827956 NUR FATIN BINTI MOHAMAD ATAN

OTEM/BJMP5023/A202

BJMP5023
OPERATIONS AND TECHNOLOGY MANAGEMENT
CHAPTER 6 DESIGNING GOODS AND SERVICES

 Sub-Topic: Taguchi Loss Function

EXERCISE #1
Face Datume Enterprise processes ‘Dark Turmeric’ as one of the raw materials for
cosmetic product produce by Sophie Laurentia Inc. in London. They pack the
material weighing 200gm per unit with a range of 15gm (plus minus). Any return of
the product will be cost at $400 per unit. Currently a unit of the product weighs about
198gm. On average the company has exported almost 12,000 units per term in
2019. Calculate the total losses through the TFL method.

WARRANTY COST = $400

TARGET = 200GM
TOLERANCE = 15GM
ACTUAL = 198GM
UNITS = 12000 PER TERM
= 12000 X 2 = 24000 PER YEAR

K = 400 K = 1.78
(15)2

L(x) = 1.78 (198 – 200)2

= 7.12

The total lost = 24000 x 7.12 = $ 170,880

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OTEM/BJMP5023/A202

EXERCISE #2
Berat Enterprise produces approximately 5,500 begs of cement in 2018. Suppose
each beg follows the industrial specification of 50 kg. The customers are willing to
accept the product if the weight is not less than plus minus of 200gm. Cost for any
return product will be charged $20 per beg. Currently the actual weight of the product
is around 50.35kg. Find
T = 50KG, L(X) = 2,
TOLERANCE ALLOWED = 0.2
ACTUAL PRODUCT WEIGHT = 50.35KG

(a) The value of k

K = Total Quality Cost

(Tolerance Allowed)2
K = 20 K = 500
0.22

(b) TFL
L(x) = 500 (x-T)2
L(50.35) = 500(50.35 – 50)2
= 61.25

(c) The total lost

61.25 x 5500 = $ 336,875

(d) TFL and total lost if the actual product is 49.35kg

L(49.35) = 500 (49.35 – 50)2

= 211.25
= 211.25 x 5500
= $ 1,161,975

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OTEM/BJMP5023/A202

EXERCISE #3
ITZ Enterprise manages e-Hailing services in Rentaki Island.
Usually they can accept the customers’ complaints about (plus
minus) 5 per month. The company will be charged approximately
$350 per complaint. In 2019, they have received averagely 20
complaints. But in November, the complaint was 40% more than
usual. Find

(a) The value of k

k = the cost coefficient, determine by the firm’s failure cost

Total quality cost (A) @ L(x) = $350 per complaint

Tolerance allowed (d) @ (x-T) = ± 5 per month

Formula: L(x) = k (x-T) ²

k= @ k= k= = $14

(b) The TFL in November

Formula: L = k (y-m)² k = $14

m = the average number of complaint received per month

m = 20 complaints
y = the number of complaint in November
y = 20 + [40% x 20]
= 28 complaints
In November, the complaint was 40% more than usual

L = 14 ( 28 – 20 )²
L = $896
The TFL in November is $896 with 28 complaints received.
(c) TFL in December 2019 if they received 13 complaints.
Formula: L = k (y-m)² k = $14

m = the average number of complaint received per month

m = 20 complaints
y = the number of complaint in December
y = 13 complaints

L = 14 (13 – 20 )²
L = $696

The TFL in November is $686 with 13 complaints received.

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OTEM/BJMP5023/A202

EXERCISE #4
A company produces crystal vase for IKAE Supermarket in
Langkap. Suppose that the specifications for a part (in inches) are
6.00 (plus minus 0.02), and that the Taguchi Loss Function is
estimated to be L(x) = 6,800 (x-T) 2. Determine the economic loss if
x = 6.05 inches. Find the total loss in a year if 3,500 units
produced by each quarter.

L (x) = k (x-T)2
L (x) = Loss function
K = Constant
x-T = Tolerance

L(X) = 6800 (6.05-6.02)2

L(0.03) = 6800 (0.03)2
= RM 6.12 per part

Total loss in a year:

L(x) = 3500 x RM 6.12) x 4 = RM85,680