The Desired Target Quality Characteristic of a Product of Hanson

question 78

Multiple Choice

The desired target quality characteristic of a product of Hanson Component Manufacturing is 0.5.The customer-service manager knows that customers are likely to complain when the specification is off the desired quality characteristic by more than 0.025.On average it costs the firm $2,000 to handle and resolve each complaint.The production manager of the Hanson Manufacturing suggests that the company test the product more thoroughly before shipping.The cost of additional testing and adjustments is estimated at $30 per unit.For Hanson,what is the value of k,the cost coefficient in the Taguchi Loss Function?

• A)$5.
• B)$2,000.
• C)$80,000.
• D)$1,600,000.
• E)$3,200,000.

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Definitions:

Long-Run Equilibrium

A state in which all inputs are variable, enabling firms to make adjustments to output and prices to reach a point where no firm desires to change its production or exit the market.

Increasing Cost Industry

An industry in which production costs increase as output expands, often due to limited resources or other constraints.

Increasing-Cost Industry

An industry in which the costs of production increase as more firms enter the market, typically due to limitations in resources.

Decreasing-Cost Industry

An industry in which the average cost of production decreases as the industry grows and output increases.