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CMA Final · Strategic Cost Management · Quality Cost Management

Under the Taguchi quality loss function, the loss to society is L = k(y - T)^2, where y is the actual measure and T is the target. For a shaft with target diameter 50 mm, a unit that deviates by 0.5 mm costs Rs. 40 in loss. What is the loss for a shaft measuring 50.3 mm?

The loss is Rs. 14.40. The Taguchi function is quadratic, so k is 40 divided by 0.25, giving 160, and the loss for a 0.3 mm deviation is 160 times 0.09. Treating loss as linear would wrongly give Rs. 24.

  1. ARs. 14.40Correct
  2. BRs. 24.00
  3. CRs. 8.00
  4. DRs. 16.00

Explanation

k = 40 / (0.5)^2 = 160. Loss at 0.3 mm deviation = 160 x 0.09 = Rs. 14.40. Rs. 24 results from wrongly treating the loss as linear (40 x 0.3/0.5).

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