A Quality Characteristic Has a Manufacturing Specification (In Cm) of 0.200

question 52

Multiple Choice

A quality characteristic has a manufacturing specification (in cm) of 0.200 ± 0.05. Historical data indicate that if the quality characteristic takes on values larger than 0.25 cm or smaller than 0.15 cm, the product fails and a cost of $75 is incurred. Given the Taguchi loss function that was computed and actual process performance of this quality characteristic of 0.135, what is the economic loss per part?

• A) More than $50 but less than or equal to $100
• B) More than $100 but less than or equal to $200
• C) More than $200 but less than or equal to $300
• D) More than $300

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Definitions:

Marginal Revenue

The extra revenue generated by the sale of an additional unit of a product or service.

Profit-maximizing

The process or strategy by which a firm determines the price and output level that returns the greatest profit.

Ethanol

A renewable fuel made from various plant materials, which can be used as an alternative to gasoline.

Market Price

The current price at which an asset or service can be bought or sold in a marketplace.