Quality Management - ENGR 5420G

Winter 2025
Unit 6: Statistical Methods in Quality Management
Last Class Recap

➢ Process Management
➢ Identifying Processes and Requirements
➢ Process Design
➢ Process Control
➢ Process Improvement
➢ Managing Supply Chain Processes
Content

• Basic Probability Concepts • Statistical Analysis with

• Probability Distributions Microsoft Excel
• Discrete Probability Distributions • Statistical Inference
- Binomial Distribution • Sampling Distributions
- Poisson Distribution • Confidence Intervals
• Continuous Probability Distributions • Hypothesis Testing
• Normal Distribution • Analysis of Variance (ANOVA)
• Exponential Distribution • Regression and Correlation
• Statistical Methodology • Design of Experiments
• Sampling
• Descriptive Statistics
 Statistics

• Statistics is a science concerned with “the

collection, organization, analysis,
interpretation, and presentation of data.”
• The use of statistical methods in quality dates
back to 1903 at the Bell Telephone system. In
the 1920s, Bell Labs thought that statistical
tools would have applications in the factory,
and began to experiment with statistical
sampling, eventually leading to the
development of control charts.

Evans and Lindsay, Managing for Quality and Performance Excellence, 11th Edition. © 2020 Cengage. All Rights Reserved. May not
be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Statistical Methodology

Evans and Lindsay, Managing for Quality and Performance Excellence, 11th Edition. © 2020 Cengage. All Rights Reserved. May not
be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
 Basic Probability Concepts
• An experiment is a process that results in some outcome.
• The outcome of an experiment is a result that we observe
o E.g.: the number of defective parts in the sample or
o the length of time until the bulb fails.
• The collection of all possible outcomes of an experiment is
called the sample space.
• Probability is the likelihood that an outcome occurs.

Evans and Lindsay, Managing for Quality and Performance Excellence, 11th Edition. © 2020 Cengage. All Rights Reserved. May not
be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Probability Properties
• Label the n outcomes in a sample space as O1,O2,…On, where
Oi represents the ith outcome in the sample space.
• The probability associated with any outcome must be between 0
and 1
o 0 ≤ P(Oi) ≤ 1 for each outcome Oi
• The sum of the probabilities over all possible outcomes must be
1.0
o P (O1 ) + P (O2 ) + ... + P (On ) = 1

Evans and Lindsay, Managing for Quality and Performance Excellence, 11th Edition. © 2020 Cengage. All Rights Reserved. May not
be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Events
• An event is a collection of one or more outcomes from a sample
space
o E.g.:finding 2 or fewer defectives in the sample of 10, or having a
bulb burn for more than 1000 hours.
• If A is any event, the complement of A, denoted as Ac ,
consists of all outcomes in the sample space not in A.
• Two events are mutually exclusive if they have no outcomes in
common.

Evans and Lindsay, Managing for Quality and Performance Excellence, 11th Edition. © 2020 Cengage. All Rights Reserved. May not
be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Calculating Probabilities
• Rule 1: The probability of any event is the sum of the probabilities of
the outcomes that compose that event.
• Rule 2: The probability of the complement of any event A is
P ( Ac ) = 1 − P ( A).
• Rule 3: If events A and B are mutually exclusive, then
P(A or B) = P(A) + P(B)
• Rule 4: If two events A and B are not mutually exclusive, then P(A or B)
= P(A) + P(B) − P(A and B)

Evans and Lindsay, Managing for Quality and Performance Excellence, 11th Edition. © 2020 Cengage. All Rights Reserved. May not
be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Example 6.1 Using Probability Rules
In testing a new personal computer after assembly, a company discovered that among a
sample of 100 units, 3 failed to boot up properly because of a defect in the motherboard, 4
units had a hard drive failure, and 2 units experienced both failures.

Let A be the event "failure to boot" and B be the event "hard drive failure." Then
3 4
P ( A) = and P (B ) = .
100 100
However, these events are not mutually exclusive because both A and B occurred together;
specifically, P ( A and B ) = 2 .
100
Therefore, the probability that one or the other failure occurred is
3 4 2 5
P ( A or B ) = P ( A) + P (B ) − P ( A and B ) = + − = .
100 100 100 100
Evans and Lindsay, Managing for Quality and Performance Excellence, 11th Edition. © 2020 Cengage. All Rights Reserved. May not
be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Conditional Probability
• Conditional probability is the probability of occurrence of one
event A, given that another event B is known to be true or have
already occurred.
P ( A and B )
P (A | B) = (6.1)
P (B )

• Multiplication rule of probability:

P ( A and B ) = P ( A | B ) P ( B ) = P ( B | A ) P ( A ) (6.2)

Evans and Lindsay, Managing for Quality and Performance Excellence, 11th Edition. © 2020 Cengage. All Rights Reserved. May not
be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
 Example 6.2 Applying Conditional Probability

P ( A and B ) = P ( A | B ) P ( B ) = P ( B | A ) P ( A )

P(test indicates defective and product is defective)

= P(test indicates defective | product is
defective)*P(product is defective)
= (0.94)(0.01) = 0.0094.

P(test indicates defective and product is not

defective)
= P(test indicates defective | product is not
defective) P(product is not defective)
= (0.02)(0.99) = 0.0198.

Evans and Lindsay, Managing for Quality and Performance Excellence, 11th Edition. © 2020 Cengage. All Rights Reserved. May not
be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Example 6.2 Calculation of Joint Probabilities

Evans and Lindsay, Managing for Quality and Performance Excellence, 11th Edition. © 2020 Cengage. All Rights Reserved. May not
be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Independent Events

• Two events A and B are independent if P ( A | B ) = P ( A ) .

• If two events are independent, then we can simplify the multiplication rule
of probability in equation (6.2): P ( A and B ) = P ( A | B ) P ( B ) = P ( B | A ) P ( A )

by substituting P(A) for 𝑃 𝐴|𝐵 :

𝑃 𝐴and𝐵 = 𝑃 𝐵 𝑃 𝐴 = 𝑃 𝐴 𝑃 𝐵 .

Evans and Lindsay, Managing for Quality and Performance Excellence, 11th Edition. © 2020 Cengage. All Rights Reserved. May not
be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Probability Distributions
• A random variable, X, is a numerical description of the outcome
of an experiment. Formally, a random variable is a function that
assigns a numerical value to every possible outcome in a
sample space.
• A probability distribution, f(x), is a characterization of the
possible values that a random variable may assume along with
the probability of assuming these values.
• The cumulative distribution function, F(x), specifies the
probability that the random variable X will assume a value less
than or equal to a specified value, x, denoted as P(X ≤ x).

Evans and Lindsay, Managing for Quality and Performance Excellence, 11th Edition. © 2020 Cengage. All Rights Reserved. May not
be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Important Probability Distributions
• Discrete
o Binomial
o Poisson

• Continuous
o Normal
o Exponential

Evans and Lindsay, Managing for Quality and Performance Excellence, 11th Edition. © 2020 Cengage. All Rights Reserved. May not
be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Binomial Distribution
• The binomial distribution describes the probability of obtaining exactly
x “successes” in a sequence of n identical experiments, called trials.
• The binomial probability function
n x
f ( x ) =   p (1 − p )
n−x

x (6.3)
n!
p (1 − p ) x = 0,1, 2,..., n
n−x
= x

x ! ( n − x )!
E  X  =  = np (6.4)
The probability of success
in each trial is a constant
value p
 2 = np (1 − p ) (6.5)

 = np (1 − p ) (6.6)
Evans and Lindsay, Managing for Quality and Performance Excellence, 11th Edition. © 2020 Cengage. All Rights Reserved. May not
be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Excel Function (1 of 2)
FIGURE 6.3 Binomial Probability
• BINOM.DIST(number_s, trials, Calculations Using Excel
probability_s, cumulative)
• In this function, number_s plays the
role of x, and probability_s is the same
as p.
• If cumulative is set to TRUE, then this
function will provide the cumulative
probability function F(x); otherwise the
default is FALSE, and it provides
values of the probability mass function,
f(x).

Evans and Lindsay, Managing for Quality and Performance Excellence, 11th Edition. © 2020 Cengage. All Rights Reserved. May not
be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Poisson Distribution
• The Poisson distribution is often used to calculate the number of
occurrences of an event over a specified interval of time or space, such
as the number of scratches per square inch on a polished surface.
e−  x
f (x) = (6.7)
x!

λ = expected value or average number of occurrences;

x = 0,1,2,3,…; and e = 2.71828…

Evans and Lindsay, Managing for Quality and Performance Excellence, 11th Edition. © 2020 Cengage. All Rights Reserved. May not
be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Excel Function (2 of 2)
FIGURE 6.4 Poisson
Probability
Calculations Using
Excel

• Excel function
POISSON.DIST(x, mean, cumulative).

Evans and Lindsay, Managing for Quality and Performance Excellence, 11th Edition. © 2020 Cengage. All Rights Reserved. May not
be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Continuous Probability Distributions
• A curve that characterizes outcomes of a continuous random
variable is called a probability density function, and is
described by a mathematical function f(x).
• Probabilities are only defined over intervals.
• The cumulative distribution function, F(x), represents the
probability P(X ≤ x).
P (a  X  b ) = P ( X  b ) − P ( X  a ) = F ( b ) − F (a ) (6.8)

Evans and Lindsay, Managing for Quality and Performance Excellence, 11th Edition. © 2020 Cengage. All Rights Reserved. May not
be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Normal Distribution
• Familiar bell-shaped curve.
• If a normal random variable has a mean μ = 0 and a standard
deviation σ = 1, it is called a standard normal distribution,
represented by z.

Figure 6.5 Standard

Normal Distribution

Evans and Lindsay, Managing for Quality and Performance Excellence, 11th Edition. © 2020 Cengage. All Rights Reserved. May not
be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Calculating Normal Probabilities
• If x is any value from a normal distribution with mean μ and
standard deviation σ, we may easily convert it to an equivalent
value from a standard normal distribution using:
x−
z= (6.11)

• Excel function NORM.DIST(x, mean, standard deviation, true)
calculates the cumulative probability F(x) for a specified mean
and standard deviation.
• The Excel function NORM.S.DIST(z) calculates the cumulative
probability for any value of z for the standard normal distribution.

Evans and Lindsay, Managing for Quality and Performance Excellence, 11th Edition. © 2020 Cengage. All Rights Reserved. May not
be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Figure 6.6 Normal Probability Calculations Using
Excel

Evans and Lindsay, Managing for Quality and Performance Excellence, 11th Edition. © 2020 Cengage. All Rights Reserved. May not
be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
NORM.INV Function
• The Excel function NORM.INV(probability, mean, standard_dev)
can be used when we know the cumulative probability
(probability) but don’t know the value of x.
• The Normal Inverse Excel template performs this calculation

Figure 6.7 Normal Inverse

Distribution Calculation
Template

Evans and Lindsay, Managing for Quality and Performance Excellence, 11th Edition. © 2020 Cengage. All Rights Reserved. May not
be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Exponential Distribution
• The exponential distribution models the time between randomly occurring
events, such as the time to or between failures of mechanical or electrical
components.
f ( x ) = e −  x for x  0 (6.12)
where
1  = mean of the exponential distribution (note that  is the mean of the
corresponding Poisson distribution)
x = time or distance over which the variable extends
e = 2.71828.. (the base of natural logarithms)
• The Excel function EXPON.DIST(x, lambda, true) can be used to compute
cumulative exponential probabilities.
Evans and Lindsay, Managing for Quality and Performance Excellence, 11th Edition. © 2020 Cengage. All Rights Reserved. May not
be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Figure 6.8 Excel Exponential Template

Evans and Lindsay, Managing for Quality and Performance Excellence, 11th Edition. © 2020 Cengage. All Rights Reserved. May not
be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Statistical Methodology

Evans and Lindsay, Managing for Quality and Performance Excellence, 11th Edition. © 2020 Cengage. All Rights Reserved. May not
be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Sampling Methods
1. Simple Random Sampling: Every item in the population has
an equal probability of being selected.
2. Stratified Sampling: The population is partitioned into groups,
or strata, and a sample is selected from each group.
3. Systematic Sampling: Every nth (4th, 5th, etc.) item is
selected.
4. Cluster Sampling: A population is partitioned into groups
(clusters) and a sample of clusters is selected. Either all
elements in the chosen clusters are included in the sample or a
random sample is taken from each of them.
5. Judgment Sampling: Expert opinion is used to determine the
sample. Evans and Lindsay, Managing for Quality and Performance Excellence, 11th Edition. © 2020 Cengage. All Rights Reserved. May not
be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Sampling Error
• Sampling error (statistical error)
• Non-sampling error (systematic error)
• Factors to consider:
o Sample size
o Appropriate sample design

Evans and Lindsay, Managing for Quality and Performance Excellence, 11th Edition. © 2020 Cengage. All Rights Reserved. May not
be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Descriptive Statistics

• A population is a complete set or collection of objects of

interest; a sample is a subset of objects taken from the
population.
• Descriptive statistics summarize the numerical
characteristics of populations or samples.

Evans and Lindsay, Managing for Quality and Performance Excellence, 11th Edition. © 2020 Cengage. All Rights Reserved. May not
be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Measures of Location
N

• Population x i
= i =1
(6.14)
mean: N
n

x i
• Sample x= i =1 (6.15)
mean: n

• Median: the middle value (or 50th percentile) when the data are
arranged from smallest to largest.
• Mode: the observation that occurs most frequently.

Evans and Lindsay, Managing for Quality and Performance Excellence, 11th Edition. © 2020 Cengage. All Rights Reserved. May not
be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Measures of Dispersion
• Range: the difference between the maximum value and the minimum
value in the data set.
N

(x − )
2
i
• Population 2 = i =1
( 6.16 )
Variance: N
n

 ( xi − x )
2

• Sample s = i =1 ( 6.17 )2

n −1
Variance:
• Standard Deviation: the square root of the variance.
N n

(x − )  ( xi − x )
2 2
i
= i =1
( 6.18 ) s= i =1
( 6.19 )
N n −1
Evans and Lindsay, Managing for Quality and Performance Excellence, 11th Edition. © 2020 Cengage. All Rights Reserved. May not
be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Excel Functions for Descriptive Statistics
• Mean: =AVERAGE(data range)
• Median: =MEDIAN(data range)
• Mode: =MODE.SNGL(data range) or
=MODE.MULT(data range)
• Range: =MAX(data range) − MIN(data range)
• Variance: =VAR.S(data range) or =VAR.P(data range)
• Standard deviation: =STDEV.S(data range) or
=STDEV.P(data range)

Evans and Lindsay, Managing for Quality and Performance Excellence, 11th Edition. © 2020 Cengage. All Rights Reserved. May not
be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
The Proportion
• The proportion, π, is the fraction of data that have a certain
characteristic.
• Proportions are key descriptive statistics for categorical data,
such as defects or errors.
• If the data are stored on an Excel worksheet, we may use the
Excel function COUNTIF(range, criteria) to find the number of
cells within a range that meet a specified criteria and then
compute the proportion as a ratio of the count to the total
number of observations.

Evans and Lindsay, Managing for Quality and Performance Excellence, 11th Edition. © 2020 Cengage. All Rights Reserved. May not
be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Example 6.10 Computing a Sample Proportion
The Excel spreadsheet Example 6.10.xlsx, shown in Figure 6.11 and available on the Student
Companion Site, provides a sample of 100 items that were inspected after a production
operation. Each of these were recorded as either "good" or "defective." To count the number
of good and defective items, we use the formulas =COUNTIF(A3:J12, "Good") and
=COUNTIF(A3:J12, "Defective") in cells A15 and B15, respectively. Therefore, the sample
proportion of defective items is 25
or 0.25.
100

Figure
6.11
Evans and Lindsay, Managing for Quality and Performance Excellence, 11th Edition. © 2020 Cengage. All Rights Reserved. May not
be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Measures of Shape
• Skewness describes the lack of symmetry of data.
o Thecoefficient of skewness (CS) measures the degree of
asymmetry of observations around the mean. The closer CS is to
zero, the less the degree of skewness. CS > 1 or < −1 suggests a
high degree of skewness.

Evans and Lindsay, Managing for Quality and Performance Excellence, 11th Edition. © 2020 Cengage. All Rights Reserved. May not
be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Measures of Shape

• Kurtosis refers to the peakedness (i.e., high, narrow) or

flatness (i.e., short, flat-topped) of a histogram.
o The coefficient of kurtosis (CK) measures the degree of kurtosis
of a population. Distributions with values of CK less than 3 are
more flat with a wide degree of dispersion; those with values of C
K greater than 3 are more peaked with less dispersion.

Evans and Lindsay, Managing for Quality and Performance Excellence, 11th Edition. © 2020 Cengage. All Rights Reserved. May not
be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Excel Descriptive Statistics Tool
• Enter the range of the data, which must be in a single row or column. If the
data are in multiple columns, the tool treats each row or column as a separate
data set, depending on which you specify.

Figure 6.12 Excel Descriptive Statistics

Dialog

Evans and Lindsay, Managing for Quality and Performance Excellence, 11th Edition. © 2020 Cengage. All Rights Reserved. May not
be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Descriptive Statistics for U-Bolt Measurements (Example
6.11)
• The tool provides the basic statistical measures of location, dispersion, and
shape, as well as the standard error, which is the standard deviation divided
by the number of observations (Count).

Figure 6.13 Descriptive Statistics for

U-Bolt Measurements

Evans and Lindsay, Managing for Quality and Performance Excellence, 11th Edition. © 2020 Cengage. All Rights Reserved. May not
be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Frequency Distributions and Histograms

• A frequency distribution is a table that shows the

number of observations in each of several nonoverlapping
groups.
• A graphical depiction of a frequency distribution for
numerical data in the form of a column chart is called a
histogram.

Evans and Lindsay, Managing for Quality and Performance Excellence, 11th Edition. © 2020 Cengage. All Rights Reserved. May not
be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Excel Histogram Tool
Define bins by specifying
1. the number of bins,
2. the width of each bin, and
3. the upper and lower limits of each bin.

Check the Chart Output box to

display a histogram in addition to
the frequency distribution.

Figure 6.14 Excel Histogram Dialog

Evans and Lindsay, Managing for Quality and Performance Excellence, 11th Edition. © 2020 Cengage. All Rights Reserved. May not
be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Figure 6.15 - Histogram Tool Results for U-Bolt
Measurements (Example 6.12)

Evans and Lindsay, Managing for Quality and Performance Excellence, 11th Edition. © 2020 Cengage. All Rights Reserved. May not
be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Frequency Distribution and Histogram Spreadsheet
Template

• With the Histogram tool, if you change the data or wish to use a
different number of cells, you must run the tool again.
• The template allows you to create frequency distributions and
histograms for up to 150 observations and experiment with
different numbers of cells. The spreadsheet will automatically
adjust the frequency distribution and histogram.

Evans and Lindsay, Managing for Quality and Performance Excellence, 11th Edition. © 2020 Cengage. All Rights Reserved. May not
be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Figure 6.16 - Frequency Distribution and Histogram
Template

Evans and Lindsay, Managing for Quality and Performance Excellence, 11th Edition. © 2020 Cengage. All Rights Reserved. May not
be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Sampling Distributions
• A sampling distribution is the distribution of a statistic for all
possible samples of a fixed size.
• Sampling distribution of the mean
o Expected value of the sample mean is the population mean
o Standard deviation of the sample mean (called the standard error
of the mean) is
σ for infinite populations or sampling with replacement from
σx =
n an infinite population (6.21)

N −n 
x = for finite populations (6.22)
N −1 n

Evans and Lindsay, Managing for Quality and Performance Excellence, 11th Edition. © 2020 Cengage. All Rights Reserved. May not
be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Central Limit Theorem

• If simple random samples of size n are taken from any

population having a mean μ and a standard deviation of
σ, the probability distribution of the sample mean
approaches a normal distribution with mean μ and
standard deviation (standard error) equal to σ divided by
the square root of the sample size.

Evans and Lindsay, Managing for Quality and Performance Excellence, 11th Edition. © 2020 Cengage. All Rights Reserved. May not
be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Figure 6.17 – Illustration of the Central Limit Theorem

Source: Copyright PQ Systems, www.pqsystems.com

Evans and Lindsay, Managing for Quality and Performance Excellence, 11th Edition. © 2020 Cengage. All Rights Reserved. May not
be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Confidence Intervals
• A confidence interval (CI) is an interval estimate of a population parameter
that also specifies the likelihood that the interval contains the true population
parameter. This probability is called the level of confidence, denoted by 1 − α,
and is usually expressed as a percentage.
Confidence interval for the mean, standard deviation known, sample size = n:
x  z 2  n (6.25)

Confidence interval for the mean, standard deviation unknown, sample size = n:

x  t 2, n −1 (s n) (6.26)

p(1 − p )
Confidence interval for a proportion, sample size = n: p  z 2 (6.27)
n

Evans and Lindsay, Managing for Quality and Performance Excellence, 11th Edition. © 2020 Cengage. All Rights Reserved. May not
be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Figure 6.18 – Confidence Interval Template for the
Population Mean, Sigma Known (Example 6.15)

Evans and Lindsay, Managing for Quality and Performance Excellence, 11th Edition. © 2020 Cengage. All Rights Reserved. May not
be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Figure 6.19 Confidence Interval Template for the
Population Mean, Sigma Unknown (Example 6.16)

Evans and Lindsay, Managing for Quality and Performance Excellence, 11th Edition. © 2020 Cengage. All Rights Reserved. May not
be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Figure 6.20 – Confidence Interval Template for the
Proportion (Example 6.17)

Evans and Lindsay, Managing for Quality and Performance Excellence, 11th Edition. © 2020 Cengage. All Rights Reserved. May not
be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Hypothesis Testing
• Hypothesis testing involves drawing inferences about two contrasting
propositions (hypotheses) relating to the value of a population parameter,
one of which is assumed to be true in the absence of contradictory data
(called the null hypothesis), and the other which must be true if the null
hypothesis is rejected (called the alternative hypothesis).
• Steps
1. Formulate the hypotheses to test.
2. Select a level of significance.
3. Determine a decision rule on which to base a conclusion.
4. Collect data and calculate a test statistic.
5. Apply the decision rule to the test statistic and draw a conclusion.

Evans and Lindsay, Managing for Quality and Performance Excellence, 11th Edition. © 2020 Cengage. All Rights Reserved. May not
be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Level of Significance

• The level of significance (α) defines the risk that we are

willing to take in making the incorrect conclusion that the
alternative hypothesis is true when in fact the null
hypothesis is true.
• Commonly used levels for α are 0.10, 0.05, and 0.01.

Evans and Lindsay, Managing for Quality and Performance Excellence, 11th Edition. © 2020 Cengage. All Rights Reserved. May not
be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Decision Rules
• The decision to reject or fail to reject H0 is based comparing the value of the
test statistic to a “critical value” from the sampling distribution of the test
statistic based on the null hypothesis and the chosen level of significance.
• The sampling distribution of the test statistic is usually the normal distribution,
t-distribution, or some other well-known distribution.
o One-sample test for the mean with an unknown population standard deviation:

x − μ0
t= (6.28)
s n
o One sample test for the proportion:

p − 0
z= (6.29)
 0 (1 −  0 ) n

Evans and Lindsay, Managing for Quality and Performance Excellence, 11th Edition. © 2020 Cengage. All Rights Reserved. May not
be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Two-Sample Hypothesis Tests
Type of Test Excel Procedure
Two-sample test for means, σ 2 Excel z-test: Two-Sample for
known Means
Two-sample test for means, σ
2 Excel t-test: Two-Sample Assuming
Unequal Variances
unknown, unequal
Two-sample test for means, σ 2 Excel t-test: Two-Sample Assuming
Equal Variances
unknown, assumed equal
Excel t-test: Paired Two-Sample for
Paired two-sample test for means Means
Two-sample test for equality of Excel F-test Two-Sample for
variances Variances

Evans and Lindsay, Managing for Quality and Performance Excellence, 11th Edition. © 2020 Cengage. All Rights Reserved. May not
be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Analysis of Variance
• Analysis of Variance, or ANOVA, is a hypothesis-testing
methodology for drawing conclusions about equality of means of
multiple populations.
• In its simplest form—one-way ANOVA—we are interested in
comparing means of observed responses of several different
levels of a single factor.
• ANOVA tests the hypothesis that the means of all populations are
equal against the alternative hypothesis that at least one mean
differs from the others.

Evans and Lindsay, Managing for Quality and Performance Excellence, 11th Edition. © 2020 Cengage. All Rights Reserved. May not
be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Example 6.20 – Using the Excel ANOVA: Single
Factor Tool
• Determine if the mean discharge time for lithium batteries is the
same for three different production processes.
• Conclude that the mean times do not differ.

Evans and Lindsay, Managing for Quality and Performance Excellence, 11th Edition. © 2020 Cengage. All Rights Reserved. May not
be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Regression and Correlation
• Regression analysis is a tool for building statistical models that
characterize relationships between a dependent variable and one
or more independent variables, all of which are numerical.
o A regression model that involves a single independent variable is
called simple regression. A regression model that involves
several independent variables is called multiple regression.
• Correlation is a measure of a linear relationship between two
variables, X and Y, and is measured by the (population)
correlation coefficient. Correlation coefficients will range from −1
to +1.

Evans and Lindsay, Managing for Quality and Performance Excellence, 11th Edition. © 2020 Cengage. All Rights Reserved. May not
be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Example 6.21 – Using the Excel Regression Tool

Figure 6.25 Voltmeter Figure 6.26 Regression Tool Dialog

Calibration Data
Evans and Lindsay, Managing for Quality and Performance Excellence, 11th Edition. © 2020 Cengage. All Rights Reserved. May not
be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Figure 6.27 - Voltmeter Calibration Regression
Results

Evans and Lindsay, Managing for Quality and Performance Excellence, 11th Edition. © 2020 Cengage. All Rights Reserved. May not
be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Design of Experiments (DOE)

• A designed experiment is a test or series of tests that enables

the experimenter to compare two or more methods to determine
which is better, or determine levels of controllable factors to
optimize the yield of a process or minimize the variability of a
response variable.
• DOE is an increasingly important tool for Six Sigma.

Evans and Lindsay, Managing for Quality and Performance Excellence, 11th Edition. © 2020 Cengage. All Rights Reserved. May not
be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Questions!