Pandra Manufacturing Specifies the Quality Characteristic of One of Its

Multiple Choice

Pandra Manufacturing specifies the quality characteristic of one of its popular products to be 0.500" ±0.020. An analysis of company records for the last two years suggests that the average cost for warranty repair or replacement is $125.00 per unit. The customer service manager believes that the product is likely to fail during the warranty period when the quality characteristic exceeds on either side of the target of 0.500 the tolerance of 0.020.

Using a Taguchi quality loss function (QLF) for this company, what is the amount of the estimated loss (to four (4) decimal places) when the actual quality characteristic, x, is 0.505?

A) $0.3906.
B) $7.8125.
C) $19.5313.
D) $125.0000.
E) $1,562.5000.