on Tools & Techniques

The problems with the payback period method as a means of analyzing and comparing potential investments extend beyond its problem with the time value of money. In fact, that problem can be corrected (but rarely is in practice) by using a method called the “Discounted Payback Period”, where the future expected cash flows are “discounted” to align them with the present value of the initial investment. But even with that correction, the Payback Period Method is still lacking as a primary return on investment (ROI) analysis tool. [Read more…]

If you’ve ever participated on a project team considering the purchase of a major piece of equipment, you’ve almost certainly heard of “Payback Period” – the length of time projected to recoup an initial investment through cost savings, increase profits, etc. It’s fairly simple to calculate: [Read more…]

As a teenager, my father was a house painter. He started out as a “brush and roller guy”, climbing ladders and cutting in windows. But as his business grew, he caught the attention of commercial developers with large jobs like grocery store ceilings and outfield fences. These can’t be completed with old school tools; they require a sprayer.

I remember my dad walking me through his logic of whether or not to buy a commercial sprayer. I didn’t recognize it then, but he was explaining to me “Break-Even Analysis”. [Read more…]

The deeper you drill into process capability analysis, the more you realize just how many capability indices are available. The two most common capability indices are Cpk and Ppk, and the closely related Cp, Cpu and Cpl, and Pp, Ppu and Ppl, respectively. Cpm is less commonly used, and has a unique way of accounting for the centeredness of a process within its specification limits. (See my past blog posts for extended discussions about all of these.) [Read more…]

One of the more confusing distinctions for quality professionals, especially those working within one of the quality management standards such as IATF 16949 or ISO 13485, is the difference between a Corrective Action Request (CAR) and a Preventive Action Request (PAR). [Read more…]

Metropolises in 2020, like New York and Shanghai, disconcertingly resembled London in 1831, in that a strange new disease passed through the population leaving in its wake confusion, grief and death. 2020 was beginning of Covid-19; 1831, Cholera. [Read more…]