Maurice Tutor

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    Argosy University/ Phoniex University/
    Nov-2005 - Oct-2011

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    Phoniex University
    Oct-2001 - Nov-2016

Category > Accounting Posted 22 Jul 2017 My Price 11.00

TAGUCHI LOSS FUNCTION

QUALITY COST REPORT, TAGUCHI LOSS FUNCTION

Marlene Briggs, president of Shorts Company, was concerned with the trend in sales and profitability. The company had been losing customers at an alarming rate. Furthermore, the company was barely breaking even. Investigation revealed that poor quality was at the root of the problem. At the end of 2007, Marlene decided to begin a quality improvement program. As a first step, she identified the following costs in the accounting records as quality related:

 

2007

Sales (400,000 units @ $100)

$40,000,000

Reinspection

1,200,000

Downtime (due to defects)

1,600,000

Vendor certification

480,000

Consumer complaints

800,000

Warranty

1,600,000

Test labor

1,200,000

Inspection labor

1,000,000

Design reviews

120,000

Required:

1. Prepare a quality cost report by quality cost category.

2. Calculate the relative distribution percentages for each quality cost category. Comment on the distribution.

3. Using the Taguchi loss function, an average loss per unit is computed to be $15 per unit. What are the hidden costs of external failure? How does this affect the relative distribution?

4. Shorts’s quality manager decided not to bother with the hidden costs. What do you think was his reasoning? Any efforts to reduce measured external failure costs will also reduce the hidden costs. Do you agree or disagree? Explain.

Answers

Maurice Tutor
(5)
Status NEW Posted 22 Jul 2017 09:07 PM My Price 11.00

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