Pandra Manufacturing Specifies the Quality Characteristic of One of Its

question 119

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.

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Definitions:

Activity-based Costing

A costing method that assigns overhead and indirect costs to specific activities related to production.

Departmental Overhead Rates

The method for allocating overhead costs to specific departments based on relevant allocation bases, such as labor hours or machine hours.

Budgeted Activity Rate

The estimated rate or cost of business activities based on the budget for a specific period, often used for forecasting and planning purposes.

Reciprocal Services Method

A method of allocating service department costs to producing departments by considering the interdepartmental exchanges of services.