Problem
The desired target quality characteristic of a product of Hanson Component Manufacturing is 0.5. The customer-service manager knows that customers are likely to complain when the specification is off the desired quality characteristic by more than 0.025. On average, it costs the firm $2,000 to handle and resolve each complaint. The production manager of the Hanson Manufacturing suggests that the company test the product more thoroughly before shipping. The cost of additional testing and adjustments is estimated at $30.00 per unit.
For Hanson, what is the value of k, the cost coefficient in the Taguchi quality loss function (QLF)?