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W3_Nasser_Invoice Process Confidence Levels Based on Standard Deviation (Sigma) Values


1. Problem Definition

https://www.blogger.com/blogger.g?blogID=6050257193168685481#editor/target=post;postID=2291635885859574121;onPublishedMenu=allposts;onClosedMenu=allposts;postNum=15;src=postname

Referring to my W2.1 Blog being “Estimating Time Required for Processing a Monthly Invoices using 3 Point Time Estimating (PERT)”, in which I estimated the time duration required to process a monthly invoice using both BERT Technique. Using Beta Distribution methodology, the following results were found:

- The Estimated Time = 18.5 hours
- The Standard Deviation (Sigma) = 1.47 hours
- The Variance = 2.15 hours

This week blog ,W4 Blog, I will find the confidence Level Based on Standard Deviation.

2. Identify the Feasible Alternative

- Targeting confidence level of 68.26%
- Targeting confidence level of 95.46%
- Targeting confidence level of 99.73%

3. Development of the Outcome for Alternative

Figure1: Areas under normal curve .vs Sigma



Table1: Number of Sigma. Vs Confidence Level

     4. Selection Criteria:

My preferred criteria is the 95% range of confidence.

5. Analysis and Comparison of the Alternative:

Table2: Confidence range of possible duration


- Our estimated duration is 18.5 hours required for processing an invoice.

- At 68.26 % confidence level, the earliest likely finish is 17.03 hours and the latest likely finish is 19.97 hours.

- At 95.46 % confidence level, the earliest likely finish is 15.56 hours and the latest likely finish is 21.44 hours.

- At 99.73% confidence level, the earliest likely finish is 14.09 hours and the latest likely finish is 22.91 hours.

6. Selection of the Preferred Alternative

The earliest likely finish is 15.56 hours and the latest likely finish is 21.44 hours.

7. Reference:

James R. Martin. (n.d.). What is Six Sigma?. Retrieved from http://maaw.info/SixSigmaSummary.htm
Microsoft. (n.d.). CONFIDENCE function. Retrieved from https://support.office.com/en-US/article/CONFIDENCE-function-75CCC007-F77C-4343-BC14-673642091AD6
SirGanttalot, S. (2010, January 6). PMP Exam Preparation: Confidence Levels Based on Standard Deviation (Sigma) Values [Video file]. Retrieved from https://www.youtube.com/watch?v=_3HHSao-b20&spfreload=10
Wikipedia. (2017, November 12). Normal distribution. Retrieved from https://en.wikipedia.org/wiki/Normal_distribution





Comments

  1. Dr. PDGNovember 27, 2017 at 10:09 AM

    Great case study Nasser but your Step 7 is not your references but how are you going to tell if using P95 is or is not working? And to do that, we most often use a STATISTICAL PROCESS CONTROL CHART (SPC) http://www.planningplanet.com/guild/gpccar/risk-opportunity-monitoring-and-control.

    Just be sure to throw out any OUTLIERS that fall outside of +/- 3 Sigma....

    http://www.statit.com/services/SPCOverview_mfg.pdf

    BR,
    Dr. PDG, Jakarta

    ReplyDelete

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