
True State of Nature

H0 Ha
Is true Is true
Support H0 /
Reject Ha Correct Type II
Conclusion Error
Conclusion Support Ha / Correct
Reject H0 Type I Error Conclusion
(Power)
 Errors of Statistical Tests
Type I error (alpha) Type II error (beta)
Name Producer’s risk/ Consumer’s risk
Significance level
1 minus error is Confidence level Power of the test
called
Example of Fire False fire alarm leading Missed fire leading to
Alarm to inconvenience disaster
Effects on Unnecessary cost Defects may be produced
process increase due to frequent
changes
Control method Usually fixed at a pre- Usually controlled to < 10%
determined level, 1%, by appropriate sample size
5% or 10%
Simple definition Innocent declared as Guilty declared as innocent
guilty
 Significance Level
Level of Confidence / Confidence Interval:
C = 0.90, 0.95, 0.99 (90%, 95%, 99%)

Level of Significance:
α = 1 – C (0.10, 0.05, 0.01)
 Power
❖ Power = 1 – β (or 1 - type II error)
❖ Type II Error: Failing to reject null
hypothesis when null hypothesis is false.
❖ Power: Likelihood of rejecting null
hypothesis when null hypothesis is false.

❖ Or: Power is the ability of a test to

correctly reject the null hypothesis.
 Alpha vs Beta
❖ Researcher can not commit both Type I
and II error. Only one can be committed.
❖ As the value of α increases (say 0.01 to
0.05) β goes down and the Power of test
increases.
❖ To reduce both Type I and II errors
increase sample size.
 Power
❖ As the value of α increases (say 0.01 to
0.05) β goes down and the Power of test
increases.
 Statistical Significance
❖ Case of a perfume making company:
❖ Mean Volume 150 cc and sd=2 cc
 Practical Significance
❖ Practical significance of an experiment
tells us if there is any actionable
information from the result.
❖ Large samples can find out statistical
difference for very small difference.
These small difference might not have
practical significance.
 Hypothesis Testing
1. State the Alternate Hypothesis.
2. State the Null Hypothesis.
3. Select a probability of error level (alpha
level). Generally 0.05
4. Select and compute the test statistic
(e.g t or z score)
5. Critical test statistic
6. Interpret the results.
 Hypothesis Testing
❖ Lower Tail Tests
❖ H0: μ ≥ 150cc
❖ Ha: μ < 150cc

❖ Upper Tail Tests

❖ H0: μ ≤ 150cc
❖ Ha: μ > 150cc
 Hypothesis Testing
❖ Two Tail Tests
❖ H0: μ = 150cc
❖ Ha: μ ≠ 150cc
 Calculate Test Statistic
❖ Single sample
❖ z = (x - μ)/ σ

❖ Mean of Multiple samples

❖ z = (x̄ - μ) / (σ / √n)
 Z Critical
❖ α = 0.05 Single Tails
❖ Z Critical = 1.645
 Z Critical
❖ α = 0.01 Two Tails means 0.005 on both
tails. Z Critical = 2.575
❖ α = 0.05 Two Tails means 0.025 on both
tails. Z Critical = 1.96
❖ α = 0.10 Two Tails means 0.05 on both
tails. Z Critical = 1.645

•90% – Z Score = 1.645

•95% – Z Score = 1.96
•99% – Z Score = 2.576
 p Value
❖ p value is the lowest value of alpha for
which the null hypothesis can be
rejected. (Probability that the null
hypothesis is correct)
❖ If p = 0.01 you can reject the null
hypothesis at α = 0.05
❖ p is low the null must go / p is high the
null fly.
 Sample Size
❖ n = ( zα/2 . σ / ME)2
❖ n is sample size
❖ zα/2 is standard score
❖ α = 0.01 Z Critical = 2.575
❖ α = 0.05 Z Critical = 1.96
❖ α = 0.10 Z Critical = 1.645
❖ σ is standard deviation
❖ ME is the Margin of Error (shift to be
detected)
 Sample Size
❖ In perfume bottle filling m/c with mean
of 150cc and s.d. of 2cc, what is the
minimum sample size which at 95%
confidence will confirm a mean shift
greater than 0.5cc?
❖ n = ( zα/2 . σ / ME)2
❖ zα/2 = 1.96, σ = 2cc, ME=0.5cc
❖ n = 61.46
Sample Size – SigmaXL Demo
 Sample Size - Proportion
❖ n = ( zα/2)2. p̂ . (1-p̂) / (Δp) 2
❖ n is sample size
❖ zα/2 is standard score
❖ α = 0.01 Z Critical = 2.575
❖ α = 0.05 Z Critical = 1.96
❖ α = 0.10 Z Critical = 1.645
❖ p̂ is proportion rate
❖ Δp is the desired proportion interval
Sample Size - Proportion
 Point vs Interval Estimates
❖ Point estimate:
❖ Summarize the sample by a single number
that is an estimate of the population
parameter.

❖ Interval estimate:
❖ A range of values within which, we believe,
the true parameter lies with high
probability.
 Point Estimates
❖ Point estimate:
❖ Summarize the sample by a single number
that is an estimate of the population
parameter.
❖ The sample mean x̄ is a point estimate of
the population mean μ. The sample
proportion p is a point estimate of the
population proportion P.
 Point vs Interval Estimates
❖ Interval estimate:
❖ A range of values within which, we believe,
the true parameter lies with high
probability.
❖ For example, a < x̄ < b is an interval
estimate of the population mean μ. It
indicates that the population mean is
greater than a but less than b.
 Confidence Interval
❖ Factors affecting the width of
confidence interval
❖ sample size
❖ standard deviation
❖ confidence level
 Confidence Interval
❖ When population standard deviation is
known/ Sample size is >=30

❖ CI = x̄ +/- (Zα/2 )* σ/√(n).

❖ Zα/2 = z table value for confidence level,
❖ σ = standard deviation
❖ n = sample size.
 Confidence Interval
❖ When population standard deviation is
known/ Sample size is >=30

❖ CI = x̄ +/- (Zα/2 )* σ/√(n).

❖ Zα/2 = z table value for confidence level,
❖ σ = standard deviation
❖ n = sample size.
 Confidence Interval
❖ The average income of 100 random residents of
city was found to be $42,000 per annum with
standard deviation of 5,000. Find the 95%
confidence interval of the town income.
❖ CI = x̄ +/- (Zα/2 )* σ/√(n).
❖ Zα/2 = z table value for confidence level,
❖ σ = standard deviation
❖ n = sample size.
 Confidence Interval
❖ The average income of 100 random residents of
city was found to be $42,000 per annum with
standard deviation of 5,000. Find the 95%
confidence interval of the town income.
❖ CI = x̄ +/- (Zα/2 )* σ/√(n).
❖ Zα/2 = z table value for confidence level =
1.96
❖ σ = standard deviation = 5,000
❖ n = sample size = 100
•90% – Z Score = 1.645
•95% – Z Score = 1.96
•99% – Z Score = 2.576
 Confidence Interval
❖ The average income of 100 random residents of
city was found to be $42,000 per annum with
standard deviation of 5,000. Find the 95%
confidence interval of the town income.
❖ CI = x̄ +/- (Zα/2 )* σ/√(n)
❖ CI = 42,000 +/- 1.96 * 5,000/√(100)
❖ CI = 42,000 +/- 980
❖ CI = 41020 to 42980
 Confidence Interval
❖ When population standard deviation is
unknown and Sample size is < 30

❖ CI = x̄ +/- (tα/2 )* s/√(n).

❖ tα/2 = t distribution value for the confidence
level and (n-1) degrees of freedom
❖ s = sample standard deviation
❖ n = sample size.
 Confidence Interval
❖ The average income of 25 random residents of
city was found to be $42,000 per annum with
standard deviation of 5,000. Find the 95%
confidence interval of the town income.
❖ CI = x̄ +/- (tα/2 )* s/√(n).
❖ tα/2 = t distribution value for the confidence
level and (n-1) degrees of freedom
❖ s = sample standard deviation
❖ n = sample size.

•90% – Z Score = 1.645

•95% – Z Score = 1.96
•99% – Z Score = 2.576
 Introducing t distribution
❖ Also known as Student ’s t distribution
❖ Used when the sample size is small
and/or when the population variance is
unknown
❖ Calculated value
❖ t = [x̄ - μ ] / [ s / sqrt( n ) ]
❖ The form of the t distribution is
determined by its degrees of freedom
(n-1)
Confidence Interval
 Confidence Interval
❖ The average income of 25 random residents of
city was found to be $42,000 per annum with
standard deviation of 5,000. Find the 95%
confidence interval of the town income.
❖ CI = x̄ +/- (tα/2 )* s/√(n).
❖ tα/2 = t distribution value for the confidence
level and (n-1) degrees of freedom = 2.064
❖ s = sample standard deviation = 5000
❖ n = sample size. = 25
❖ CI = 42,000 +/- 2.064* 5000/√(25)
❖ CI = 42,000 +/- 2064
❖ CI = 39,936 to 44,064
 Confidence Interval - Proportion
❖ CI = x̄ +/- (Zα/2 )* σ/√(n)
❖ CI = p +/- (Zα/2 )* √((p)(1-p)/n)

❖ Conditions to satisfy for this:

❖ np ≥ 5 and
❖ n(1 − p) ≥ 5
 Confidence Interval - Proportion
❖ Out of 100 pieces sample inspected 10
were found to be defective. What is the
95% confidence interval for
proportions?
❖ CI = p +/- (Zα/2 )* √((p)(1-p)/n)
❖ p = 0.10, np = 100x0.10=10, n(1-p)=90
❖ Conditions np ≥ 5 and n(1 − p) ≥ 5
satisfied
❖ CI = 0.10+/- 1.96 √((0.10)(1-0.10)/100)
❖ CI = 0.10 +/- 0.0588 = 0.0412 to 0.1588
 Confidence Interval - Variation
❖ Confidence interval for variance:

❖ Let’s understand Chi-square distribution

first
 Chi-Square Distribution
❖ Select a random sample of size n from a
normal population, having a standard
deviation equal to σ.
❖ The standard deviation in sample is
equal to s.
❖ chi-square for this can be calculated by:
❖ Χ2 = [ ( n - 1 ) * s2 ] / σ2
 Chi-Square Distribution
❖ Χ2 = [ ( n - 1 ) * s2 ] / σ2
 Chi-Square Distribution
❖ Χ2 = [ ( n - 1 ) * s2 ] / σ2
❖ Df = 24, Χ2 0.05 = 36.42, Χ2 0.95 = 13.848
 Chi-Square Distribution
❖ Χ2 = [ ( n - 1 ) * s2 ] / σ2
❖ Df = 24, Χ2 0.05 = 36.42, Χ2 0.95 = 13.848
❖ For 25 sample of perfume bottles,
variance was found to be 4. Find the CI
of the population with 90% confidence.
❖ (25-1).(4)/36.42 and (25-1).(4)/13.848
❖ Between 2.636 and 6.93
 Tests for Mean, Variance & Proportion
One sample z test

One Sample One sample t test

One sample p test

Two sample z test

Two sample t test

Two
Tests
Samples
Paired t test

Two sample p test

Two sample standard

deviation
More than 2
ANOVA
samples
 One Sample z Test
❖ Calculated value
❖ z = [x̄ - μ ] / [σ / sqrt( n ) ]
❖ Example: Perfume bottle producing
150cc with sd of 2 cc, 100 bottles are
randomly picked and the average
volume was found to be 152cc. Has
mean volume changed? (95%
confidence)
❖ zcalculated = (152-150)/[2 / sqrt( 100 ) ] =
2/0.2 = 10
❖ zcritical = ?
One Sample z Test
zcritical = 1.96
 One Sample z Test
❖ Calculated value
❖ z = [x̄ - μ ] / [σ / sqrt( n ) ]
❖ Example: Perfume bottle producing
150cc with sd of 2 cc, 100 bottles are
randomly picked and the average
volume was found to be 152cc. Has
mean volume changed? (95%
confidence)
❖ zcalculated = (152-150)/[2 / sqrt( 100 ) ] =
2/0.2 = 10
❖ zcritical = 1.96 > Reject Ho
 One Sample t Test
❖ Calculated value
❖ t = [x̄ - μ ] / [s / sqrt( n ) ]
❖ Example: Perfume bottle producing
150cc, 4 bottles are randomly picked
and the average volume was found to
be 151cc and sd of sample was 2 cc. Has
mean volume changed? (95%
confidence)
❖ tcal = (151-150)/[2 / sqrt( 4 ) ] = 1/1 = 1
❖ tcritical = ?
One Sample t Test
tcritical = 3.182
 One Sample t Test
❖ Calculated value
❖ t = [x̄ - μ ] / [s / sqrt( n ) ]
❖ Example: Perfume bottle producing
150cc, 4 bottles are randomly picked
and the average volume was found to
be 151cc and sd of sample was 2 cc. Has
mean volume changed? (95%
confidence)
❖ tcal = (151-150)/[2 / sqrt( 4 ) ] = 1/1 = 1
❖ tcritical = 3.182 > Fail to reject Ho
 One Sample p Test
❖ H0: p = p0
❖ Calculated value

❖ Example: Smoking rate in a town in past

was 21%, 100 samples were picked and
found 14 smokers. Has smoking habit
changed?
 One Sample p Test
❖ Example: Smoking rate in a town in past
was 21%, 100 samples were picked and
found 14 smokers. Has smoking habit
changed at 95% confidence? (two tail)
❖ p0 = 0.21, p=0.14
❖ np0 = 0.21x100 = 21 and n(1-p0)= 0.79x100 = 79
❖ >5 means sample size is sufficient.
❖ z = (0.14-0.21)/sqt (0.21x0.79/100)
❖ z = -0.07/0.0407 = -1.719
❖ z critical = 1.96
 One Sample p Test
❖ Example: Smoking rate in a town in past
was 21%, 100 samples were picked and
found 14 smokers. Has smoking habit
reduced at 95% confidence? (one tail)
❖ H0 : p < p 0
❖ p0 = 0.21, p=0.14
❖ z = (0.14-0.21)/sqt (0.21x0.79/100)
❖ z = -0.07/0.0407 = -1.719
❖ z critical = 1.645
 Tests for Mean, Variance & Proportion
One sample z test

One Sample One sample t test

One sample p test

Two sample z test

Two sample t test

Two
Tests
Samples
Paired t test

Two sample p test

Two sample standard

deviation
More than 2
ANOVA
samples
 Two Sample z Test
❖ Null hypothesis: H 0: μ 1 = μ 2
❖ or H 0: μ 1 – μ 2= 0
❖ Alternative hypothesis: H a : μ 1 ≠ μ 2
 Two Sample z Test
❖ Example: From two machines 100
samples each were drawn.
❖ Machine 1: Mean = 151.2 / sd = 2.1
❖ Machine 2: Mean = 151.9 / sd = 2.2
❖ Is there difference in these two machines.
Check at 95% confidence level.
 Two Sample z Test
❖ Example: From two machines 100
samples each were drawn.
❖ Machine 1: Mean = 151.2 / sd = 2.1
❖ Machine 2: Mean = 151.9 / sd = 2.2
❖ Is there difference in these two machines.
Check at 95% confidence level.
❖ Zcal = -0.7 / 0.304 = -2.30
❖ Zcritical = 1.96
❖ Reject Null.
❖ There is a difference.
 Two Sample z Test
❖ Example: From two machines 100
samples each were drawn.
❖ Machine 1: Mean = 151.2 / sd = 2.1
❖ Machine 2: Mean = 151.9 / sd = 2.2
❖ Is there difference of more than 0.3 cc in
these two machines. Check at 95%
confidence level.

❖ H 0: μ 2 – μ 1 <= 0.3
❖ H a: μ 2 – μ 1 > 0.3
 Two Sample z Test
❖ Example: From two machines 100
samples each were drawn.
❖ Machine 1: Mean = 151.2 / sd = 2.1
❖ Machine 2: Mean = 151.9 / sd = 2.2
❖ Is there difference of more than 0.3 cc in
these two machines. Check at 95%
confidence level.
❖ Zcal = (151.2 – 151.9) – (-0.3)/0.304
❖ = -0.4 / 0.304 = -1.316
❖ Zcritical = 1.64
❖ Fail to reject Null Hypothesis.
 Two Sample t Test
❖ If two set of data are independent or
dependent.
❖ If the values in one sample reveal no
information about those of the other
sample, then the samples are independent.
❖ Example: Blood pressure of male/female

❖ If the values in one sample affect the values

in the other sample, then the samples are
dependent.
❖ Example: Blood pressure before and after a
specific medicine
 Two Sample t Test
❖ If two set of data are independent or
dependent.
❖ If the values in one sample reveal no
information about those of the other
sample, then the samples are independent.
❖ Example: Blood pressure of male/female
Two sample t test

❖ If the values in one sample affect the values

in the other sample, then the samples are
dependent.
❖ Example: Blood pressure before and after a
specific medicine Paired t test
 Two Sample t Test
❖ Is variance for two samples equal?

❖ If yes: Pooled variance calculate Sp for

finding out t
 Two Sample t Test
❖ Example: Samples from two machines A
and B have the following volumes in
bottles. If the mean different? Calculate
with 95% confidence.

❖ Use SigmaXL and then lets understand

results.
Two Sample t Test
Two Sample t Test
tcritical = 2.306
 Two Sample t Test
❖ Assumptions: Normality, independent
random samples, population variances
are equal
 Two Sample t Test
❖ What if variance of two samples is not
A C
equal? 150 144
152 162
154 177
152 150
151 140
2 Sample t-Test

Test Information
H0: Mean Difference = 0
Ha: Mean Difference Not Equal To 0
Assume Unequal Variance

Results: A C
Count 5 5
Mean 151.80 154.60
Standard Deviation 1.483 15.027

Mean Difference -2.800

Std Error Difference 6.753
DF 4.078
t -0.414644
P-Value (2-sided) 0.6997
 Two Sample t Test
❖ Degrees of freedom are calculated by:

Results: A C
Count 5 5
Mean 151.80 154.60
Standard Deviation 1.483 15.027
Two Sample t Test

tcritical = 2.776
 Two Sample t Test
❖ Minitab 17 output:

Two-Sample T-Test and CI: A, C

Two-sample T for A vs C

N Mean StDev SE Mean

A 5 151.80 1.48 0.66
C 5 154.6 15.0 6.7

Difference = μ (A) - μ (C)

Estimate for difference: -2.80
95% CI for difference: (-21.55, 15.95)
T-Test of difference = 0 (vs ≠): T-Value = -0.41 P-Value = 0.700
DF = 4
 Paired t Test
❖ Where you have two samples in which
observations in one sample can be
paired with observations in the other
sample.
❖ Or
❖ If the values in one sample affect the
values in the other sample, (the samples
are dependent.)
❖ Example: Blood pressure before and after a
specific medicine
 Paired t Test
❖ Find the difference between two set of
readings as d1, d2 …. dn.
❖ Find the mean and standard deviation of
these differences.
 Paired t Test
❖ Example: Before and after medicine BP
was measured. Is there a difference at
95% confidence level?

Patient Before After

1 120 122
2 122 120
3 143 141
4 100 109
5 109 109
 Paired t Test
❖ Example: Before and after medicine BP
was measured. Is there a difference at
95% confidence level?
Patient Before After difference
1 120 122 2
2 122 120 -2
3 143 141 -2
4 100 109 9
5 109 109 0

❖ d-bar = 1.4 , s = 4.56 , n=5

❖ tcal. = 1.4/2.04 = 0.69
 Paired t Test
❖ Example: Before and after medicine BP
was measured. Is there a difference at
95% confidence level?
Patient Before After difference
1 120 122 2
2 122 120 -2
3 143 141 -2
4 100 109 9
5 109 109 0
❖ tcal. = 1.4/2.04 = 0.69
❖ t0.025, 4 = 2.766
❖ Fail to reject null hypothesis
 Tests for Mean, Variance & Proportion
One sample z test

One Sample One sample t test

One sample p test

Two sample z test

Two sample t test

Two
Tests
Samples
Paired t test

Two sample p test

Two sample standard

deviation
More than 2
ANOVA
samples
 Two Sample p Test
❖ Null hypothesis: H 0: p1 = p2
❖ or H 0: p 1 – p 2= 0
❖ Alternative hypothesis: H a : p 1 ≠ p 2

❖ Normal approximation – Pooled

❖ Normal approximation – Un-pooled

Two Sample p Test
 Two Sample p Test
❖ Normal approximation – Pooled
❖ p1 = 30/200 =0.15 , p2= 10/100 = 0.10
❖ Pooled p = (30+10)/(200+100) = 0.1333
❖ Expected value = 13.33% (is >=5)
❖ Z = 0.0500 /
Sqrt(0.133x0.866)(1/200+1/100)
❖ Z = 0.0500/0.4156 = 1.20
 Tests for Variance
❖ F-test
❖ for testing equality of two variances from
different populations
❖ for testing equality of several means with
technique of ANOVA.
❖ Chi-square test
❖ For testing the population variance against
a specified value
❖ testing goodness of fit of some probability
distribution

❖ testing for independence of two attributes

 Two Sample Variance – F Test
❖ F-test
❖ for testing equality of two variances from
different populations

❖ H0: σ21 = σ22

❖ F calculated

❖ Keep higher value at the top for right tail

test.
❖ Remember: Variance is square of standard
deviation
 Two Sample Variance – F Test
❖ F critical
❖ Use table with appropriate degrees of
freedom
❖ For two tail test use the table for α/2
 Two Sample Variance – F Test
❖ Example: We took 8 samples from
machine A and the standard deviation
was 1.1. For machine B we took 5
samples and the variance was 11. Is
there a difference in variance at 90%
confidence level?
❖ n1 = 8, s1 = 1.1, s21 = 1.21, df = 7 (denominator)
❖ n2 = 5, s22 = 11, df = 4 (numerator)
❖ F calculated = 11/1.21 = 9.09 (higher value at top)
Two Sample Variance – F Test

F critical = 4.1203
 Two Sample Variance – F Test
❖ Example: We took 8 samples from
machine A and the standard deviation
was 1.1. For machine B we took 5
samples and the variance was 11. Is
there a difference in variance at 90%
F critical = 4.1203
confidence level?
❖ n1 = 8, s1 = 1.1, s21 = 1.21, df = 7 (denominator)
❖ n2 = 5, s22 = 11, df = 4 (numerator)
❖ F calculated = 11/1.21 = 9.09 (higher value at top)
❖ Reject H0
 Two Sample Variance – F Test
❖ Right tail F critical = 4.1203
❖ Left tail F critical =?
❖ Reverse degrees of freedom and then
take inverse.
F critical = 4.1203
❖ F (4,7) = 4.1203
❖ F (7,4) = 6.0942
❖ Inverse of this is 1/6.0942 is F= 0.164
 Tests for Variance
❖ F-test
❖ for testing equality of two variances from
different populations
❖ for testing equality of several means with
technique of ANOVA.
❖ Chi-square test
❖ For testing the population variance against
a specified value
❖ testing goodness of fit of some probability
distribution

❖ testing for independence of two attributes

 One Sample Chi Square
❖ For testing the population variance against
a specified value σ
 One Sample Chi Square
❖ Example: A sample of 25 bottles was
selected. The variance of these 25 bottles
as 5 cc. Has it increased from established 4
cc? 95% confidence level.
❖ Ho: s2 <= σ2 / Ha: s2 > σ2

❖ X2 = 24x5 / 4 = 30

❖ What is critical value of Chi Square for 24

degrees of freedom?
 One Sample Chi Square
❖ Example: A sample of 25 bottles was
selected. The variance of these 25 bottles
as 5 cc. Has it increased from established 4
cc? 95% confidence level.
❖ Ho: s2 <= σ2 / Ha: s2 > σ2

❖ X2 = 24x5 / 4 = 30

❖ What is critical value of Chi Square for 24

degrees of freedom?
One Sample Chi Square
 One Sample Chi Square
❖ Example: A sample of 25 bottles was
selected. The variance of these 25 bottles
as 5 cc. Has it increased from established 4
cc? 95% confidence level.
❖ Ho: s2 <= σ2 / Ha: s2 > σ2
❖ X2 = 24x5 / 4 = 30

❖ Critical value of Chi Square for 24 degrees

of freedom = 36.42

❖ Fail to reject H0
 One Sample Chi Square
❖ SigmaXL Output
 ANOVA
❖ F-test
❖ for testing equality of two variances from
different populations
❖ for testing equality of several means with
technique of ANOVA.
❖ Chi-square test
❖ For testing the population variance against
a specified value
❖ testing goodness of fit of some probability
distribution

❖ testing for independence of two attributes

 ANOVA
❖ F-test
❖ for testing equality of two variances from
different populations

❖ H0: σ21 = σ22

❖ F calculated

❖ Keep higher value at the top for right tail

test.
❖ Remember: Variance is square of standard
deviation
 ANOVA
❖ Why ANOVA?
❖ We used t test to compare the means of
two populations.
❖ What if we need to compare more than two
populations? With ANOVA e can find out if
one or more populations have different
mean or comes from a different population.
❖ We could have conducted multiple t Test.
❖ How many t Test we need to conduct if
have to compare 4 samples? … 6
 ANOVA
❖ Why ANOVA?
❖ How many t Test we need to conduct if
have to compare 4 samples? … 6

4 x

3 x 3 vs 4

2 x 2 vs 3 2 vs 4

1 x 1 vs 2 1 vs 3 1 vs 4

1 2 3 4
 ANOVA
❖ Why ANOVA?
❖ How many t Test we need to conduct if
have to compare 4 samples? … 6
❖ Each test is done with alpha = 0.05 or 95%
confidence.
❖ 6 tests will result in confidence level of
0.95x0.95x0.95x0.95x0.95x0.95 = 0.735
 ANOVA
❖ Comparing three machines:
Machine 1 Machine 2 Machine 3
150 153 156
151 152 154
152 148 155
152 151 156
151 149 157
150 152 155
x̄1 = 151 x̄2 = 150.83 x̄3 = 155.50
 ANOVA
Machine 1 Machine 2 Machine 3
❖ Comparing three machines: 150 153 156
151 152 154
152 148 155
152 151 156
158
151 149 157
156 150 152 155
x̄1 = 151.00 x̄2 = 150.83 x̄3 = 155.50
154
Median
25th
152
75th
Mean
150

148
Machine 1 Machine 2 Machine 3
146
 ANOVA
❖ Comparing three machines:

Machine 1 Machine 2 Machine 3 Machine 4 Machine 5 Machine 6

150 153 156 130 163 166
151 152 154 155 152 154
152 148 155 160 143 155
152 151 156 158 141 151
151 149 157 152 149 152
150 152 155 145 157 155
x̄1 = 151.00 x̄2 = 150.83 x̄3 = 155.50 x̄1 = 151.00 x̄2 = 150.83 x̄3 = 155.50
 ANOVA
❖ Comparing three machines:
Machine 1 Machine 2 Machine 3 Machine 4 Machine 5 Machine 6
150 153 156 130 163 166
151 152 154 155 152 154
152 148 155 160 143 155
152 151 156 158 141 151
151 149 157 152 149 152
150 152 155 145 157 155
x̄1 = 151.00 x̄2 = 150.83 x̄3 = 155.50 x̄1 = 151.00 x̄2 = 150.83 x̄3 = 155.50
170
158
165
156 160
154 Median
Median 155
25th 25th
152 150
75th 75th
145
150 Mean Mean
140 Outliers
148
135
Machine 1 Machine 2 Machine 3
146 130
125 Machine 4 Machine 5 Machine 6
 ANOVA
❖ ANOVA is Analysis of Variance
❖ Variance

❖ Numerator of this formula is Sum of

Squares
❖ Total of Sum of Squares (SST) =
SS between/or treatment +SS within/or error
 ANOVA
❖ SST = SS between(or treatment) +SS within(or error)

❖ Ratio:
SS between(or treatment) / SS within(or error)

F = MS between(or treatment) / MS within(or error)

 ANOVA
❖ SST = SS between(or treatment) +SS within(or error)

Machine 1 Machine 2 Machine 3

150 153 156
151 152 154
152 148 155
152 151 156
151 149 157
150 152 155
x̄1 = 151.00 x̄2 = 150.83 x̄3 = 155.50
 Machine 1 Machine 2 Machine 3

ANOVA
150 153 156
151 152 154
152 148 155
152 151 156

❖ SST = SS between(or treatment) +SS within(or error) 151 149 157

150 152 155
x̄1 = 151.00 x̄2 = 150.83 x̄3 = 155.50

Machine 1 x1 - x̄1 Sqr(x1 - x̄1) Machine 2 x2 - x̄2 Sqr(x2 - x̄2) Machine 3 x3 - x̄3 Sqr(x3 - x̄3)
150.00 -1.00 1.00 153.00 2.17 4.69 156.00 0.50 0.25
151.00 0.00 0.00 152.00 1.17 1.36 154.00 -1.50 2.25
152.00 1.00 1.00 148.00 -2.83 8.03 155.00 -0.50 0.25
152.00 1.00 1.00 151.00 0.17 0.03 156.00 0.50 0.25
151.00 0.00 0.00 149.00 -1.83 3.36 157.00 1.50 2.25
150.00 -1.00 1.00 152.00 1.17 1.36 155.00 -0.50 0.25
151.00 150.83 155.50 152.44
4.00 18.83 5.50
❖ SS within = 4.00+18.83+5.50 = 28.33
 Machine 1 Machine 2 Machine 3

ANOVA
150 153 156
151 152 154
152 148 155
152 151 156

❖ SST = SS between(or treatment) +SS within(or error) 151 149 157

150 152 155
x̄1 = 151.00 x̄2 = 150.83 x̄3 = 155.50

Machine 1 x1 - x̄1 Sqr(x1 - x̄1) Machine 2 x2 - x̄2 Sqr(x2 - x̄2) Machine 3 x3 - x̄3 Sqr(x3 - x̄3)
150.00 -1.00 1.00 153.00 2.17 4.69 156.00 0.50 0.25
151.00 0.00 0.00 152.00 1.17 1.36 154.00 -1.50 2.25
152.00 1.00 1.00 148.00 -2.83 8.03 155.00 -0.50 0.25
152.00 1.00 1.00 151.00 0.17 0.03 156.00 0.50 0.25
151.00 0.00 0.00 149.00 -1.83 3.36 157.00 1.50 2.25
150.00 -1.00 1.00 152.00 1.17 1.36 155.00 -0.50 0.25
151.00 150.83 155.50 152.44
4.00 18.83 5.50

-1.44 2.07 -1.61 2.58 3.06 9.36

❖ SS between = (2.07+2.58+9.36)x6 = 84.06

 Machine 1 Machine 2 Machine 3

ANOVA
150 153 156
151 152 154
152 148 155
152 151 156

❖ SST = SS between(or treatment) +SS within(or error) 151 149 157

150 152 155
x̄1 = 151.00 x̄2 = 150.83 x̄3 = 155.50

❖ SST = 84.06 +28.33 = 112.39

❖ Degrees of freedom
❖ Total df = df treatment + df error
❖ (N-1) = (C-1) + (N-C)
❖ df treatment = 3-1=2, df error = 18-3=15
❖ df total = 17
 Machine 1 Machine 2 Machine 3

ANOVA
150 153 156
151 152 154
152 148 155
152 151 156

❖ Mean Sum of Square = SS / df 151 149 157

150 152 155

❖ MSbetween = SS between(or treatment) /df treatment x̄1 = 151.00 x̄2 = 150.83 x̄3 = 155.50

❖ MSbetween = 84.06 / 2 = 42.03

❖ MSwithin = SS within(or error) /df within

❖ MSwithin = 28.33 /15 = 1.89

❖ F = Msbetween / Mswithin = 42.03/1.89 = 22.24

 ANOVA
❖ F = MSbetween / MSwithin = 42.03/1.89 =
22.24

❖ Compare this with F critical

❖ F (2, 15, 0.95) = 3.68

❖ Reject Null Hypothesis

❖ DEMONSTRATE MS Excel
 Machine 1 Machine 2 Machine 3

ANOVA
150 153 156
151 152 154
152 148 155

F = 22.24 152 151 156

151 149 157
One-Way ANOVA & Means Matrix:
150 152 155
H0: Mean 1 = Mean 2 = ... = Mean k x̄1 = 151.00 x̄2 = 150.83 x̄3 = 155.50
Ha: At least one pair Mean i ≠ Mean
j

Summary Information Machine 1 Machine 2 Machine 3

Count 6 6 6
Mean 151 150.83 155.50
Standard Deviation 0.894427 1.941 1.048808848
UC (2-sided, 95%, pooled) 152.20 152.03 156.70
LC (2-sided, 95%, pooled) 149.80 149.64 154.30

ANOVA Table
Source SS DF MS F P-Value
Between 84.111 2 42.056 22.265 0.0000
Within 28.333 15 1.889
Total 112.44 17
 ANOVA
❖ Practice Exercise: Fill in the values for ?A
to ?E in this ANOVA Table:
ANOVA Table
Source SS DF MS F
Between 84.111 ?C ?D ?E
Within ?A 15 1.889
Total ?B 17

❖ STOP the video and try to find out the

values. Once done, go ahead and start
the video
 ANOVA
❖ ?A = 15x1.889 = 28.333
❖ ?B = 84.111+28.33 = 112.44
❖ ?C = 17-15 = 2
❖ ?D = 84.111/2 = 42.056
❖ ?E = 42.045/1.889 = 22.265
ANOVA Table
Source SS DF MS F
Between 84.111 ?C= 2 ?D = 42.056 ?E= 22.265
Within ?A= 28.333 15 1.889
Total ?B= 112.44 17
 Goodness of Fit Test (Chi Square)
❖ To test if the sample is coming from a
population with specific distribution.
❖ Other goodness-of-fit tests are
❖ Anderson-Darling
❖ Kolmogorov-Smirnov
❖ Chi Square Goodness of Fit can be used
for any time of data: Continuous or
Discrete.
 Goodness of Fit Test (Chi Square)
❖ H0: The data follow a specified
distribution.
❖ Ha: The data do not follow the specified
distribution.
❖ Calculated Statistic:

❖ Critical Statistic: Chi square for k-1

degrees of freedom for specific alpha.
 Goodness of Fit Test (Chi Square)
❖ A coin is flipped 100 times. Number of
heads are noted. Is this coin biased?
Expected Observed
50 51
50 52
50 56
50 82
50 65
 Goodness of Fit Test (Chi Square)
❖ A coin is flipped 100 times. Number of
heads are noted. Is this coin biased?
Expected Observed O-E (O-E)2 (O-E)2/E
50 51 1 1 0.02
50 52 2 4 0.08
50 56 6 36 0.72
50 82 32 1024 20.48
50 65 15 225 4.5

X2 = 25.8
 Goodness of Fit Test (Chi Square)
❖ A coin is flipped 100 times. Number of
heads are noted. Is this coin biased?
X2cal= 25.8

X2(4,0.95)= 9.49
 Goodness of Fit Test (Chi Square)
❖ A coin is flipped 100 times. Number of
heads are noted. Is this coin biased?

❖ X2cal= 25.8
❖ X2(4,0.95)= 9.49

❖ Reject Null Hypothesis

❖ Coin is biased
 Contingency Tables
❖ To find relationship between two
discrete variables.
Smoker Non
Smoker
Male 60 40 100
Female 35 40 75
95 80 175

Operator 1 Operator 2 Operator 3

Shift 1 22 26 23 71
Shift 2 28 62 26 116
Shift 3 72 22 66 160
122 112 115 347
 Contingency Tables
❖ Null hypothesis is that there is no
relationship between the row and
column variables.
❖ Alternate hypothesis is that there is a
relationship. Alternate hypothesis does
not tell what type of relationship exists.
Operator 1 Operator 2 Operator 3
Shift 1 22 26 23 71
Shift 2 28 62 26 116
Shift 3 72 22 66 160
122 112 115 347
 Contingency Tables
❖ Calculate Chi square statistic.

Operator 1 Operator 2 Operator 3

Shift 1 22 26 23 71
Shift 2 28 62 26 116
Shift 3 72 22 66 160
122 112 115 347
 Contingency Tables
❖ Calculate Chi square statistic.
OBSERVED
Operator 1 Operator 2 Operator 3
Shift 1 22 26 23 71
Shift 2 28 62 26 116
Shift 3 72 22 66 160
122 112 115 347

EXPECTED
Operator 1 Operator 2 Operator 3
Shift 1 122x71/347 112x71/347 115x71/347 71
Shift 2 122x116/347 112x116/347 115x116/347 116
Shift 3 122x160/347 112x160/347 115x160/347 160
122 112 115 347
 Contingency Tables
❖ Calculate Chi square statistic.
EXPECTED
Operator 1 Operator 2 Operator 3
Shift 1 122x71/347 112x71/347 115x71/347 71
Shift 2 122x116/347 112x116/347 115x116/347 116
Shift 3 122x160/347 112x160/347 115x160/347 160
122 112 115 347

EXPECTED
Operator 1 Operator 2 Operator 3
Shift 1 24.96 22.91 23.53 71
Shift 2 40.78 37.44 38.44 116
Shift 3 56.25 51.64 53.02 160
122 112 115 347
 Contingency Tables
❖ Calculate Chi square statistic.
OBSERVED EXPECTED
Operator 1 Operator 2 Operator 3 Operator 1 Operator 2 Operator 3
Shift 1 22 26 23 71 Shift 1 24.96 22.91 23.53 71
Shift 2 28 62 26 116 Shift 2 40.78 37.44 38.44 116
Shift 3 72 22 66 160 Shift 3 56.25 51.64 53.02 160
122 112 115 347 122 112 115 347

Operat Operat
2
(O-E) /E Operator 1
or 2 or 3
Shift 1 (22-24.96)2/24.96 = 0.35 0.42 0.01 71
Shift 2 (28-40.78)2/40.78 = 4.00 16.11 4.03 116
Shift 3 (72-56.25)2/56.25 = 4.41 17.01 3.18 160
122 112 115 347 X2 = 49.52
 Contingency Tables
❖ Calculate Chi square statistic = 49.52
❖ Degrees of freedom = (r-1)(c-1) = 4
❖ Chi square critical = 9.49
❖ Reject null hypothesis
❖ There is a relationship between the shift
and the operator.
 Contingency Tables
❖ Practice Exercise:
❖ Calculate the Expected value for Non
Smoker Male?
❖ What will be the degrees of freedom in
this example?
Smoker Non
Smoker
Male 60 40 100
Female 35 40 75
95 80 175
 Contingency Tables
❖ Practice Exercise:
❖ Calculate the Expected value for Non
Smoker Male? = 80x100/175 = 45.71
❖ What will be the degrees of freedom in
this example? (2-1)(2-1)=1
Smoker Non
Smoker
Male 60 40 100
Female 35 40 75
95 80 175
 Parametric vs Non Parametric
❖ Parametric
❖ Assumes about the population from which the
sample has been drawn (e.g. Normally
distributed)
❖ Data is ratio or interval level
❖ Non Parametric
❖ Makes no assumption about the population
from which the sample has been drawn
❖ Normally or small size data. No minimum
sample size.
❖ Data is ratio, interval, nominal or ordinal level
❖ Less power (More likely to make Type II error)
 Parametric vs Non Parametric

Parametric Non Parametric

Data Level Interval, Ratio Nominal, Ordinal,
Interval, Ratio
Measurement of Mean Median
central tendency
Distribution Normal Unknown
 Parametric vs Non Parametric Tests
Parametric Non Parametric

1-sample Z-test, 1-sample Sign test,

1-sample t-test 1-sample Wilcoxon
test
Independent Sample Mann-Whitney Test
T Test
Paired Sample T Test Wilcoxon Signed-Rank
Test
One-way ANOVA Kruskal-Wallis Test
 FMEA
❖ Failure Mode and Effect Analysis:
❖ The FMEA is a design tool used to
systematically analyze potential failures
and identify the their effects.
❖ Identify
❖ Prioritize
 FMEA Concept
FMEA

Design FMEA Process FMEA

Identifies failures associated Identifies failures associated
with: with:

•Product malfunctions •Product quality Design FMEA Process FMEA

•Product life •Process reliability
•Safety hazards •Customer dissatisfaction
FMEA
Concept
FMEA

Design Process
FMEA FMEA

- System
Production Assembly
- Subsystem
FMEA FMEA
- Component
FMEA
- System - System
- Subsystem - Subsystem
- Component - Component
FMEA FMEA
 FMEA
❖ Failure Mode and Effect Analysis:
❖ It is proactive tool (Before the problem
happens / not the after effect analysis)
❖ It is a living document
 FMEA
Process / Failure Mode Failure Severity Cause(s) of Occurrence Current Detection R Recommende
Requirement Effect (1-10) failure mode (1-10) Controls (1-10) P d actions
(KPIVs) N
Perfume (1-10) • Unclear (1-10) • Review and 4 96
Making • Inconsistent specificatio 3 approve
quality 8 n specification
• Receiving • Wrong by design
ingredients
• Substandard 6 • Third party 4 192
material certification
supplied by • In house test
supplier lab
• Mixing
 FMEA
❖ Risk Priority Number (RPN)
❖ Severity (1-10) x Occurrence (1-10) x
Detection (1-10)

❖ Severity
❖ Severity 1 – No effect/ client might not
even notice it
❖ Severity 10 – Serious safety hazard
without warning
 FMEA
❖ Occurrence
❖ Occurrence 1 – Rare event, no data of such
type of failure in past
❖ Occurrence 10 – Failure almost inevitable
❖ Detection
❖ Detection 1 – Current system almost
certainly detect the problem (automation)
❖ Detection 10 – Current system can not
detect the problem
 FMEA
❖ Identify key process steps
❖ Identify failure mode
❖ Identify failure effects/severity
❖ Identify causes/occurrence
❖ Identify controls /detection
❖ Calculate Risk Priority Number (RPN)
❖ Prioritize by RPN – Higher RPN first
❖ Determine action plan
❖ Recalculate RPN
 FMEA
❖ Update FMEA when there is plan to
change / actual change of :
❖ Design
❖ Application
❖ Material
❖ Process

❖ FMEA is a living document

 Gap Analysis
❖ Difference between
❖ Where we are, and
❖ Where we want to be

Desired
Gap State

Current
State
 Gap Analysis
❖ Defining Current State
❖ Internal Measurements Strength Weakness

❖ SWOT Analysis (Strengths, Weaknesses,

Opportunities and Threats) Opportunity Threat

❖ PEST Analysis (Political, Economic,

Social, and Technological factors)

Political Social
Government Culural aspects
Intervention
Economic Technological
How business Automation
operates and innovation
 Gap Analysis
❖ Defining Future State

❖ Benchmarking
 Gap Analysis
❖ Bridging the gap

❖ Prioritization
❖ Hoshin Kanri (X Matrix) for Strategy
deployment
 Commonly Used Gap Analysis
❖ Implementing ISO 9001 or other
Management Systems
❖ MBNQA, EFQM Excellence Model,
Deming Prize
 Root Cause Analysis (RCA)
❖ RCA is a structured process to identify
root causes of an event that resulted in
an undesired outcome and develop
corrective actions.
 Root Cause Analysis (RCA)
❖ 1. Identify the event to be investigated
and gather preliminary information (D)
❖ 2. Charter and select the team (D)
❖ 3. Describe what happened (M)
❖ 4. Identify the contributing factors (A)
❖ 5. Identify the root causes (A)
❖ 6. Identify and implement changes to
eliminate the root causes (I)
❖ 7. Measure and monitor the success (C)
Five Whys
Oil spill on Leakage from
floor pump

Gasket Sub standard

damaged gasket

Policy of
ordering to
lowest bidder
 Five Whys

Policy of
Oil spill on Leakage from Gasket Sub standard
ordering to
floor pump damaged gasket
lowest bidder

Cleaning staff Maintenance

on leave overdue

Poor
Pump too old
Housekeeping
 Frequency

10

0
1
2
3
4
5
6
8
9

7
Application opportunity

Concepts clear

Engaging instructor
Pareto Chart

Complaint
Meeting expectatations

Instructor knoledgeable

Learning Valuable
0%
10%
20%
30%
40%
50%
60%
80%
90%

70%
100%
Fault Tree Analysis

OR gate AND gate

Image from
Wikipedia
Cause and Effect Diagrams
Types of Wastes
Philosophy
• Waste exist in all processes at all levels in
the organization.
• Waste elimination is the key to successful
implementation of lean.
• Waste reduction is an effective way to
increase profitability.
Muda, Mura, Muri
Muda
an activity that is wasteful and
doesn't add value or is unproductive

Mura
Any variation leading to
unbalanced situations.

Muri
Any activity asking unreasonable
stress or effort from personnel, Wastes
material or equipment.
Muda
• Muda is a traditional Japanese term for
an activity that is wasteful and doesn't
add value or is unproductive
• Type I Muda: (Incidental Work)
• Non-value-added tasks which seam to be
essential. Business conditions need to be
changed to eliminate this type of waste.
Wastes
• Type II Muda: (Non-Value-Added Work)
• Non-value-added tasks which can be
eliminated immediately.
Mura
• MURA: Any variation leading to
unbalanced situations.
• Mura exists when
• workflow is out of balance
• workload is inconsistent
• not in compliance with the standard.
Wastes
Muri
• MURI: Any activity asking unreasonable
stress or effort from personnel, material
or equipment.
• For people, Muri means too heavy a mental
or physical burden.
• For machinery Muri means expecting a
machine to do more than it is capable of or
Wastes
has been designed to do.
Eight Types of Wastes
Transportation Over Processing
Unnecessary movement of people Processing beyond the demand
or parts between processes. from the customers.

Inventory Over Production

Materials parked and not having Producing too much, too early
value added to them. and/or too fast.

8 Types
of Wastes Defects
Motion
Unnecessary movement of people Sorting, repetition or making
or parts within a process. scrap

Wait Time Under Utilized Staff

People or parts waiting for a Failure when it comes
work cycle to finish. to exploiting the knowledge and
talent of the employees.
Types of Wastes (TIMWOOD +1)
1. Transportation
2. Inventory
3. Motion
4. Wait time 8 Types
of Wastes
5. Over-Processing
6. Over-Production
7. Defects

8. Under-utilized staff
1. Transportation
• Unnecessary movement of people or
parts between processes.

8 Types
of Wastes
2. Inventory
• Materials parked and not having value added
to them.

8 Types
of Wastes
3. Motion
• Unnecessary movement of people or parts
within a process.

8 Types
of Wastes
4. Waiting time
• People or parts waiting for a work cycle to
finish.

8 Types
of Wastes
5. Over processing
• Processing beyond the demand from the
customers.

8 Types
of Wastes
6. Overproduction
• Producing too much, too early and/or too
fast.

8 Types
of Wastes
7. Defects
• Sorting, repetition or making scrap

8 Types
of Wastes
8. Unexploited knowledge
• Failure when it comes to exploiting the
knowledge and talent of the employees.

8 Types
of Wastes