Int. J.

Production Economics 140 (2012) 368373

Contents lists available at SciVerse ScienceDirect

Int. J. Production Economics

journal homepage: www.elsevier.com/locate/ijpe

Enhanced Rolled Throughput Yield: A new six sigma-based

performance measure
Abbas Saghaei a,n, Hoorieh Naja a, Rassoul Noorossana b
a
b

Department of Industrial Engineering, Science and Research branch, Islamic Azad University, Tehran, Iran
Department of Industrial Engineering, Iran University of Science & Technology, Tehran, Iran

a r t i c l e i n f o

a b s t r a c t

Article history:
Received 7 April 2010
Accepted 1 February 2012
Available online 13 February 2012

The quality level measurement of a given process is essential to some phases of six sigma methodology.
So far, different indicators have been applied to estimate the capabilities of a process such as classic
yield, defect per unit, sigma quality level and rolled throughput yield.
However, the examination of the efciency of total processes in a certain organization is a recent
challenge which is, unfortunately, not thoroughly explored in scarce studies undertaken. The proposed
approach called Enhanced Rolled Throughput Yield (ERTY), unlike other methods, pays particular
attention to such factors as the difference between scrap and rework cycles, the cost of scrap and
rework and the sequence of stages. Moreover, the proposed approach is able to cover all previous
methods. The presented real case illustrates the results of applying this model upon the industrial
production of electronic sets.
& 2012 Elsevier B.V. All rights reserved.

Keywords:
Rolled throughput yield
Six sigma
Process capability
Overall performance of organization
Rework
Scrap

1. Introduction
Nowadays, the global market is highly competitive and in
order to survive, organizations need to produce products and
services of high quality to achieve customer satisfaction and
loyalty to stimulate top-line business growth (Kumar and
Antony, 2008; Chen, 2008). The six sigma improvement method
is problem-focused and its main objectives are decreasing scrap,
earning income and creating value.
This business management strategy started with manufacturing
(Kwak and Anbari, 2006) but over the years it has expanded its
realm to a variety of elds such as healthcare (Heuvel et al., 2005;
Lazarus and Butler, 2001; Sehwall and DeYong, 2003; Woodard,
2005), banking (Jones, 2004), servicing (Antony, 2004a; Benedetto,
2003; Does et al., 2002; Hensley and Dobie, 2005; Woodall, 2001).
Six sigma has been exploited by many world class organizations
such as GE, Motorola, Honeywell, Bombardier, ABB, Sony, Samsung
Electronics, and Johnson to name a few from the lengthy list, and
resulted in billions of dollars of bottom-line savings (Snee, 2004,
2005; Antony et al., 2005a, b; Shamji, 2005; Zu et al., 2010).
The term sigma is a Greek alphabet letter used to describe
variability and is applied as a statistical process technology
measure in organizations (McAdam and Lafferty, 2004). In a six
sigma quality program, one of the widely-applied measures

Corresponding author. Tel.: 98 2188534460; fax: 98 2188534461.

E-mail addresses: a.saghaei@srbiau.ac.ir (A. Saghaei),
h.naja@srbiau.ac.ir (H. Naja), rassoul@iust.ac.ir (R. Noorossana).
0925-5273/$ - see front matter & 2012 Elsevier B.V. All rights reserved.
doi:10.1016/j.ijpe.2012.02.002

to evaluate the performance is the sigma quality level. The sigma

level is often measured for a single product or sometimes applied
for a process. Six sigma is dened as having less than 3.4 defects
per million opportunities or a success rate of 99.9997% (Antony
and Banuelas, 2002).
Of course, other criteria such as yield, Defect Per Million
Opportunity (DPMO), and Defect Per Unit (DPU) are still used
for capability measurement of any process. In six sigma methodology, a new criterion titled Rolled Throughput Yield (RTY) was
introduced to measure the quality of a process. RTY demonstrates
the possibility of a product or service passing the whole process
defect free (Graves, 2002; Pyzdek, 2003).
Harry (1998) claims that organizations are often classied as
world-class, industrial average or non-competitive based on
their cost of poor quality (see Table 1).
However, Tort-Martorell et al. (2009) say that the numbers in
Table 1 are given without any justication or research to support
them. They believe that despite the advantages of sigma level it
has some considerable difculties.
The tendency of managers to report the performance of organization processes overall performance of organization has
increased (Deleryd, 1999). That is why Harry (1998) attempted to
draw attention to sigma level as an overall criterion for estimating
performance of organizations. Ravichandran (2006) highlighted a
challenge by asking Does a six sigma organization mean that an
organization has achieved six-sigma goal of 3.4 part per million in
all critical processes of interest?. Although there are some criteria
for the yield assessment of a given process, little attempt has
been made on the estimation of total organization processes.

A. Saghaei et al. / Int. J. Production Economics 140 (2012) 368373

2. Enhanced Rolled Throughput Yield

Table 1
Sigma levels and cost of poor quality.
Sigma level

Cost of poor quality

6
5
4
3
2
1

o 10% of sales
1015% of sales
1520% of sales
2030% of sales
3040% of sales
440% of sales

World class
Industry average
Noncompetitive

Table 2
Different features of ERTY and other methods.
Method

Final product yield

Process efciency
Importance of subprocesses
Importance of products
Difference between
scrap and rework
Extent of rework cycles
Process step that a
defect occurs

Yield RTY Weight-based

sigma level

Cost-based
sigma level

ERTY

Yes
No
No

Yes Yes
Yes No
No Yes

Yes
No
Yes

Yes
Yes
Yes

No
No

No
No

No
No

Yes
No

Yes
Yes

No
No

No
No

No
No

No
No

Yes
Yes

Ravichandran (2006) presented a method for calculating organizational sigma level by assigning weights to all critical processes based
on their importance. His proposed method has been modied in
2007, cost-based process weights has been set up to determine a
unique weighted-defects per million opportunity. The proposed
approach uses both internal and external performances of the
products and processes in terms of costs involved to determine
cost-based process weights. In order to calculate the organization
performance based on six sigma viewpoint, we suppose that a welldesigned overall organization measure attempts to consider the
following features:









The
The
The
The
The
The
The

369

nal product yield (effectiveness)

process efciency
importance of sub processes
importance of products
fundamental difference between scraps and reworks
extent of rework cycles
process step that a defect occurs in

This paper presents a new model called Enhanced Rolled

Throughput Yield (ERTY) to calculate the overall performance of
organization. Table 2 shows the differences between the proposed
and current methods. Therefore, at rst all the references related
to the development of Six Sigma indexes were studied and the
characteristics of every index were extracted which is shown in
Table 2. Simultaneously, certain characteristics of real processes
indexes for assessing the performance were listed. Then, a new
statistics mathematics model for calculating the performance of
organization processes, was designed based on the RTY index.
The organization of this article is given as follows. In Section 2,
we formulate the proposed method. In Section 3, some numerical
examples show the limitations of current methods. In Section 4,
the results of applying the proposed method on electronics
industry are presented. A few concluding remarks and future
studies are offered in Section 5.

Suppose that the main process consists of n sub-processes. In

each stage of this process, defects might be found. If the products
in any stages of the process do not meet the dened criteria, they
should be either corrected in that same stage or returned to
previous stages for rework. Otherwise, they are considered scrap
and must be discarded from the production line. Fig. 1 shows the
typical diagram of a main process.
The notation is summarized below.
A
aj
Nj

n  1 Matrix
Expectation of scrap costs for sub-process j.
Random variable of scrap numbers for sub-process j.

S(j)
B
bji

Random variable of unit scraps cost in sub-process j.

n  n Lower triangular matrix.
Expectation of occurred rework costs by sub-process j
and return to sub-process i.
Random variable of occurred rework number by subprocess j and return to sub-process i.
Random variable of the total cost caused by rework in
sub-process j and return to sub-process i.
Random variable of the correcting costs for sub-process j.
Boolean variable. It takes 1 if the defect goes through the
sub-process k and 0 otherwise.
Random variable of the cost of producing a unit of
product in sub-process k.
m  1 Matrix
Expectation of prot gained from the sale of product j.
Random variable of number of product j sold.

Nji
R(ji)
rj

mk
gk
C
cj
Mj
X(j)
n
m
wj
~j
w

Random variable of price per unit of product j.

Number of sub-processes.
Number of products.
Weight of sub-process j.
Weight of product j.
(
1 kj
1  n matrix s:t ek
0 ka j

ek

The probability of a unit to pass sub-process j

defect free.
The RTY for the main process j.
Entrance to the rst sub-process.
Number of units entering sub-process j.

Pj
rtyj
y
uj

In this model, importance of each sub-process is considered

according to scrap and rework costs. The rework cost for each
sub-process is a cumulative cost based on all rework cycles that
end at this sub-process.
As it is described above, total rework cost can be written in the
following form:
Rji r j

j
X

mk g k

ki

This equation shows that the total cost of reworking a

defective product in every stage of process is obtained from the
sum of the costs of reforming actions in stage j and those of
product return to sub-process i.
aj E

Nj
X

!
Sj
k

ENj ESj

k1

bji E

Nji
X
k1

!
Rkji

EN ji ERji

370

A. Saghaei et al. / Int. J. Production Economics 140 (2012) 368373

aj

wj Pn

k 1 ak

ERTY

n
Y

Pj
ej Bk
Pnk 1 Pq
q1

by (11)(13).
4

eq Bk
k1

DPMOj

wj

pj

5
RTY

j1

where
cj E

j1

wj 1.
EM j EX j

i1

EN ji

n 
Y

1

DPMOj
10

 106

10


11

v

uY
n 
u
DPMOj
n
1
NRTY t
106
j1

weighted DPMO

!
X kj

Pj

uj

j1

Pn

Mj
X

ENj

12

k1

c
~ j Pm j
w

j1

cj

n
X

wj DPMOj

13

j1

Here,

v
uY
u m
~
1w
m1
rtyj j
Overall RTY t

Pn

j1

wj 1.

j1

3. Numerical examples

Pm

~ j 1.
where j 1 w
Eqs. (2) and (3) successively calculate the total of reworking
costs of products and that of scrap in the sub-process of jth.
Formula (4) states the weight of each sub-process based on scrap
and rework costs. Eq. (5) calculates the RTY of a process by
focusing on importance of each sub-process. .
If m products each of which has their own main processes
are produced within the organization, the overall performance is
obtained by using Eqs. (6)(8). Eq. (6) shows the prot gained
from selling various products of the organization. The weight of
each product is obtained by using Eq. (7) and nally the RTY of
the organization as a whole is calculated based on Geometric
mean from the formula (8).
In Eq. (2), for each j, Skj ,k 1,. . .,N j , is independent identied
distribution and for each j,Skj ,k 1,. . .,N j , is independent from Nj.
This point is likewise for (3) and (6).
Moreover, classic yield can be calculated by using the following relation.
Pn
j 1 EN j
Yield 1
9
y
Assuming that in each sub-process, there is one defect opportunity then DPMOj could be dened according to the proposed
model variables as (10). Then the relations of RTY, Normalized
RTY (NRTY) (Pyzdek; 2003), weight-based sigma level and costbased sigma level (Ravichandran, 2006, 2007) are achieved

Scrap

Sub1

Sub i

Sub j

Sub n

Rework
Fig. 1. The typical diagram of a main process.

100

In this section, two examples are used to illustrate the

effectiveness of the proposed ERTY method. Assume
g 1 5, g 2 10, g 3 15, r j 1, j 1,2,3, ES1 5,
ES2 10, ES3 15 and mk 1, k1,2,3. In Fig. 2(a) and
2(b) we can see different rework cycles. Obviously, the process
shown in Fig. 2(a) is more efcient than Fig. 2(b). NRTY and classic
yield methods make similar performance results in two cases. In
contrast to the NRTY and classic yield, the proposed ERTY method
differentiates between two typical processes.
Fig. 3 shows two different processes which have same classical
yield and NRTY results for Fig. 3(a) and 2(b). The ERTY reveals
more reasonable performance result. It is clear that the performance of process (a) and (b) are related to the scrap costs of the
rst and third sub- processes.

4. Applying ERTY on electronics industry

The presented example in this section is related to real data of
an electronic industry. There are ve different products (EP1, EP2,
EP3, EP4 and EP5) in this industry which vary according to
production rate, cost and capabilities of given processes. The
production process includes case manufacturing, printing and
nally assembling the electronic boards and accessories brought
from the contractors as shown in Fig. 4. The whole set is then
tested. The next stages include assembly control, electrical quality
control, and a series of environmental tests. The main difference
between processes in various products lies in the type of
environmental tests.
The occurred defects in each sub-process only include
rework, which means the matrix A in this case is equal to
zero. Moreover, all the corrections are provided at the rework
stages equals zero, in other words, r j 0,j 1, y, 15. As shown
in Fig. 4, all rework related to environmental tests move back
to the Primary Test stage and mk 1,k 1, y, 15. To make

100
1
10

20

2
30

10

Fig. 2. Two processes with different rework cycles.

2
20

30

A. Saghaei et al. / Int. J. Production Economics 140 (2012) 368373

30

10

100

10

371

30

100
2

Fig. 3. Two processes with different sequence of occurred scraps.

Start

Case Print

Case Assembly

Accessories

Accessories and Boards Assembly

Boards

Primary Test

Assembling Control

Electrical Quality Control

The weight of each sub-process is obtained from the information given in Table 3 and Eqs. (1), (3) and (4). Table 4 shows the
parameters estimation.
The efciency of each main process is estimated with the use
of Eq. (5).The performance of organizational processes is shown in
Table 5 based on three methods of classical Yield, NRTY and ERTY.
Regarding Table 5 it is revealed that classical yield shows a
similar performance for all products by focusing on the number of
output products and input resources, regardless of rework during
processing. The NRTY indicator designates different performance
levels to the process of products but it disregards important
factors mentioned in Table 2. Finally, the ERTY method shows that
the products efciency is in fact less than the estimated yield by
other indicators. It can be seen that when there is an increase in
the number of reworks, or when the rework cycles get bigger, or
the rework occurs in the later stages of the process this difference
is more severe. Accordingly, this method us able to compare
organizational processes and improve them with more sensitivity.
Also considering Table 4, we can identify poor sub-processes of a
certain process based on its imposing costs on the organization.
In order to obtain total performance of the industry, it sufces
to use Eqs. (6)(8). Table 6 shows estimated price per unit and the
rate of product sale in a given period of time and the nal
weighted performance.
v
u 5
Y
u
~
4
1w
Overall RTY t
14
rtyj j 0:73
j1

Environment Test 1

Environment Test 8

Delivery

End
Fig. 4. Electronic industry processes.

it simpler, for each product a different period of time was

considered so that the process input volume for all products
would be the same (y 100). The number of reworks occurred
and the related total cost within a given time are estimated
and shown in Table 3.

5. Conclusions
The estimation of an organizations quality level has been
expanded since six sigma started to develop. However, few
studies have been done in this eld. The ERTY method is a new
approach for measuring the performance based on the process
efciency and effectiveness. Different view of scrap and rework,
calculation of rework costs according to the structure of the
process and estimation of scrap costs according to the related
sub-process stage are among the criteria for evaluation of subprocesses, hence a point of distinction among all current methods.
Numerical examples were used to illustrate the effectiveness of
the proposed ERTY method. These examples showed that the
classic yield and normalized rolled throughput yield are limited
indicators to report the processes performance.
Finally a real example of electronics industry was presented to
validate the ability of this method compared with current
methods. This approach not only presents more sensitive and
able criteria for the identication of low-quality organizational
processes with the inclusion of scrap and rework costs, it also
covers previous measurement methods based on dened variables. Since this index includes the characteristics of real processes more than the previous ones do, it can reect the

372

A. Saghaei et al. / Int. J. Production Economics 140 (2012) 368373

Table 3
Number of reworks and total cost per unit in each sub-process.
Sub-processes of electronic production

EP1
EP2
EP3
EP4
EP5
gk

Sub1

Sub2

Sub3

Sub4

Sub5

Sub6

Sub7

Sub8

Sub9

Sub10

Sub11

Sub12

Sub13

Sub14

Sub15

0
2
0
0
1
1

1
3
0
0
0
0.9

0
0
0
0
0
1

0
0
0
0
0
1.1

2
1
1
1
0
2

9
0
18
30
5
2.1

1
0
0
0
0
2.2

24
4
17
55
18
3.1

26
4
51
37
9
3.2

17
2
0
0
0
2.2

6
0
16
0
10
3

18
0
0
0
0
3.5

0
0
0
0
0
2.9

4
2
0
0
11
4

0
0
0
0
0
3

Table 4
Efciency and weighted efciency of sub-processes.
Sub-processes of electronic production

pj

Sub1

Sub2

Sub3

Sub4

Sub5

Sub6

Sub7

Sub8

Sub9

Sub10

Sub11

Sub12

Sub13

Sub14

Sub15

1.00

0.99

1.00

1.00

0.98

0.91

0.99

0.76

0.74

0.83

0.94

0.82

1.00

0.96

1.00

EP1
wj

pj

1.00

0.99

1.00

1.00

0.99

0.99

0.99

0.95

0.93

0.96

0.99

0.94

1.00

0.99

1.00

pj

0.98

0.97

1.00

1.00

0.99

1.00

1.00

0.96

0.96

0.98

1.00

1.00

1.00

0.98

1.00

EP2
wj

pj

0.99

0.99

1.00

1.00

0.99

1.00

1.00

0.99

0.98

0.99

1.00

1.00

1.00

0.99

1.00

pj

1.00

1.00

1.00

1.00

0.99

0.82

1.00

0.83

0.49

1.00

0.84

1.00

1.00

1.00

1.00

pj

1.00

1.00

1.00

1.00

0.99

0.98

1.00

0.97

0.67

1.00

0.95

1.00

1.00

1.00

1.00

pj

1.00

1.00

1.00

1.00

0.99

0.70

1.00

0.45

0.63

1.00

1.00

1.00

1.00

1.00

1.00

pj

1.00

1.00

1.00

1.00

0.99

0.96

1.00

0.68

0.82

1.00

1.00

1.00

1.00

1.00

1.00

pj

0.99

1.00

1.00

1.00

1.00

0.95

1.00

0.82

0.91

1.00

0.90

1.00

1.00

0.89

1.00

0.99

1.00

1.00

1.00

1.00

0.99

1.00

0.95

0.98

1.00

0.97

1.00

1.00

0.95

1.00

EP3
wj

EP4
wj

EP5
wj

pj

Appendix

Table 5
Comparison three performance methods yield, NRTY and ERTY.

Eq. (2) provided in Section 2 can be proved as the following:

Product

Yield

NRTY

ERTY

EP1
EP2
EP3
EP4
EP5

1.00
1.00
1.00
1.00
1.00

0.92
0.98
0.91
0.89
0.96

0.81
0.97
0.62
0.54
0.88

Nj
X

!
Skj

E E

k1

Nj
X

!!
Skj 9N j

k1

Since
E

Nj
X

!
Skj 9Nj n

n
X

k1

Table 6
Price and rate of products sale and weighted performance of processes.

Product

N
X

!
Skj 9Nj n

k1

n
X

!
Skj

nESj

k1

!
Skj 9Nj

N j ESj

k1

Price per unit of products

Rate of each product sold
~j
1w

rtyj

EP1

EP2

EP3

EP4

EP5

9.3
2.5
0.89

7.5
1.5
0.98

5.6
1
0.65

4.7
1.5
0.58

3.2
1.75
0.89

performance of organization processes more and improvable

points. The model is also used to evaluate the performance of
processes of all organizations including production and service.
This research could be advanced for systems with more
complicated processes. It is also possible to dene different
criteria for sub-process/product weighting according to the purposes of various organizations.

Therefore,
E

N
X

!
Skj

ENES

ENESj

k1

where, for each j,Skj ,k 1, y, Nj is independent identied distribution and for each j, S(j)
k , k1, y, Nj is independent of Nj.
Similar to the procedure of Eq. (2) formulation, we can prove
(3). Also, E(R(ji)) is obtained as below:
ji

ER E r j

j
X
ki

mk g k Erj E

j
X
ki

mk g k Erj mk

j
X
ki

Eg k :

A. Saghaei et al. / Int. J. Production Economics 140 (2012) 368373

Reference
Antony, J., 2004a. Six sigma in the UK service organizations: results from a pilot
survey. Managerial Auditing Journal 19 (8), 10061013.
Antony, J., Banuelas, R., 2002. Key ingredients for the effective implementation of
six sigma program. Measuring Business Excellence 6 (4), 2027.
Antony, J., Kumar, M., Madu, C.N., 2005a. Six sigma in small and medium sized UK
manufacturing enterprises: some empirical observations. International Journal
of Quality & Reliability Management 22 (8), 860874.
Antony, J., Kumar, M., Tiwari, M.K., 2005b. An application of six sigma methodology to reduce the engine overheating problem in an automotive company.
IMechE Part B 219 (B8), 633646.
Benedetto, A.R., 2003. Adapting manufacturing-based six sigma methodology to
the service environment of a radiology lm library. Journal of Healthcare
Management 48 (4), 263280.
Chen, C.C., 2008. An objective-oriented and product-line-based manufacturing
performance measurement. International Journal of Production Economics
112, 380390.
Deleryd, M., 1999. A pragmatic view on process capability studies. International
Journal of Production Economics 58, 319330.
Does, R., Heuvel, E., Mast, J., Bisgaard, S., 2002. Comparing nonmanufacturing with
traditional applications of six sigma. Quality Engineering 15 (1), 177182.
Graves, S., 2002. Six sigma rolled throughput yield. Quality Engineering 14 (2),
257266.
Harry, M.J., 1998. Six sigma: a breakthrough strategy for protability. Quality
Progress 31 (5), 6064.
Hensley, R.L., Dobie, K., 2005. Assessing readiness for six sigma in a service setting.
Managing Service Quality 15 (1), 82101.
Heuvel, J., Does, R., Bisgaard, S., 2005. Dutch hospital implements six sigma. Six
Sigma Forum Magazine 4 (2), 1114.
Jones Jr., M.H., 2004. Six sigma: at a bank? Six Sigma Forum Magazine 3 (2), 1317.
Kumar, M., Antony, J., 2008. Common myths of six sigma demystied. International Journal of Quality & Reliability Management 25 (8), 878895.

373

Kwak, Y.H., Anbari, F.T., 2006. Benets, obstacles and future of six sigma approach.
Technovation 26, 708715.
Lazarus, I.R., Butler, K., 2001. The promise of six sigma part one. Managed
Healthcare Executive 11 (9), 2226.
McAdam, R., Lafferty, B., 2004. A multilevel case study critique of six sigma:
statistical control or strategic change? International Journal of Operations &
Production Management 24 (5), 530549.
Pyzdek, T., 2003. The Six Sigma Handbook. McGraw-Hill, New York, NY.
Ravichandran, J., 2006. Six sigma milestone: an overall sigma level of an
organization. Total Quality Management & Business Excellence 17 (8),
973980.
Ravichandran, J., 2007. Cost-based process weights for DPMO and the overall
performance of an organization. The TQM Magazine 19 (5), 442453.
Sehwall, L., DeYong, C., 2003. Six sigma in health care. International Journal of
Health Care Quality Assurance 16 (6), 15.
Shamji, N., 2005. Six sigma basics. Total Quality Management 16 (5), 567574.
Snee, R.D., 2004. Six sigma: the evolution of 100 years of business improvement
methodology. International Journal of Six Sigma and Competitive Advantage
1 (1), 420.
Snee, R.D., 2005. Leading business improvement: a new role for statisticians and
quality professionals. Quality and Reliability Engineering International 21,
235242.
Tort-Martorell, X., Grima, P., Marco, L., 2009. Source of confusion. Six Sigma Forum
Magazine 9 (1), 1419.

Woodall, T., 2001. Six sigma and service quality: Christian Gronroos
revisited.
Journal of Marketing Management 17 (56), 595607.
Woodard, D.T., 2005. Addressing variation in hospital quality: is six sigma the
answer? Journal of Healthcare Management 50 (4), 226236.
Zu, X., Robbins, T.L., Fredendal, L.D., 2010. Mapping the critical links between
organizational culture and TQM/Six sigma practices. International journal of
Production Economics 123, 86106.