DPMO stands for "Defects per Million Opportunities".
dpmo = (number of defects discovered)number of opportunities for error) X one million
Example:
An airport loses 3 pieces of luggange per month.
The airport handles 8,000 passengers per month; each passenger averages 1.5 bags.
dpmo = (lost luggage/(passengers X number of bags)) x 1,000,000
dpmo = (3/(8,000 X 1.5) X 1,000,000
dpmo = (3/12,000) X 1,000,000
dpmo = .00025 X 1,000,000 = 250
In services, the term "errors per million opportunities (epmo) is often used.