The following slides show how to calculate DPMO, which stands for Defects Per Million Opportunities. DPMO levels the playing field when assessing process quality levels by taking the number of opportunities for defects into account.
In this simplified example, an order entry team is entering four different fields when an order is called in: customer name, address, model number, and credit card. Thus there are four opportunities for a defect to occur.
Analyzing the data after 1,000 orders are taken (this could be any number), the team records the defects in the following grid. Twenty orders actually had two defects, where both the customer name and address were incorrect.
In the above case, there were 4,000 opportunities for defects to occur: 1,000 orders multiplied by four possible defects per order taken. DPMO is calculated by dividing total defects observed by total opportunities for defects, and multiplying by a million:
For a product example and detailed explanation of inputs and calculations, see the DPMO product example.
See The Best DPMO Excel Template page to download a useful template that includes a sigma-level calculation.
For arguments against using DPMO, The Case Against DPMO.