An engineering company have won a contract to produce 1500 steel rods per month. A trial run was produced to establish process capability. The results were:-
11.80 12.30 12.20 12.4 12.1 12.2 11.9 11.8 11.85 12.15
The specification is 12cm +/- 0.35 cm, and the cost of rejection would be £20 per casting. Average loss should be kept below £4 per unit to avoid making a loss on the contract.
Using Taguchi Loss function, what is the variance in the system and the loss likely to be experienced?