RK:Quality Methods
Pp A measure of PRECISION
Capability
Definition
Capability is the ability of a process to generate parts within the design specification. Some people use it as a measure of a machine’s quality, so they have a comparison with others.
On the surface it is very simple, which is why so many managers like to communicate the quality of their processes using the capability indices.
When studied in depth, we realise how careful we need to be, so as not to use the wrong variability or the wrong index.
We must also remember that capability is a statistic; calculated using a sample, so there will be confidence intervals around the result which can not be ignored.
Capability is a very complex topic. The RK:QM one day course Capability Masterclass is a good knowledge builder for those already competent in the subject.
Ppk A measure of both PRECISION and ACCURACY.
Capability has its limitations

It is essential the data has come from a stable process. An unstable process is unpredictable, hence any calculation of Pp/Ppk will be very unreliable.

No specifications: use the variability to define appropriate tolerance.

One sided specifications: Only Ppk can be calculated

Nonnormal distributions: Find the distribution (Weibull, Exponential, logistic, etc) which best fits the data.
Or, transform the data in a way that will leave the resulting transformation normal, then analyse using normal techniques. 
Mixing variability from different heads has to be treated specially. Topic covered in RK:QM Masterclass course.

Be careful in collecting samples. Depending on which samples you collect will determine which capability index you produce.

Understand the difference between Potential (a dream if there were no instability and all heads balanced) and Overall (what the customer receives)
Sample Sizes

Pragmatic approach

Take a bunch of samples,

Calculate the Ppk with its confidence limits (Minitab under Options Include confidence limits) .

Add more samples to the study if the lower limit isles than 1.67

Formulae approach

Decide what a reasonable confidence limit around the Ppk is, for example ± 10%

Use the formulae in the download D
Footnote
There is debate in the packaging industry at present, as to whether Capability should be defined by Pp = ƒ {Tolerance, Variability}
or, whether it is more sensible to define tolerance by Tolerance = ƒ {Pp, Variability}