Calculation used in Six Sigma that will indicate the number of defects in a process, procedure or service measured in the number of millions of opportunities. Sometimes referred to as PPM, (parts per million). (see note)
To calculate DPMO you must first calculate DPO, (defects per opportunity). Once you have the DPO, you multiply by 1,000,000 or 10 to the power 6 to get DPMO.
DPMO = DPO x 10 to the power 6
As per wiki..
In process improvement efforts, defects per million opportunities or DPMO (or nonconformities per million opportunities (NPMO)) is a measure of process performance. It is defined as
As per wiki…
A defect is defined as a nonconformance of a quality characteristic (e.g., strength, width, response time) to its specification. DPMO is stated in opportunities per million units for convenience: Processes that are considered highly-capable (e.g., processes of Six Sigma quality) are those that experience only a handful of defects per million units produced (or services provided).
Note that DPMO differs from reporting defective parts per million (PPM) in that it comprehends the possibility that a unit under inspection may be found to have multiple defects of the same type or may have multiple types of defects. Identifying specific opportunities for defects (and therefore how to count and categorize defects) is an art, but generally organizations consider the following when defining the number of opportunities per unit:
Knowledge of the process under study
When studying multiple types of defects, knowledge of the relative importance of each defect type in determining customer satisfaction
The time, effort, and cost to count and categorize defects in process output
DPMO of a process=(1,000,000 *No of defects)/(No fo units*No of opportunities in a unit)
Suppy chain process:
DPMO: Defects Per Million Opportunities
DPMO is a Six Sigma* calculation used to indicate the amount of defects in a process per one million opportunities.
To calculate: Total Number of Defects / Total Number of Opportunities for a Defect. Then multiply the answer by 1 Million.
The challenge here is determining exactly what qualifies as a defect. Some defects can pass through a quality inspection and have little impact on the end product. Other defects can result in re-work or scrap.
DPMO is sometimes used instead of Defect per Unit to allow for comparison between processes with different levels of complexity.
*Six Sigma uses statistical analysis to measure a companies performance by identifying defects in a manufacturing process. The goal of Six Sigma is to reduce process output variation to + or – three standard deviations. This results in no more than 3.4 defects per million opportunities.
The best Process:(eHow .com)
First, you’ll need to figure out the number of opportunities for defects that exist in one unit. To do this, count everything that could be wrong with the product that is also important to your customers.
Let’s say you produce widgets, and each widget is made up of 5 parts. Each one of those parts could be an opportunity for a defect if a problem would be undesirable to a customer. Now, let’s say your customer wants the widget delivered within 5 business days. Since delivery time is important to your customer, late delivery is also a defect. If your customers don’t care about the color, then a difference in color is not a defect.
Once you’ve listed out all of the possible defects in your product or service, count them up and you now know the number of opportunities per unit.
Next, you need to sample some data to determine the total number of defects the process is producing. The more samples you have, the more reliable your DPMO measure will be. For each unit examined, count the number of defects you find. Count how many samples you inspected (number of units) and the number of defects you found.
Now that you are armed with the data, you are one simple calculation away from finding your DPMO: (1,000,000 * Number of Defects) / (Number of Units * Number of opportunities).
Widget Factory Calculation:
Number of Defects: 9
Number of Opportuntities per unit: 6 (5 parts + shipping time)
Number of Units: 30 (widgets that were inspected)
DPMO = (1,000,000*9)/(6*30)=50,000
In plain English, if our factory produced one million widgets, we could expect to end up with 50,000 defects in those widgets.
And my favorite online tool is here..