North Platt Machinery Company manufactures a shaft that must fit inside a sleeve. The firm has just
Question:
North Platt Machinery Company manufactures a shaft that must fit inside a sleeve. The firm has just received an order of 50,000 units from Southernstar Exploration Company for $80 per unit. North Platt can manufacture the shaft at $50 per unit. Southernstar desires the diameter of the shaft to be 1.275 cm. The diameter of the shaft must not be less than 1.25 cm, in order to fit properly inside the sleeve. To be able to insert the shaft into a sleeve without the use of force, the diameter cannot be larger than 1.30 cm. A defective shaft is discarded and a replacement has to be shipped via express freight to locations around the world. North Platt estimates that the average cost of handling and shipping a replacement shaft will be approximately $70. Shown below are the diameters from a sample of 80 shafts manufactured during a trial run.
X (diameter) | Frequency | |||
1.232 | 1 | |||
1.240 | 2 | |||
1.250 | 3 | |||
1.258 | 2 | |||
1.262 | 2 | |||
1.270 | 3 | |||
1.272 | 6 | |||
1.273 | 6 | |||
1.274 | 7 | |||
1.275 | 18 | |||
1.276 | 8 | |||
1.277 | 5 | |||
1.280 | 2 | |||
1.288 | 2 | |||
1.292 | 2 | |||
1.293 | 1 | |||
1.294 | 4 | |||
1.298 | 2 | |||
1.300 | 2 | |||
1.304 | 1 | |||
1.320 | 1 | |||
80 | ||||
Manufacturing Cost per Unit = | $50.00 | |||
Handling/Shipping Costs for Repl. = | $70.00 | |||
Total quality cost = | $120.00 | |||
Target quality level = | 1.275 | cm | ||
Max. diameter allowed = | 1.300 | cm | ||
Tolerance = | 0.025 | cm | ||
Taguchi cost coefficient, k = | $192,000 |
Required
Set up an Excel spreadsheet that uses a Taguchi loss function to determine:
1. The expected loss from this process.
2. The diameter tolerance that should be set for the manufacture of theshaft.
Step by Step Answer:
Cost management a strategic approach
ISBN: 978-0073526942
5th edition
Authors: Edward J. Blocher, David E. Stout, Gary Cokins