Heidelberg Manufacturing Specifies the Quality Characteristic for One of Its

question 121

Multiple Choice

Heidelberg Manufacturing specifies the quality characteristic for one of its key components to be 154.0" ± 4.0. The cost of failure is estimated to be $8,000 per unit. Using the Taguchi Quality Loss Function (QLF) the firm has estimated the loss, L(x) , at the quality characteristic that the firm has experienced, x, to be $4,500. What is the estimated loss (to the nearest dollar) if the deviation from the value of the quality characteristic doubled?

• A) $4,000.
• B) $9,000.
• C) $16,000.
• D) $18,000.
• E) $32,000.

---

Definitions:

Cost Driver

An activity or factor that incurs costs based on its level of use or consumption, influencing the total cost of production.

Activity Level

A measure of the volume or quantity of production or operations in a business, which can significantly impact costs.

Job Order Cost

The total cost associated with a specific job order, including direct materials, direct labor, and allocated manufacturing overhead.

Process Cost System

An accounting system used to track and assign costs to units of product in continuous, homogenous production processes.