A Modified Target Costing Technique to Improve Product Quality from Cost Consideration

Abstract

The target costing technique, mathematically discussed by Sauers, only uses the C_p index along with Taguchi loss function X − R control charts to set up goal control limits. The new specification limits derived from Taguchi loss function is linked through the C_p value to X − R control charts to obtain goal control limits. This study further considers the reflected normal loss function as well as the C_pk index along with its lower confidence interval in forming goal control limits. Withe the use of lower confidence interval to replace the point estimator of the C_pk index and reflected normal loss function proposed by Spring to measure the loss to society, this modified and improved target costing technique would become more robust and applicable in practice. Finally, an example is provided to illustrate how this modified and improved target costing technique works.

Citation

Wu, H. (2005), "A Modified Target Costing Technique to Improve Product Quality from Cost Consideration", Asian Journal on Quality, Vol. 6 No. 2, pp. 31-45. https://doi.org/10.1108/15982688200500012