The desired target quality characteristic of a product of Hanson Component Manufacturing is 0.500. The customer-service manager knows that customers are likely to complain when the specification is off the desired quality characteristic by more than 0.025. On average, it costs the firm $2,000 to handle and resolve each complaint. The production manager of the Hanson Manufacturing suggests that the company test the product more thoroughly before shipping. The cost of additional testing and adjustments is estimated at $30.00 per unit.

Assume that based on the company's cost information, tolerance is set at 0.0009. What should the target specification ("target specs") for the product be, to four decimal places?
A) 0.025 +/− 0.0300
B) 0.025 +/− 0.0090
C) 0.500 +/− 0.0300
D) 0.500 +/− 0.0009
E) 0.500 +/− 0.0081

Question

The desired target quality characteristic of a product of Hanson Component Manufacturing is 0.500. The customer-service manager knows that customers are likely to complain when the specification is off the desired quality characteristic by more than 0.025. On average, it costs the firm $2,000 to handle and resolve each complaint. The production manager of the Hanson Manufacturing suggests that the company test the product more thoroughly before shipping. The cost of additional testing and adjustments is estimated at $30.00 per unit.

Assume that based on the company's cost information, tolerance is set at 0.0009. What should the target specification ("target specs") for the product be, to four decimal places?

Assume that based on the company's cost information, tolerance is set at 0.0009. What should the target specification ("target specs") for the product be, to four decimal places?
A) 0.025 +/− 0.0300
B) 0.025 +/− 0.0090
C) 0.500 +/− 0.0300
D) 0.500 +/− 0.0009
E) 0.500 +/− 0.0081

Quizplus · Accepted Answer

The tolerance given in the question is 0.0009, which means the acceptable range for the specification is +/- 0.0009 from the desired quality characteristic of 0.500. Therefore, the target specification should be 0.500 +/- 0.0009 = 0.4991 to 0.5009. This range is much smaller than the range of +/- 0.025 where customers are likely to complain, so the additional testing and adjustments cost would be worth it. None of the other choices take into account the given tolerance and/or do not result in an acceptable range for the specification.

The Desired Target Quality Characteristic of a Product of Hanson