Points for parts per million PPM defect rate will be allocat

Points for parts per million (PPM) defect rate will be allocated on a company\'s supplier scorecard as follows: PPM Defect Rate Scorecard Points 1-20 21-40 41-60 61-80 81-100 20 19 18 17 16 15 14 13 12 101-150 151-200 201-250 251-300 301-350 351-400 401-450 451-500 501-550 551-600 10 6 601-700 701-800 801-900 901-1000 3 > 1000 The supply manager is responsible for calculating the performance measures and updating the scorecard with the points earned Here is the information she collected this quarter about a supplier No. of defects: 40 No. of parts received: 50,000 PPM defect rate for the prior quarter 1150 What is the percent PPM improvement?

Solution

Hello!

To solve this question we need to make the no. of parts received equal in the two quaters.

In the current quarter:
No. of defetcs = 40
No. of parts received = 50,000

In the previous quarter:
No. of defects = 1150
No. of parts received = 1,000,000 (because it\'s parts per million)

Applying the basic unitary method,
In the current quarter, no. of defects per million parts will be ((1,000,000*40)/50,000) = 800

Therefore, percent PPM improvement = ((1150 - 800)/1150)*100
   = 30.4%

Hope you understood!:)