Case Study: Applying Six Sigma to Cricket

Case Study: Applying Six Sigma to Cricket

Mike was the best batsman in the Club Acme cricket team. The probability of Club Acme’s winning a match was higher when he batted well and scored more runs. His batting form had been declining the past few months, however,affecting the team’s win percentage and revenues. Improving Mike’s consistency with the bat would help the team win more matches. The team hired a Lean Six Sigma Black Belt to analyze the factors affecting Mike’s batting and develop an improvement plan. A project team was formed with the chief batting coach as the project leader.

Problem Statement

The average number of runs scored by Mike per inning was 32.5 for the last 50 matches (January 2011 to December 2011) compared to his benchmarked 40 runs per inning. Team won only 36 percent of the matches they played in the same timeframe. (See Figure 1.)

Process Capability

Forty runs in a completed inning was the benchmark and set as the lower specification limit (LSL) for assessing process capability. Any complete innings in which Mike scored fewer than 40 runs was considered a defect. Mike played 50 matches in 2011 and as he usually batted at the top of the batting order, he was dismissed in all 50 matches. He scored more than 40 runs in only 14 out of 50 innings.

Figure 1: Run Chart of Runs

Batting Statistics for Mike in 2011

The project team determined the improvement target by using the 1-sample percent-defective test

Figure 2: Summary of 1-Sample Percent Defective Test

The 1-sample percent-defective test compared Mike’s current defective rate to a target of 50 percent. With a 0.05 level of significance and a calculated p-value of 0.001, the test verified statistically that Mike’s current percent defective was greater than 50 percent. At a 90 percent confidence level, the true percent defective was between 59.74 percent and 82.21 percent. (The confidence interval (CI) quantifies the uncertainty associated with estimating the percent defective from the sample data.) The team concluded that if Mike scored 40 runs or more in 50 percent the matches played, it would be a statistically significant improvement.

Root Cause Analysis of Batting Performance

The team analyzed data for all of the innings in which Mike scored fewer than 40 runs. In 30 out of 36 defective innings (83 percent), Mike was dismissed for fewer than 20 runs. Once Mike crossed 20 runs, the probability of playing a longer inning was high – he was dismissed only 6 times between 20 and 40 runs out of the overall 50 completed innings. Why was Mike dismissed so often before scoring 20 runs?

The team used a Pareto chart to identify the dismissal types when:

 Mike scored fewer than 20 runs

 Mike scored more than 20 runs

Figure 3: Types of Dismissals for Innings with Fewer Than 20 Runs

Figure 4: Types of Dismissals for Innings with More Than 20 Runs

Being caught behind was the most frequent cause for dismissal when Mike scored fewer than 20 runs: 50 percent compared to 10 percent when he scored more than 20 runs. Why was Mike getting caught by the keeper and the slip fielders so often at the start of his innings? Club Acme’s statistician provided the shot data for Mike as shown in Figure 5.

Figure 5: Type of Stroke Relating to Type of Shot Played 

(Left = Type of Stroke, Right = Attacking Shot Played)

Of Mike’s caught behind dismissals at the start of his innings, 67 percent occurred while he was playing attacking strokes. In particular, the attacking shots (a subset of attack strokes) that contributed most often to the caught behind dismissals were three types of high-risk shots: hooks, pulls and upper cuts. A Closer Look at the Shots The team analyzed the success of these shots played by Mike at the start of his innings and later in the games. By looking at Mike’s historical strike rate, it was clear that he used to play 25 balls to score 20 runs. The team tested the success of his hook, pull and upper cut shots during the first 25 balls played by Mike in comparison to shots played after 25 balls. The strike rate for balls 26 and higher was almost double compared to the first 25 balls. compared to 10 dismissals out of 28 attempts in the first 25 balls, Mike was dismissed just 4 times in 117 attempts after playing 25 balls.

The conclusion from this analysis was that Mike had to avoid playing those higher-risk shots in the initial stages of his innings.

Other Inputs for Batting

In a brainstorming session, the project team identified the various factors related to runs being scored and created the cause-and-effect diagram shown in Figure 6. Items highlighted in red are the ones deemed to be most critical and that were investigated further.

Figure 6: Factors Related to Runs Scored

The project team did not find any difference in Mike’s performance when batting first or when chasing a target. His performance on flat pitches, however, was better compared to green pitches. What was affecting Mike’s batting while playing on green pitches? The batting coach suggested the team look at the type of bat Mike used and his batting position. While the type of bat used (light or heavy) did not have any measurable impact, Mike performed better on green pitches when he was not required to open the batting (bat first) and face the new ball bowlers. On green pitches, his batting average in fourth position was 52.6 compared to 12.1 when Mike opened the batting, a statistically

significant difference (Figure 7).

Figure 7: Pitch Versus Batting Position

The project team collected data for Mike’s batting and shot selection against different types of bowlers. Shots played by Mike that did result, or could have resulted, in a dismissal were identified as false or risky and termed “defective.”

The proportion of defective shots was contrasted against the total number of balls played against each type of bowler. As shown in Table 3 and Figure 8, there were differences among the percent defectives for different bowling types at a 0.05 level of significance (p-value: 0.000). From the analysis, it was concluded that Mike played more false or risky shots while playing left-arm seam bowlers (21.48 percent) in comparison to other bowlers such as right-arm seam

bowlers and spinners.

Figure 8: Percent Defective Comparison Chart

The chief batting coach analyzed video footage of Mike batting against left-arm seam bowlers. Mike played a left-arm seam with a closed stance, similar to what he used for right-arm seam bowlers. The orthodox stance blocked him before he played a shot, and he ended up playing around his front pad (protective clothing). He also kept his back swing too straight, playing across the line (moving laterally to the incoming ball) and ended up chest-on to the ball.

Mike was advised to play left-arm seam with an open stance and wider back-lift. With an open stance, he could better align himself up to the incoming ball. For a wider back-lift, he had to pick his bat over the off stump or the first slip area (angle of the bat while playing the ball changes depending upon the starting position of the bat) rather than over the middle stump.

The Improvement Plan

After the analysis was complete, the project team summarized its results and made its improvement

recommendations for Mike and Club Acme.

Table 4: Action Plan

Project Outcome and Benefits

The action plan recommended by the Black Belt and the project team helped improve Mike’s batting consistency. He scored an average of 49.32 runs per inning in the 28 innings of the first six months of 2012 compared to his previous baseline average of 32.52 runs per inning, as shown in Figure 9. In addition, Club Acme improved its win rate to 54 percent (16 out of 28).

Figure 9: Batting Improvement Project Results

Things To Consider Before Investing In An IPO

IPOs or Initial Public Offers are means by which a company can raise debt free capital through sharing the ownership and profits. There have been many companies opting for the IPO route over the last two decades. There have also been many big success stories with people making decent profits through these investment tools. However, there are always some items to consider when investing in an IPO that can reduce the risk in this. 

IPO Basics

As the company starts growing, there is a time when it needs huge capital to take it to the next level of growth. Some companies decide to raise debt to get this capital; others opt for profit sharing without adding to the debt. The second option is the IPO route. In effect, when you invest in an IPO you are opting for part of its profits and losses too! So you need to be very selective on which companies you want invest in.

No History

It's hard enough to analyze the stock of an established company. An IPO company is even trickier to analyze since there won't be a lot of historical information. Your main source of data is the red herring, so make sure you examine this document carefully. Look for the usual information, but also pay special attention to the management team and how they plan to use the funds generated from the IPO.

And what about the underwriters? Successful IPOs are typically supported by bigger brokerages that have the ability to promote a new issue well. Be more wary of smaller investment banks because they may be willing to underwrite any company.

Studying the Company

A good starting point for your IPO analysis is to look at the financial reports of the company for as many years as possible. One thing that every company must publish is its total debt and total asset value. As long as the asset value is more than the debt, you know that enterprise can pay off its debts so it would survive. Also look at the difference in the assets value and debt which in effect is like the company value. Check what is the effective company value based on the IPO price and number of shares. If the IPO price is less than this value you are in for good profits on listing. 

Besides value, another good indicator is the company growth seen in the profits it has made over the past few years. Sometimes the enterprise is new, so its current value is less, but a strong growth pattern would be that its value is going to increase in future so it is a good longer term investment. 

Third important thing to look at is whether the company is stuck in some legal tangles. Typically, if the verdict goes against it, it would affect its finances and more importantly the stock price in the market. You could lose lot of money, in that case. So study these aspects well before investing. 

Lastly, analyse its market standing among the peers. If you use its products, you know it is a good company and you can invest with lesser risk. But if it is an unheard commodity, you need to be cautious.

The Lockup Period

If you look at the charts following many IPOs, you'll notice that after a few months the stock takes a steep downturn. This is often because of the lockup period.

When a company goes public, the underwriters make company officials and employees sign a lockup agreement. Lockup agreements are legally binding contracts between the underwriters and insiders of the company, prohibiting them from selling any shares of stock for a specified period of time. The period can be anything from 3 to 24 months. The problem is, when lockups expire all the insiders are permitted to sell their stock. The result is a rush of people trying to sell their stock to realize their profit. This excess supply can put severe downward pressure on the stock price.

Flipping

Flipping is reselling a hot IPO stock in the first few days to earn a quick profit. This isn't easy to do, and you'll be strongly discouraged by your brokerage. The reason behind this is that companies want long-term investors who hold their stock, not traders. There are no laws that prevent flipping, but your broker may blacklist you from future offerings or just smile less when you shake hands.

Of course, institutional investors flip stocks all the time and make big money. The double standard exists and there is nothing we can do about it because they have the buying power. Because of flipping, it's a good rule not to buy shares of an IPO if you don't get in on the initial offering. Many IPOs that have big gains on the first day will come back to earth as the institutions take their profits.

Avoid the Hype

It's important to understand that underwriters are salesmen. The whole underwriting process is intentionally hyped up to get as much attention as possible. Since IPOs only happen once for each company, they are often presented as "once in a lifetime" opportunities. Of course, some IPOs soar high and keep soaring. But many end up selling below their offering prices within the year. Don't buy a stock only because it's an IPO - do it because it's a good investment.

Conclusion

Besides these points, other items that could affect the IPO price on listing are market sentiments, the economic outlook, general industry news, etc. These are so dynamic that they cannot be used a guidelines, and you need to go with the market flow. 

In short, investing in IPOs is risky, but with careful analysis you can reduce the risk. For this there are some items to consider when investing in an IPO. As long as you do your homework, the risks are limited.

References

1. http://ezinearticles.com/?Think-Long-Term-When-Investing-in-an-IPO&id=4400955

Ice cream and General motors - A case study

Ice cream and General motors - A case study 

This is the case of a Vanilla Ice Cream that puzzled General Motors!

Read on to learn about this interesting case study story that teaches you never to underestimate your Client's Complaint, no matter how funny it might seems.

It is said, this is a real story that happened between the customer of General Motors and its Customer -Care Executive.

A complaint was received by the Pontiac Division of General Motors:

'This is the second time I have written to you, and I don't blame you for not answering me, because I sounded crazy, but it is a fact that we have a tradition in our family of Ice-Cream for dessert after dinner each night, but the kind of ice cream varies so, every night, after we've eaten, the whole family votes on which kind of ice cream we should have and I drive down to the store to get it. It's also a fact that I recently purchased a new Pontiac and since then my trips to the store have created a problem.....

You see, every time I buy a vanilla ice-cream, when I start back from the store my car won't start. If I get any other kind of ice cream, the car starts just fine. I want you to know I'm serious about this question, no matter how silly it sounds "What is there about a Pontiac that makes it not start when I get vanilla ice cream, and easy to start whenever I get any other kind?" The Pontiac President was understandably skeptical about the letter, but sent an Engineer to check it out anyway.

The latter was surprised to be greeted by a successful, obviously well educated man in a fine neighbourhood. He had arranged to meet the man just after dinner time, so the two hopped into the car and drove to the ice cream store. It was vanilla ice cream that night and, sure enough, after they came back to the car, it wouldn't start.

The Engineer returned for three more nights. The first night, they got

chocolate. The car started. The second night, he got strawberry. The car started. The third night he ordered vanilla. The car failed to start.

Now the engineer, being a logical man, refused to believe that this man's car was allergic to vanilla ice cream. He arranged, therefore, to continue his visits for as long as it took to solve the problem. And toward this end he began to take notes: He jotted down all sorts of data: time of day, type of gas uses, time to drive back and forth etc.

In a short time, he had a clue: the man took less time to buy vanilla than any other flavour. Why? The answer was in the layout of the store. Vanilla, being the most popular flavor, was in a separate case at the front of the store for quick pickup. All the other flavors were kept in the back of the store at a different counter where it took considerably longer to check out the flavor.

Now, the question for the Engineer was why the car wouldn't start when it took less time. Eureka - Time was now the problem - not the vanilla ice cream!!!!  The engineer quickly came up with the answer: "vapour lock".

It was happening every night; but the extra time taken to get the other flavours allowed the engine to cool down sufficiently to start. When the man got vanilla, the engine was still too hot for the vapour lock to dissipate.

Even crazy looking problems are sometimes real and all problems seem to be simple only when we find the solution, with cool thinking. Don't just say "problem is at the other end or it is  IMPOSSIBLE" without putting a sincere effort.In the end, what really matters is your attitude and your perception.

Moral of the Story is "Try to Fix the Bug instead of making it as a Known Issue.