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Taguchi Loss Function and Expected Loss

A computer chip is designed so that the distance between two adjacent pins has a specification of 2.000 ± 0.002 millimeters (mm). The loss due to a defective chip is $5. A sample of 25 chips was drawn from the production process and the results, in mm, are listed below.

1) Compute the value of k in the Taguchi loss function?

2) What is the expected loss from this process based on the sample data?

2.001 2.000 2.001 1.998 1.999
2.000 2.000 2.002 1.999 2.000
1.998 1.999 2.001 2.000 2.000
2.000 1.999 2.001 2.001 2.000
2.000 2.002 2.000 2.000 2.001

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