Developing a performance index with a Poisson process and an exponential distribution for operations management and continuous improvement

The adoption of performance measurements is becoming increasingly widespread and represents the key success factor for companies seeking to gain a sustainable competitive advantage. Consequently, there is a need to develop a systematic method for companies to be more performance-measurement focused. This study presents an operating performance index (OPI) based on the concept of customers arriving at a store from a Poisson process and an exponential distribution. To support the efficient use of the proposed method, the statistical properties of OPI are given and a step-by-step operating procedure is constructed. The proposed method can not only evaluate and determine whether the current performance meets the level of Six Sigma, but also improve the precision when estimating a parameter. To validate the application and viability of the proposed method, it is applied to a realistic case study for operating performance measurement and improvement. The results reveal that the proposed method provides a more effective way to achieve Six Sigma, and that it can easily be implemented in practice for operations management and continuous improvement.