Cost Management: A Strategic Emphasis 7th Edition by Edward Blocher,David Stout ,Paul Juras,Gary Cokins

Exercise 70

Taguchi Loss Function [L(x)] Analysis Duramold specializes in manufacturing molded plastic panels to be fitted on car doors. The blueprint specification for the thickness of a high-demand model calls for 0.1875 ± 0.0025 inch. It costs $120 to manufacture and $150 to scrap a part that does not meet these specifications. The thickness measure for the unit just completed is 0.1893 inch.
Required
1. Use the Taguchi loss function, L ( x ), to determine:
a. The value of the cost coefficient, k.
b. The amount of loss for the unit, L ( x = 0.1893).
2. Assume that Duramold can eliminate the uneven thickness by adding a production worker, at the critical production point, for $6 per unit. Under this assumption:
a. At what tolerance should the panels be manufactured Show calculations.
b. What should be the production specification for these panels