Quadratic loss function, Managerial Accounting

Assignment Help:

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.


Related Discussions:- Quadratic loss function

Case study, Anderson Nuclear Power Plant will be "mothballed" at the end of...

Anderson Nuclear Power Plant will be "mothballed" at the end of its useful life (approximately 20 years) at great expense. The expense recognition principle requires that expenses

Determine the profitability ratios, Profitability ratios The primary ob...

Profitability ratios The primary objective of a business under taking is to earn profits. Profit earning is considered necessary for the survival of the business. A business re

Determine the internal factors of pricing decision, Determine the Internal ...

Determine the Internal factors of pricing decision 1) Organization factor: pricing decision occur on two level in the organization. Overall price strategy is dealt with by to

HELP , ) Allgood Inc. has fixed costs of $480,000. It has a unit selling pr...

) Allgood Inc. has fixed costs of $480,000. It has a unit selling price of $6, unit variable cost of $4.50, and a target net income of $1,500,000. HOW TO COMPUTE

Business application, Conceptual understanding: defining in identifying rel...

Conceptual understanding: defining in identifying relevant information Business application - Dave burgers is in the fast food restaurant business. One component of it's market

Representation of simplex method, Representation of Simplex method We s...

Representation of Simplex method We shall use the example previously stated for the graphical solution. The standard form of the model is given by: Maximize :  Z = 3X E + 2

Profi t Planning, SK 2 Chapter 10: Master budgeting Objective How organisat...

SK 2 Chapter 10: Master budgeting Objective How organisations strive to achieve their financial goals by preparing a number of budgets that together form an integrated business pla

Predetermined Overhead Rate, Logan Products computes its predetermined over...

Logan Products computes its predetermined overhead rate annually on the basis of direct labor hours. At the beginning of the year, it estimated that 39,000 direct labor-hours would

Define materials cost variance, Define Materials cost variance Material...

Define Materials cost variance Material cost variance (MCV) is the difference between the standard cost of material specified and the actual cost of materials used." It is the

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd