Regression Between Defect Rate and Per Unit $ Value

Six Sigma – iSixSigma Forums General Forums Tools & Templates Regression Between Defect Rate and Per Unit $ Value

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    Hi Members,

    I am trying to conduct analysis between a forecast defect rate and TCQ/Unit cost.
    Can we conduct regression analysis between the above two.
    Usually $ values are never used in regression.
    Looking forward to thoughts from the forum.



    Robert Butler

    Yes you can. There are no restrictions on the distributions of the X’s or the Y’s in a regression analysis. As for “never” using dollar values in a regression equation – how would you propose to identify an optimum combination of ingredients for, say a plastic compound, such that the dollar cost per pound was minimized other than using the X’s to predict the final dollar cost. In short – perhaps someone has told you this is never done but whomever offered that opinion is wrong.


    Mike Carnell

    @rbutler Robert “whomever offered that opinion is wrong.” Very nice. You are always to tactful (generally). Had to smile when I saw this one.


    Chris Seider

    usually $ values not used in regression? ….why not

    anyways, I would expect COQ to have at least be part of a multiple regression with parts or $ since the basic COQ would involve them in the calculation. Of course, maybe the COQ could be “recorded wrong” or have bad assumptions.



    Technically speaking, you can use any parameter in regression, dollar value is no exception. However, the question is how useful is the $ value when you run the regression for processes.
    Remember, $ value is a derived parameter based on consumption and unit rate. Hence, its always useful to apply some caution with $ figures as they can get confounded.

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