13-17 The Loss Function is more complex than shown below, but its concept can be understood by filling out the table and

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13 17 The Loss Function Is More Complex Than Shown Below But Its Concept Can Be Understood By Filling Out The Table And 1 (181.25 KiB) Viewed 28 times

13-17 The Loss Function is more complex than shown below, but its concept can be understood by filling out the table and selecting which alternative to employ. Suppose that the defect rate for Alt-3 is 1 per million. You already answered the questions on what are the defect rates for 3 and 6 sigma. (Note that some of you maintain that this is insolvable - you're wrong, all necessary data has been provided). Alt-1 Alt-2 Alt-3 Quality 3 Sigma 6 Sigma 8 Sigma Cost of Technology $2,000,000 $3,000,000 $5,000,000 Annual Production 6,000,000 6,000,000 6,000,000 Defect Rate 1/1,000,000 Annual Number of Defects Annual Defect Cost at $100/Defect Annual Financing Cost at 15% per Year Total Cost of above. This is the value of the Loss Function 13-18 What is your recommendation of which alternative to employ?