The Upper and Lower Specification Limits for a Component Are

question 124

Multiple Choice

The upper and lower specification limits for a component are 0.150 cm. and 0.120 cm., respectively. The process standard deviation is 0.003 cm. and the process average is 0.138 cm. What conclusion can be drawn?

• A) The specifications should be changed to 0.141 and 0.135, respectively.
• B) The process average is out of statistical control.
• C) The process is not capable.
• D) The process is capable.

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Definitions:

Incremental Analysis

The process of comparing the additional costs and benefits of different alternatives in order to make decisions.

Unprofitable Segment

A division or business unit within a company that consistently generates losses instead of profits, affecting the overall financial health of the company.

Manufacturing Variances

Differences between the actual costs and standard (expected) costs incurred during production, which can be categorized into material, labor, and overhead variances.

Incremental Analysis

The process of identifying the financial data that changes under alternative courses of action, used for decision-making in business.