Confusion over calculating Cpk by two different methods is one reason that a new index, Ppk, was developed. Ppk uses the calculated sigma from the individual data.Given that Ppk uses the calculated sigma, it is no longer necessary to use the calculated sigma in Cpk. The only acceptable formula for Cpk uses the estimated sigma.
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http://www.6sq.net/cdb/pic/Oon2_formula.bmp)
Which value is best to report, Cpk or Ppk? Although they show similar information, they have slightly different uses.Estimated sigma and the related capability indices (Cp, Cpk, and Cr) are used to measure the potential capability of a system to meet customer needs. Use it when you want to analyze a system's aptitude to perform.Actual or calculated sigma (sigma of the individuals) and the related indices (pp, Ppk, and Pr) are used to measure the performance of a system to meet customer needs. Use it when you want to measure a system's actual process performance.