This case is about Corona Data Analysis (CDA) which processes claims for health insurance. CDA has about 90 employees out of which 75% work in the operations side of the business which is also the side of the business we were hired to consult upon. We were hired by the quality manager, Gordon Yu, who was hired by the CEO, Julieanna Sugumar. Gordon Yu has asked us to analyze the defects per unit, DPU, defects per million units , DPMO, and K-sigma quality levels. He has given us important access to the processing data and the number of errors that were made in 5 different categories including name, ss#, address, claim code, and claim date fields. This information has been given to us for the past 6 months along with the actual number of claims taken during each month. Gordon Yu has also asked for some tips on reaching Six Sigma since his boss doesn’t believe it is a good idea and is a waste of money.
DPU is also known as defects per unit which is calculated very easily by taking the total number of the defects that occurred in a process and dividing it by the total number of possible defects which is basically the amount of records in this case. Therefore to calculate DPU for each month in our case we add all the defects that were made in name, address, ss#, claim code, and claim date then we divided this sum by the total number of records for each month. These calculations are really useful because it gives us an understanding of the rate of defects that we have going on. This leads us to the next point which is DPMO.
DPMO is also known as defects per million opportunities which is calculated by taking the DPU(calculated earlier) and multiplying it by 1,000,000. Calculating DPMO gives us a better unders...
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...olved by having training.
In conclusion we have decided that CDA is on the right track and is very close to achieving six-sigma. CDA is very capable and as the calculation showed they are at 3.8 defects per million which is very close to the requirement on 3.4 for six sigma. Also we have identified that the biggest cause of the problem has been the claim code field which is an internal cause that could be solved by having the employees retrained in that area and having reminder posters of the claim codes and examples of what each requirement is for being part of the specific code. CDA has a very bright future ahead and should definitely take the six-sigma challenge for the obvious reasons of higher customer satisfaction, competitive advantage, and the ability of lowering costs by not needing people do the same job twice by having to correct the errors.
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