Journal of Statistical Computation and Simulation, 2015

Vol. 85, No. 4, 839–853, http://dx.doi.org/10.1080/00949655.2013.852551

A powerful test for two-sided multiple independent

characteristics supplier selection problem
C.H. Wua∗ , W.L. Pearnb and C.C. Chuangb
a Department of Industrial Engineering & Systems Management, Feng Chia University, 100 Wenhwa Road,
Taichung 40724, Taiwan, Republic of China; b Department of Industrial Engineering & Management,
National Chiao Tung University, 1001 Ta Hsueh Road, Hsinchu 30050, Taiwan, Republic of China

(Received 20 March 2013; accepted 3 October 2013)

In this article, we consider the supplier selection problem for two-sided processes with multiple indepen-
dent characteristics. We review the existing division method and develop a new exact approach called the
subtraction method. For practical applications, a two-phase selection procedure is established based on
the subtraction method. The decision powers of two methods are compared. We show that the subtraction
method we proposed is indeed more powerful than the existing division method. Several figures are pre-
sented to display the required sample sizes with various powers and various values of (Cpk1 T , C T ). For
pk2
the convenience of practitioners, the required sample sizes for the two methods with various powers and
T , C T ) are also tabulated.
various values of (Cpk1 pk2

Keywords: multiple independent characteristics; process capability index; subtraction method; supplier
selection

1. Introduction

Process capability indices are unitless numerical values that quantify process performance. They
have been widely used in the manufacturing and service industries to measure process repro-
duction capability of the preset product quality requirement. Several basic process capability
indices, including Cp , CPU , CPL , Cpk , Cpm , and Cpmk , have been developed for this purpose.[1–3]
These indices compare the predefined product specifications with the actual production or service
performance of the investigated quality characteristics. These indices are defined as follows:

USL − LSL USL − μ

Cp = , CPU = ,
6σ 3σ
 
μ − LSL USL − μ μ − LSL
CPL = , Cpk = min , ,
3σ 3σ 3σ
 
USL − LSL USL − μ μ − LSL
Cpm =  , Cpmk = min  ,  ,
6 σ 2 + (μ − T )2 3 σ 2 + (μ − T )2 3 σ 2 + (μ − T )2

∗ Corresponding author. Email: hexjacal.iem96g@nctu.edu.tw

© 2013 Taylor & Francis

840 C.H. Wu et al.

where USL is the upper specification limit, LSL is the lower specification limit, μ is the pro-
cess mean, σ is the process standard deviation (overall process variation), and T is the target
value. While the indices Cp , Cpk , Cpm , and Cpmk are appropriate for statistically controlled normal
processes with two-sided specification limits, the indices CPU and CPL are designed specifically
for processes with one-sided specification limits. We note that a process is under control means
the process parameters are stable but this does not imply that the process quality is satisfactory.
Specifically, classical control charts cannot be used for processes monitoring when a very low
defect percentage is required.
Those indices have been implemented in many industry manufacturing applications, including
(i) the multi-process performance analysis chart for factory defective control [4–6]; (ii) process
performance analysis for multiple quality characteristics [7,8]; (iii) supplier selection problem
[9–16]; (iv) capability measures for multiple manufacturing streams [17,18]; (v) variables accep-
tance sampling plans for lot sentencing [19–21]; (vi) tool replacement optimization.[22–24] Pearn
and Kotz [25] presented a thorough review on the development of process capability indices in
the past two decades.
The remainder of this paper is organized as follows. We first review the existing division method
in the next section. In Section 3, a new method referred to as the subtraction method is proposed.
Then, an example of a dual-fibre tip is presented to illustrate that the new method is more powerful.
The conclusion is given in the last section.

2. The existing division method

For processes with two-sided specification limits and multiple independent characteristics, Pearn
T
et al. [26] proposed the generalization Cpk index designed as
  
1 −1 [ mi=1 (2(3Cpki ) − 1) + 1]
T
Cpk =  , (1)
3 2

where Cpki denotes the Cpk index value of the ith quality characteristic for i = 1, 2, . . . , m. m is the
number of quality characteristics. Function (·) denotes the cumulative distribution function of
the standard normal distribution. Cpk index measures the actual process performance with regard
to the production yield. For one normally distributed process with a single characteristic and a
fixed value of Cpki , the bounds of the production yield Pi can be obtained as

2(3Cpki ) − 1 ≤ Pi ≤ (3Cpki ). (2)

Consequently, for a normally distributed process with multiple independent characteristics, the
lower bound on overall yield P can be obtained as


m 
m
P= Pi ≥ [2(3Cpki ) − 1] = 2(3Cpk
T
) − 1. (3)
i=1 i=1

However, in practice, the process parameters such as the process means and the process of each
characteristic are unknown and should be estimated from the collected data. The following natural
T
estimator of Cpk can be represented as
  
1 [ mi=1 (2(3Ĉpki ) − 1) + 1]
T
Ĉpk = −1 . (4)
3 2
 Journal of Statistical Computation and Simulation 841

Ĉpki denotes the natural estimator of Cpk index for the ith quality characteristic. Pearn et al. [26]
T
developed an approximate distribution of the natural estimator of Cpk as
T 2

1 Cpk
T
Ĉpk ≈N T
Cpk , + . (5)
9n 2n

T
For supplier selection problem in which the existing Supplier I has capability value Cpk1 and the
T
competitive supplier, Supplier II, has capability value Cpk2 , the following hypothesis testing is
considered:
T
H0 : Cpk1 ≥ Cpk2
T T
vs. H1 : Cpk1 T
< Cpk2 , (6)
to compare the two suppliers. We first review the existing approach, which we refer to as the
division method, then develop a new exact approach called the subtraction method. Pearn and Wu
[27] investigated the problem in Equation (6) by the testing statistic R = Ĉpk2
T T
/Ĉpk1 (the quotient
T
of two natural estimators). From the distribution of Ĉpk presented in Equation (5), Pearn and Wu
[27] developed the probability density function (p.d.f) of R = Ĉpk2
T T
/Ĉpk1 as
    
1 μ23 √ μ3
fR (r) = 2σ3 exp − 2 + μ3 σ3 2π 1 − 2
2
2πσ1 σ2 2σ3 σ3
 2  (7)
1 μ1 μ22 μ23
× exp − + − ,
2 σ12 σ22 σ32

Where
T 2 T 2
1 Cpk1 1 Cpk2
μ1 = Cpk1
T
, μ2 = Cpk2
T
, σ12 = + , σ22 = + ,
9n1 2n1 9n2 2n2
−1 (8)
μ1 /σ12 + rμ2 /σ22 rμ2 σ12 + μ1 σ22 1 r2 σ 2σ 2
μ3 = = and σ32 = + = 2 21 2 2 .
1/σ1 + r /σ2
2 2 2
r 2 σ12 + σ22 σ12
σ22
r σ1 + σ2

As mentioned above, the result in Pearn and Wu [27] is very practical, but the mathematical formula
is too complex and too difficult to implement. Therefore, we propose a new testing statistic W by
the subtraction method; its sampling distribution and p.d.f are presented below:
T 2 T 2

1 1 C pk1 C pk2
W = Ĉpk2
T
− Ĉpk1
T
≈ N Cpk2T
− Cpk1
T
, + + + , (9)
9n1 9n2 2n1 2n2
1
fW (w) = 
2π(1/(9n1 ) + 1/(9n2 ) + Cpk1
T 2
/(2n1 ) + Cpk2
T 2
/(2n2 ))

[w − (Cpk2
T
− Cpk1T
)]2
× exp − . (10)
2(1/(9n1 ) + 1/(9n2 ) + Cpk1
T 2
/(2n1 ) + Cpk2
T 2
/(2n2 ))

Consequently, the sampling distribution of the testing statistic W is also a normal distribution.
T
Figure 1 plots the p.d.f of W for Cpk1 = 1.0, 1.5, Cpk2
T
= 1.0, 1.5, and n1 = n2 = 30, 50, 100, 150,
200 (from bottom to top).
T
Figure 1 reveals the following features: (1) the larger the value of Cpk2 − Cpk1
T
, the larger the
variance of W = Ĉpk2 − Ĉpk1 ; (2) the distribution of W is unimodal and is rather symmetric to
T T
T
Cpk2 − Cpk1
T
even for small sample sizes; (3) the larger the sample sizes of n1 and n2 , the smaller
842 C.H. Wu et al.

Figure 1. p.d.f plots of W for sample sizes n1 = n2 = 30, 50, 100, 150, 200 (from bottom to top in plots).

the variance of W . In the next section, we propose a two-stage selection procedure to deal with
the supplier selection problem based on the testing statistic W .

3. The proposed subtraction method

T
Let C denote the minimal required value of Cpk for all candidate suppliers. The existing Supplier
T
I has achieved the requirement of Cpk1 > C. A new supplier, Supplier II, claims that it is better
than Supplier I. To compare the process capabilities of these two suppliers, a procedure including
two phases is established based on the testing statistic W .

3.1. Phase I: selection determination

In phase I, to test whether Supplier II has a higher capability than the Supplier I, the hypothesis

T
H0 : Cpk2 − Cpk1
T
≤ 0 vs. H1 : Cpk2
T
− Cpk1
T
>0 (11)
 Journal of Statistical Computation and Simulation 843

Table 1. T ≤ C T with n = n = 30(10)200 and α = 0.05.

Critical values to reject Cpk2 pk1 1 2

T = CT = C
Cpk1 pk2

n 1.0 1.1 1.2 1.3 1.4 1.5 1.6 1.7 1.8 1.9 2.0

30 0.3320 0.3594 0.3872 0.4153 0.4436 0.4722 0.5009 0.5298 0.5588 0.5879 0.6171
40 0.2875 0.3112 0.3353 0.3596 0.3842 0.4089 0.4338 0.4588 0.4839 0.5091 0.5344
50 0.2572 0.2784 0.2999 0.3217 0.3436 0.3658 0.3880 0.4104 0.4328 0.4554 0.4780
60 0.2348 0.2541 0.2738 0.2936 0.3137 0.3339 0.3542 0.3746 0.3951 0.4157 0.4363
70 0.2173 0.2353 0.2535 0.2719 0.2904 0.3091 0.3279 0.3468 0.3658 0.3849 0.4040
80 0.2033 0.2201 0.2371 0.2543 0.2717 0.2892 0.3067 0.3244 0.3422 0.3600 0.3779
90 0.1917 0.2075 0.2235 0.2398 0.2561 0.2726 0.2892 0.3059 0.3226 0.3394 0.3563
100 0.1818 0.1968 0.2121 0.2275 0.2430 0.2586 0.2744 0.2902 0.3061 0.3220 0.3380
110 0.1734 0.1877 0.2022 0.2169 0.2317 0.2466 0.2616 0.2767 0.2918 0.3070 0.3223
120 0.1660 0.1797 0.1936 0.2076 0.2218 0.2361 0.2505 0.2649 0.2794 0.2939 0.3085
130 0.1595 0.1726 0.1860 0.1995 0.2131 0.2268 0.2406 0.2545 0.2684 0.2824 0.2964
140 0.1537 0.1664 0.1792 0.1922 0.2054 0.2186 0.2319 0.2452 0.2587 0.2721 0.2856
150 0.1485 0.1607 0.1732 0.1857 0.1984 0.2112 0.2240 0.2369 0.2499 0.2629 0.2760
160 0.1438 0.1556 0.1677 0.1798 0.1921 0.2045 0.2169 0.2294 0.2420 0.2546 0.2672
170 0.1395 0.1510 0.1626 0.1745 0.1864 0.1984 0.2104 0.2226 0.2347 0.2470 0.2592
180 0.1355 0.1467 0.1581 0.1695 0.1811 0.1928 0.2045 0.2163 0.2281 0.2400 0.2519
190 0.1319 0.1428 0.1538 0.1650 0.1763 0.1876 0.1990 0.2105 0.2220 0.2336 0.2452
200 0.1286 0.1392 0.1500 0.1608 0.1718 0.1829 0.1940 0.2052 0.2164 0.2277 0.2390

is considered. Based on the testing statistic W = Ĉpk2

T
− Ĉpk1
T
and a given significant level α, the
critical value c0 for decision-making can be obtained by

Type I error = P(Reject H0 |H0 is true)

(12)
= P(W ≥ c0 |H0 : Cpk2
T
− Cpk1
T
≤ 0, n1 , n2 and Cpk1
T
≥ C) ≤ α.
T
It is noted that the larger the value of Cpk2 − Cpk1
T
, the larger the critical value of c0 . Therefore, c0
can be calculated by the following equation:

P(W ≥ c0 |Cpk1
T
= Cpk2
T
= C, n1 , n2 ) = α. (13)
T
Table 1 displays the critical values c0 for Cpk1 = Cpk2
T
= C = 1.0(0.1)2.0, sample sizes n1 = n2 =
n = 30(10)200 and the significant level α = 0.05. For example, for n1 = n2 = 90, C = 1.3 and
α = 0.05, we conclude that Supplier II has a process capability better than Supplier I if the testing
statistic W = Ĉpk2
T
− Ĉpk1
T
is greater than the critical value c0 = 0.2398. It should be noted that
the process selection procedure can be implemented to general cases with unequal sample sizes
(n1  = n2 ).

3.2. Phase II: magnitude outperformed measurement

In practice, replacing a supplier always incurs a high cost. The decision-maker would consider
changing the supplier only if the new Supplier II is significantly better than the existing Supplier
I by a designated outperformance magnitude h. The supplier selection procedure in phase I
only compares the process capabilities of two suppliers without any further comparisons of the
magnitudes of these two suppliers. Therefore, in phase II, the following hypothesis is tested:
T
H0 : Cpk2 − Cpk1
T
≤ h vs. H1 : Cpk2
T
− Cpk1
T
> h. (14)

The decision rule is similar to that of phase I. The critical value c0 satisfies

P(W ≥ c0 |Cpk2
T
− Cpk1
T
≤ h, n1 , n2 and Cpk1
T
≥ C) ≤ α (15)
844 C.H. Wu et al.

and can be obtained by the following equation:

P(W ≥ c0 |Cpk1
T
= C and Cpk2
T
= Cpk1
T
+ h, n1 , n2 ) = α. (16)

If the testing statistic W is greater than the critical value c0 , the null hypothesis H0 would be
rejected and there is sufficient information to conclude that Supplier II is significantly better than
Supplier I by a designated outperformance h, and the replacement of Supplier I by Supplier II
would be suggested. It should be noted that the two-stage procedure we purpose only depend
on the α risk without considering the decision power and Type II error β; this is comparatively
unfavourable to H1 or the new supplier. The decision power can be calculated by

power = P(W ≥ c0 |Cpk2

T T
> Cpk1 T
, Cpk1 = C, n1 , n2 ) = 1 − β. (17)

The type II error is the probability that fails to reject H0 when H1 is true:

β = P(W < c0 |Cpk2

T T
> Cpk1 T
, Cpk1 = C, n1 , n2 ). (18)

For a given significant level of α = 0.05, a minimal requirement of C = 1.00, 1.33, 1.67, 2.00 and
sample sizes of n1 = n2 = n = 10(5)200, Table 2 displays the minimal values of Cpk2 T
allows the
decision power to surpass the predetermined requirement level. For example, for Cpk1 = C = 1.33,
T

a significant level of α − risk = 0.05 and sample sizes of n1 = n2 = n = 15, the decision power
would be less than 0.95 if Cpk2 T
− Cpk1
T
< 1.59. In other words, if the minimal required mag-
nitude h for supplier replacement is greater than 1.59, the decision power would be greater
than 0.95.

Table 2. The minimal value of h to keep the required decision power with various values of α = 0.05
T .
and Cpk1

T
Cpk1 T
Cpk1

n 1.00 1.33 1.67 2.00 n 1.00 1.33 1.67 2.00

Power = 0.9 Power = 0.95

10 1.33 1.71 2.10 2.50 10 1.65 2.12 2.62 3.10
15 1.02 1.31 1.62 1.92 15 1.24 1.59 1.96 2.32
20 0.86 1.10 1.36 1.61 20 1.02 1.31 1.62 1.92
25 0.75 0.96 1.19 1.41 25 0.89 1.14 1.40 1.66
30 0.68 0.87 1.07 1.26 30 0.79 1.02 1.25 1.49
35 0.62 0.79 0.98 1.16 35 0.72 0.93 1.14 1.35
40 0.58 0.74 0.91 1.07 40 0.67 0.86 1.06 1.25
45 0.54 0.69 0.85 1.00 45 0.63 0.80 0.99 1.17
50 0.51 0.65 0.80 0.95 50 0.59 0.75 0.93 1.10
55 0.48 0.62 0.76 0.90 55 0.56 0.71 0.88 1.04
60 0.46 0.59 0.72 0.86 60 0.53 0.68 0.84 0.99
65 0.44 0.56 0.69 0.82 65 0.51 0.65 0.80 0.95
70 0.42 0.54 0.66 0.79 70 0.49 0.62 0.77 0.91
75 0.41 0.52 0.64 0.76 75 0.47 0.60 0.74 0.87
80 0.39 0.50 0.62 0.73 80 0.45 0.58 0.71 0.84
85 0.38 0.49 0.60 0.71 85 0.44 0.56 0.69 0.81
90 0.37 0.47 0.58 0.69 90 0.42 0.54 0.67 0.79
95 0.36 0.46 0.56 0.67 95 0.41 0.53 0.65 0.77
100 0.35 0.45 0.55 0.65 100 0.40 0.51 0.63 0.75
105 0.34 0.44 0.53 0.63 105 0.39 0.50 0.61 0.73
110 0.33 0.42 0.52 0.62 110 0.38 0.49 0.60 0.71
115 0.33 0.41 0.51 0.60 115 0.37 0.47 0.58 0.69
120 0.32 0.41 0.50 0.59 120 0.36 0.46 0.57 0.67

(Continued)
 Journal of Statistical Computation and Simulation 845

Table 2. Continued.

T
Cpk1 T
Cpk1

n 1.00 1.33 1.67 2.00 n 1.00 1.33 1.67 2.00

125 0.31 0.40 0.49 0.58 125 0.36 0.45 0.56 0.66
130 0.31 0.39 0.48 0.57 130 0.35 0.44 0.55 0.65
135 0.30 0.38 0.47 0.55 135 0.34 0.44 0.54 0.63
140 0.29 0.37 0.46 0.54 140 0.33 0.43 0.52 0.62
145 0.29 0.37 0.45 0.53 145 0.33 0.42 0.51 0.61
150 0.28 0.36 0.44 0.52 150 0.32 0.41 0.51 0.60
155 0.28 0.35 0.44 0.52 155 0.32 0.40 0.50 0.59
160 0.27 0.35 0.43 0.51 160 0.31 0.40 0.49 0.58
165 0.27 0.34 0.42 0.50 165 0.31 0.39 0.48 0.57
170 0.27 0.34 0.42 0.49 170 0.30 0.39 0.47 0.56
175 0.26 0.33 0.41 0.48 175 0.30 0.38 0.47 0.55
180 0.26 0.33 0.40 0.48 180 0.29 0.37 0.46 0.54
185 0.25 0.32 0.40 0.47 185 0.29 0.37 0.45 0.54
190 0.25 0.32 0.39 0.46 190 0.29 0.36 0.45 0.53
195 0.25 0.31 0.39 0.46 195 0.28 0.36 0.44 0.52
200 0.24 0.31 0.38 0.45 200 0.28 0.35 0.43 0.51
Power = 0.975 Power = 0.99
10 1.99 2.56 3.17 3.76 10 2.51 3.23 4.00 4.75
15 1.45 1.86 2.30 2.73 15 1.75 2.25 2.78 3.30
20 1.18 1.52 1.87 2.22 20 1.40 1.80 2.22 2.63
25 1.02 1.31 1.61 1.91 25 1.19 1.53 1.89 2.24
30 0.91 1.16 1.43 1.70 30 1.05 1.35 1.66 1.97
35 0.82 1.05 1.30 1.54 35 0.95 1.22 1.50 1.78
40 0.76 0.97 1.20 1.42 40 0.87 1.12 1.37 1.63
45 0.71 0.90 1.11 1.32 45 0.81 1.04 1.28 1.51
50 0.66 0.85 1.05 1.24 50 0.76 0.97 1.19 1.42
55 0.63 0.80 0.99 1.17 55 0.71 0.91 1.13 1.33
60 0.60 0.76 0.94 1.11 60 0.68 0.87 1.07 1.27
65 0.57 0.73 0.90 1.06 65 0.65 0.83 1.02 1.21
70 0.55 0.70 0.86 1.02 70 0.62 0.79 0.97 1.15
75 0.53 0.67 0.83 0.98 75 0.59 0.76 0.94 1.11
80 0.51 0.65 0.80 0.94 80 0.57 0.73 0.90 1.07
85 0.49 0.63 0.77 0.91 85 0.55 0.71 0.87 1.03
90 0.47 0.61 0.75 0.88 90 0.53 0.68 0.84 1.00
95 0.46 0.59 0.72 0.86 95 0.52 0.66 0.81 0.97
100 0.45 0.57 0.70 0.83 100 0.50 0.64 0.79 0.94
105 0.44 0.56 0.68 0.81 105 0.49 0.63 0.77 0.91
110 0.42 0.54 0.67 0.79 110 0.48 0.61 0.75 0.89
115 0.41 0.53 0.65 0.77 115 0.46 0.59 0.73 0.87
120 0.40 0.52 0.63 0.75 120 0.45 0.58 0.71 0.84
125 0.40 0.50 0.62 0.73 125 0.44 0.57 0.70 0.83
130 0.39 0.49 0.61 0.72 130 0.43 0.55 0.68 0.81
135 0.38 0.48 0.60 0.70 135 0.42 0.54 0.67 0.79
140 0.37 0.47 0.58 0.69 140 0.42 0.53 0.65 0.77
145 0.36 0.47 0.57 0.68 145 0.41 0.52 0.64 0.76
150 0.36 0.46 0.56 0.67 150 0.40 0.51 0.63 0.75
155 0.35 0.45 0.55 0.65 155 0.39 0.50 0.62 0.73
160 0.35 0.44 0.54 0.64 160 0.39 0.49 0.61 0.72
165 0.34 0.43 0.53 0.63 165 0.38 0.49 0.60 0.71
170 0.34 0.43 0.53 0.62 170 0.37 0.48 0.59 0.70
175 0.33 0.42 0.52 0.61 175 0.37 0.47 0.58 0.68
180 0.32 0.41 0.51 0.60 180 0.36 0.46 0.57 0.67
185 0.32 0.41 0.50 0.59 185 0.36 0.46 0.56 0.66
190 0.32 0.40 0.49 0.59 190 0.35 0.45 0.55 0.65
195 0.31 0.40 0.49 0.58 195 0.35 0.44 0.55 0.65
200 0.31 0.39 0.48 0.57 200 0.34 0.44 0.54 0.64
846 C.H. Wu et al.

T = 1.00, 1.33, 1.67, 2.00 (from bottom to

Figure 2. The minimal value of h that can keep the decision power for Cpk1
top in plots).

This phenomenon can be easily interpreted intuitively. If the difference between the two sup-
pliers is large, it is easy to determine whether Supplier II is significantly better than Supplier
I. On the other hand, if the preset value h is small, it is more difficult to distinguish between
T
H0 : Cpk1 = Cpk2
T
= C and H1 : Cpk2T
= C + h > Cpk1T
= C. Consequently, the decision power
decreases as the parameter h decreases. To overcome this problem, the sample sizes should be
increased to increase the decision power. Figure 2 plots the sample sizes n with various values
T
of Cpk1 vs. h = Cpk2
T
− Cpk1
T
which can keep the decision power to achieve the preset level. From
Figure 2, with the same sample sizes and the same required decision power, we observe that the
T
value of minimal h becomes larger as the initial value of Cpk1 increases. As the sample size n
T
increases, the minimal value of h decreases. This pattern is consistent for all values of Cpk1 , and
the trends of these curves are identical.
The sample sizes that are needed to achieve the preset decision power with various values of
T
Cpk1 T
and h are tabulated in Table 3. For example, if Cpk1 = 1.33 and h = 0.20, we need at least
577 samples to keep the decision power greater than 0.95.
Figure 3 displays the sample sizes for the required decision power of 0.9, 0.95, 0.975, and
0.99 versus various values of Cpk1 T T
and Cpk2 with a significant level of α = 0.05. From Table 3
and Figure 3, it is noted that the larger the required decision power, the larger the required
sample size.
 Journal of Statistical Computation and Simulation 847

Table 3. Sample size needed for rejecting H0 with h = 0.1(0.05)1 and α = 0.05.

T
Cpk1 T
Cpk1
h 1.00 1.33 1.67 2.00 h 1.00 1.33 1.67 2.00

Power = 0.90 Power = 0.95

0.10 1086 1757 2643 3693 0.10 1379 2229 3352 4680
0.15 492 793 1190 1659 0.15 627 1008 1511 2106
0.20 282 453 678 943 0.20 360 577 862 1199
0.25 184 295 439 610 0.25 236 376 560 777
0.30 131 208 309 429 0.30 168 266 395 546
0.35 98 155 230 318 0.35 126 199 294 406
0.40 77 121 179 247 0.40 99 155 229 315
0.45 62 97 143 197 0.45 80 125 184 252
0.50 51 80 117 161 0.50 66 103 151 207
0.55 43 67 98 135 0.55 56 87 127 173
0.60 37 57 84 115 0.60 48 74 108 147
0.65 32 50 72 99 0.65 42 65 93 127
0.70 29 44 63 86 0.70 37 57 82 111
0.75 25 39 56 76 0.75 33 50 72 98
0.80 23 35 50 68 0.80 30 45 65 87
0.85 21 31 45 61 0.85 27 41 58 78
0.90 19 28 41 55 0.90 25 37 53 71
0.95 17 26 37 50 0.95 23 34 48 64
1.00 16 24 34 45 1.00 21 31 44 59
Power = 0.975 Power = 0.99
0.10 1662 2685 4034 5631 0.10 2024 3267 4907 6848
0.15 756 1216 1821 2536 0.15 923 1482 2218 3087
0.20 436 697 1040 1446 0.20 532 851 1268 1761
0.25 286 455 676 938 0.25 350 556 826 1143
0.30 203 322 477 660 0.30 249 394 583 806
0.35 153 241 356 491 0.35 188 296 436 600
0.40 120 188 277 381 0.40 148 231 339 466
0.45 97 152 223 306 0.45 120 186 273 374
0.50 81 125 183 251 0.50 100 154 225 307
0.55 69 106 154 210 0.55 85 130 189 258
0.60 59 91 132 179 0.60 73 112 162 220
0.65 52 79 114 155 0.65 64 97 140 190
0.70 46 69 100 135 0.70 57 86 123 166
0.75 41 62 88 120 0.75 51 76 109 147
0.80 37 55 79 107 0.80 46 68 98 131
0.85 33 50 71 96 0.85 42 62 88 118
0.90 31 45 65 87 0.90 38 56 80 107
0.95 28 42 59 79 0.95 35 52 73 97
1.00 26 38 54 72 1.00 32 48 67 89

3.3. Comparison between the subtraction and the division methods

In this section, we will compare the subtraction method and the division method with regard to
selection power – the probability of rejecting the null hypothesis correctly. For various power
requirements and α = 0.05, Table 4 summarizes the required sample sizes by the subtraction
T T
method (S) and the division method (D) with various values of Cpk1 and Cpk2 . For example, if the
minimal capability requirement Cpk is 1.67, the designated α and β risks are 0.05 (i.e. power =
T

0.95), and the expected h = Cpk2T

− Cpk1T
is 0.3, then the required sample size by the subtraction
method and the division method are 395 and 427, respectively. It should be noted that the new
subtraction method is more convenient than the old division method.
In addition, based on the test statistics of subtraction and division methods, the decision power
can be represented as Equation (17) and follows
power = P(R ≥ c0 (R)|Cpk2
T T
> Cpk1 T
, Cpk1 = C, n1 , n2 ),
848 C.H. Wu et al.

T and C T .
Figure 3. The required sample sizes to keep the decision power with various values of Cpk1 pk2

Table 4. Sample size required for the subtraction (S) and the division (D) methods with various power requirements
T and C T .
and various values of Cpk1 pk2

Power Power
T
Cpk1 T
Cpk2 0.90 0.95 0.975 0.99 T
Cpk1 T
Cpk2 0.90 0.95 0.975 0.99

1.00 1.15 S 492 627 756 923 1.30 1.45 S 762 969 1169 1425
D 532 671 805 975 D 810 1023 1227 1489
1.20 S 282 360 436 532 1.50 S 436 555 670 818
D 312 394 472 572 D 472 595 714 866
1.25 S 184 236 286 350 1.55 S 283 362 438 535
D 209 263 315 381 D 312 394 472 573
1.30 S 131 168 203 249 1.60 S 200 256 310 379
D 151 190 228 276 D 224 283 339 411
1.35 S 98 126 153 188 1.65 S 149 192 232 285
D 115 145 174 211 D 170 215 257 312
1.40 S 77 99 120 148 1.70 S 116 149 181 223
D 92 116 138 168 D 135 170 203 246
1.45 S 62 80 97 120 1.75 S 94 120 146 180
D 76 95 114 137 D 110 138 166 201
1.50 S 51 66 81 100 1.80 S 77 99 121 149
D 64 80 95 116 D 92 116 138 168

(Continued)
 Journal of Statistical Computation and Simulation 849

Table 4. Continued.

Power Power
T
Cpk1 T
Cpk2 0.90 0.95 0.975 0.99 T
Cpk1 T
Cpk2 0.90 0.95 0.975 0.99

1.55 S 43 56 69 85 1.85 S 65 84 102 126

D 55 68 82 99 D 78 98 118 143
1.60 S 37 48 59 73 1.90 S 55 72 87 108
D 48 60 71 86 D 68 85 102 124
1.65 S 32 42 52 64 1.95 S 48 62 76 94
D 42 53 63 76 D 60 75 90 108
1.70 S 29 37 46 57 2.00 S 42 55 67 83
D 38 47 56 68 D 53 66 79 96
1.75 S 25 33 41 51 2.05 S 37 49 60 74
D 34 42 51 61 D 47 60 71 86
1.80 S 23 30 37 46 2.10 S 33 44 53 66
D 31 39 46 56 D 43 54 64 78
1.85 S 21 27 33 42 2.15 S 30 39 48 60
D 28 35 42 51 D 39 49 59 71
1.90 S 19 25 31 38 2.20 S 27 36 44 55
D 26 33 39 47 D 36 45 54 65
1.95 S 17 23 28 35 2.25 S 25 33 40 50
D 24 30 36 43 D 33 41 50 60
2.00 S 16 21 26 32 2.30 S 23 30 37 46
D 23 28 33 40 D 31 38 46 56
1.50 1.65 S 980 1266 1502 1829 1.67 1.82 S 1190 1511 1821 2218
D 1034 1305 1568 1901 D 1248 1577 1892 2295
1.70 S 559 712 859 1048 1.87 S 678 862 1040 1268
D 600 757 908 1101 D 722 911 1094 1327
1.75 S 363 463 560 683 1.92 S 439 560 676 826
D 395 499 599 726 D 475 599 719 872
1.80 S 256 327 396 484 1.97 S 309 395 477 583
D 283 357 428 519 D 339 427 513 622
1.85 S 191 244 296 362 2.02 S 230 294 356 436
D 214 270 324 392 D 255 322 387 469
1.90 S 148 190 230 282 2.07 S 179 229 277 339
D 169 213 255 309 D 201 253 304 369
1.95 S 119 153 185 227 2.12 S 143 184 223 273
D 137 173 207 251 D 163 205 246 299
2.00 S 98 126 153 188 2.17 S 117 151 183 225
D 114 144 172 209 D 135 171 205 248
2.05 S 82 106 129 158 2.22 S 98 127 154 189
D 97 122 146 177 D 115 145 173 210
2.10 S 70 90 110 135 2.27 S 84 108 132 162
D 84 105 126 153 D 99 125 149 181
2.15 S 61 78 95 118 2.32 S 72 93 114 140
D 73 92 111 134 D 86 109 130 158
2.20 S 53 69 84 103 2.37 S 63 82 100 123
D 65 82 98 119 D 76 96 115 140
2.25 S 47 61 74 92 2.42 S 56 72 88 109
D 58 73 87 106 D 68 86 103 124
2.30 S 42 54 67 82 2.47 S 50 65 79 98
D 52 66 79 95 D 61 77 92 112
2.35 S 38 49 60 74 2.52 S 45 58 71 88
D 48 60 72 87 D 56 70 84 101
2.40 S 34 44 55 68 2.57 S 41 53 65 80
D 43 55 65 79 D 51 64 76 93
2.45 S 31 41 50 62 2.62 S 37 48 59 73
D 40 50 60 73 D 47 59 70 85
2.50 S 29 37 46 57 2.67 S 34 44 54 67
D 37 46 56 67 D 43 54 65 78
850 C.H. Wu et al.

T = 1.00 and 1.00 ≤ C T ≤ 2.00 with sample

Figure 4. Power curves of the subtraction and division methods for Cpk1 pk2
sizes of n1 = n2 = n = 30, 50, 100, 150.

where c0 (R) is the critical value corresponding to the quotient test statistic. Under the significance
level α = 0.05, Figure 4 displays the power curves of the subtraction method (shown in dotted line)
T
and the division method (shown in solid line) for Cpk1 = 1.00 vs. 1.00 ≤ Cpk2 T
≤ 2.00 with sample
sizes of n1 = n2 = n = 30, 50, 100, 150. From Figure 4, it can be seen that the test using W =
T
Ĉpk2 − Ĉpk1
T
is significantly powerful than the one based on R = Ĉpk2 T T
/Ĉpk1 as the power curves
of the subtraction method are apparently higher than the ones of the division method uniformly
over all cases. It shows that the subtraction method we proposed in this manuscript is better.

4. Application example: dual-fibre tip

Dual-fibre tips are used to make fibre optic cables, which are used in optical fibre products.
The quality characteristics and the corresponding specifications for a dual-fibre tip product are
presented in Table 5.[28] The minimum requirement of the supplier is CpkT
= 1.00. For Suppliers
I and II, the calculated sample mean, sample standard deviation, and the estimated Cpki index
values for each characteristic obtained from collected data with n1 = n2 = 150 are summarized
in Table 6.
 Journal of Statistical Computation and Simulation 851

Table 5. Specifications of characteristics for the dual-fibre tips.

Characteristic LSL Target USL

Capillary diameter (mm) 1.795 1.800 1.805

Capillary length (mm) 6.00 6.25 6.50
Wedge (◦ ) 7.5 8.0 8.5
Core diameter (μm) 126 127 128

Table 6. Estimated values of capability indices for Supplier I and Supplier II.

Supplier Characteristic x̄ s Ĉpki

I Capillary diameter (mm) 1.8009 0.00097 1.40894

Capillary length (mm) 6.255 0.04035 2.02396
Wedge (◦ ) 7.99◦ 0.0959◦ 1.70316
Core diameter (μm) 126.8 0.2458 1.08489
II Capillary diameter (mm) 1.8001 0.00081 2.01646
Capillary length (mm) 6.249 0.05049 1.64389
Wedge (◦ ) 8.13◦ 0.05473 2.25349
Core diameter (μm) 127.1 0.18249 1.64393

T = 1.00, C T = 1.20, 1.25,

Table 7. Critical values and decisions of testing the two suppliers for Cpk1 pk2
1.26(0.01)1.37.

T
Cpk1 1.00 1.00 1.00 1.00 1.00 1.00 1.00
T
Cpk2 1.20 1.25 1.26 1.27 1.28 1.29 1.30
h 0.20 0.25 0.26 0.27 0.28 0.29 0.30
c0 0.3613 0.4147 0.4254 0.4360 0.4467 0.4574 0.4681
S Reject Reject Reject Reject Reject Reject Reject
D Reject Reject Reject Reject Accept Accept Accept
T
Cpk1 1.00 1.00 1.00 1.00 1.00 1.00 1.00
T
Cpk2 1.31 1.32 1.33 1.34 1.35 1.36 1.37
h 0.31 0.32 0.33 0.34 0.35 0.36 0.37
c0 0.4788 0.4895 0.5002 0.5109 0.5216 0.5324 0.5431
S Reject Reject Reject Reject Accept Accept Accept
D Accept Accept Accept Accept Accept Accept Accept

4.1. Phase I: select a supplier with higher capability

To determine if Supplier II has a better process capability than Supplier I, the hypothesis testing
T
H0 : Cpk2 ≤ Cpk1
T T
vs. H1 : Cpk2 T
> Cpk1 is considered. From Table 6, we have Cpk1 T
= 1.08291
T
and Cpk2 = 1.59814. We calculated W = Ĉpk2 T
− Ĉpk1
T
= 0.51523 for the proposed subtraction
method, and R = Ĉpk2 T T
/Ĉpk1 = 1.47578 for the division method. The critical value is 1.1608
for the division, and 0.1534 for the proposed subtraction method. Since the testing statistic W =
0.51523 > 0.1534, and R = 1.47578 > 1.1608, we therefore conclude that Supplier II is superior
to Supplier I with a 95% confidence level (using either one of the two methods).

4.2. Phase II: magnitude outperformed

To investigate the magnitude of the capability difference between the two suppliers, we consider
T
the hypothesis by testing H0 : Cpk2 ≤ Cpk1
T
+ h vs. H1 : Cpk2
T T
> Cpk1 + h. The decision results of
the hypotheses by the two methods are given in Table 7 (α = 0.05). The results show that if the
852 C.H. Wu et al.

division method is used, we can only conclude that Supplier II has a manufacturing capability
better than Supplier I by a designated outperformance h = 0.27, i.e. Cpk2
T
> Cpk1T
+ 0.27. If the
subtraction method is used, however, we can conclude that Supplier II is better than Supplier I by
a designated outperformance h = 0.34, i.e. Cpk2
T T
> Cpk1 + 0.34.

5. Conclusions

T
For stable normal processes with multiple independent characteristics, the generalization Cpk
index provides a lower bound on the production yield. In this article, we investigated the supplier
selection problem for two two-sided processes. We presented a new approach to solve the supplier
selection problem. The proposed approach which we referred to as the subtraction method is more
powerful than the existing division method used in all existing research. In practice, to replace a
supplier always incurs a high cost. Therefore, the replacement of a supplier would be considered
only if the new supplier has a process capability significantly better than the existing supplier’s
process capability (by a designated outperformance h > 0). The proposed subtraction approach,
T
in this case, can be used to test the corresponding hypothesis H0 : Cpk2 ≤ Cpk1
T
+ h vs. H1 : Cpk2
T
>
Cpk1 + h. A dual-fibre tip example was presented to illustrate the implementation of the purposed
T

approach. The results show that the purposed new method is more convenient than the old method.

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