Methods for analysing variation in multistage manufacturing processes in or
der to identify stages which contribute most to variation in the final prod
uct are a valuable prioritization tool in variation reduction studies. Howe
ver, when the data are observed with significant measurement error, substan
tial biases which mislead the investigator can result. In addition, methods
of interval estimation and diagnostic model checking are needed for proper
application of these methods, In this paper, we present methods that incor
porate measurement error and discuss both maximum likelihood estimation and
a simpler "naive" method that is much easier to implement. We then give me
thods of developing confidence intervals, either in the presence or absence
of measurement error, Finally, we discuss techniques for model checking.