Quadratic loss function, Managerial Accounting

Consider the following quality data for three different manufacturers of automobile weather-strips:

Weather-strip Bulb Dimension

Specification y=20 +or- 4mm

 

supplier

mean

variance

Cp

Cpk

%Defects

$Defects

Warranty Cost ($)

I

20.0

(4/3)2

1.0

1.0

0.270

 

 

II

18.0

(2/3)2

2.0

1.0

0.135

 

 

III

17.2

(2/5)2

3.33

1.0

0.135

 

 

Assume a customer loss per defective unit of $1450; cost of the weather-strip is $150, and a customer specified functional tolerance of ?0 = ± 5mm.  Assume the annual production rate is 200,000 units.

1. Confirm the entries in the %Defects column.

2. Calculate the $Defects for each supplier, and fill in the table.

3. Using a quadratic loss function of the form:

Average Loss = k [ s2 + ( mean - target )2

calculate the $ loss due to variation, and fill in the table.

4. What is the sigma level for each supplier?

5. What is the value of manufacturing specifications to customers?

6. Select the best supplier, and explain your choice.

Posted Date: 3/11/2013 3:54:36 AM | Location : United States







Related Discussions:- Quadratic loss function, Assignment Help, Ask Question on Quadratic loss function, Get Answer, Expert's Help, Quadratic loss function Discussions

Write discussion on Quadratic loss function
Your posts are moderated
Related Questions
Explain the Investment versus Speculation? In brief describes the following terms: a) Investment versus Speculation. b) Active and Passive Equity Management c) Systematic v

Issa Company manufactures a personal computer designed for use in schools and markets it under its own label. Issa has the capacity to produce 25000 units a year but is currently p

After determining the amount of working capital as in above, a specific amount say 5 percent or 10 percent may be added to cover contingencies. This is to be noted that facts depen

Activity Based Costing (ABC) differs from Absorption Costing (AC) in the manner in which overheads are charged to units. ABC charges overheads to units based on their proportion

Accounting Method is the method by which income and expenses are accounted for taxation purposes. The Internal Revenue Service needs taxpayers to select an accounting method that p

Use of Budgetary controls Budgetary controls are used for the following reasons: 1) To state the objectives of the organization as a whole. 2) To reveal the extent by whi

Identify whether each of the following transactions involves spot exchange, contract, or vertical integration. For the last item if the contract length is optimal or suboptimal.

X's Strategy X will like to divide his play between his rows in such a way that his expected winnings or losses when Y plays the first column will be equal to his expected winn

Describe Benchmarking It is the process of measuring products service or activities against the best level of performance which may be found either inside or outside the organi

Suppose the spot price of gold is $1700 per ounce. The futures price for delivery in six months is $1712, while the futures price for delivery in one year is $1720. The interest ra