Lankfort Company has decided to estimate its hidden external failure costs using the Taguchi loss function. After some study, it was determined that k = $800 and T = 40 inches in diameter. A sample of four units produced the following values:

Required:

f. Calculate the average loss per unit.
2. Assuming that 20,000 units were produced, what is the total hidden cost?
3. Assume that the multiplier for Lankfort's hidden external failure costs is four. What are the measured external costs? Explain the difference between measured costs and hidden costs.

Transcribed Image Text:

Unit No. Actual Diameter (y) 123+ 39.6 40.4 3 40.6 4 39.4