Zone of Tolerance: Definition & Example

Zone of Tolerance: Definition & Example
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  • 0:00 Zone of Tolerance
  • 1:52 Lower Limit and Upper Limit
  • 3:01 Why Shouldn't We Pay…
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Lesson Transcript
Instructor: Dr. Douglas Hawks

Douglas has two master's degrees (MPA & MBA) and is currently working on his PhD in Higher Education Administration.

You've probably heard a survey or poll reported with a margin of error. In this lesson, we'll learn why it isn't always cost-effective to make something perfect, and thus, why it is important to define a zone of tolerance.

Zone of Tolerance

Whether we are measuring customer service, the weight of a 70-pound punching bag, or the ounces in a 20-ounce soda, perfection is very difficult - and expensive - to achieve. Thus, while perfection is a great goal, we typically can't expect perfection in everything.

This begs the question, How close do we need to be to 'perfect' to be acceptable? Well, we answer that question by defining the zone of tolerance, the amount of error around the goal metric (perfection) that we, and the customers, can consider acceptable.

It's important to remember that the zone of tolerance will depend on what we are producing. Let's use some examples - something that's really important to people and that they'll be very demanding about - chocolate! And, for a slightly more serious and important example, we'll use heart medication.

With chocolate chips, we probably have a little bit more flexibility with our zone of tolerance than we do if we are a pharmaceutical company making prescription drugs. Telling customers they are buying 16 ounces of chocolate chips when they really get 15.8 - 16.2 ounces is probably okay by everyone, but when a customer needs to take 1 milligram of heart medicine, our zone of tolerance may be +/- .005 milligrams, so we can make pills from .995 - 1.005 milligrams.

Let's look at a graphic to get a good visual example of a zone of tolerance.

Zone of Tolerance Graphic

There is some desired, perfect point, but around that point is a zone of tolerance in which all values are acceptable. In this graphic, our 'perfect point' falls somewhere in this area, labeled 'Customer Expectations.' Of course, if we exceed their expectations, that will probably be tolerated by most customers. Notice that I said exceed their expectations, and not exceed the quantity they expect - that's an important distinction.

Lower Limit and Upper Limit

In our chocolate chip example, 16 ounces would be the goal, but 15.8 would be the lower limit and 16.2 would be the upper limit. However, do not assume that the lower limit is more important than the upper limit. Often, it becomes easy to think that customers are okay with getting more than what they paid for and sometimes that is the case, but sometimes it is not.

As in our medication example, sometimes it's just as important to have a strict upper limit as it is to have a strict lower limit. Another example would be shoes. If a customer is expecting a size 12 shoe and they get what would measure to be about a 12.2, the extra .2 isn't going to be 'extra' in the mind of the customer!

On the flip side, there are cake and muffin mixes sold that all you have to do is add wet ingredients, mix it all up, and pop it in the oven. If each bag contained more mix, the extra flour, sugar, salt, and other ingredients could upset the balance of the recipe. Given enough extra dry ingredients, you'd have to add extra wet ingredients to get your muffins to come out just right - a headache that consumers don't want to have to deal with.

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