An Improvement on Target Costing Technique
Abstract
The target costing technique, mathematically discussed by Sauers, only uses the Cp index along with Taguchi loss function and X‐R control charts to setup goal control limits. The new specification limits derived from Taguchi loss function is linked through the Cp value to X‐R control charts to obtain goal control limits. Studies have shown that the point estimator of the Cp index, Ĉp, could vary from time to time due to the sampling error. The suggested approach is to use confidence intervals, especially the lower confidence intervals, to replace the point estimator. Therefore, an improvement on target costing technique is presented by applying the lower confidence interval of the Ĉp index and using both Taguchi and Spiring’s loss functions together with X‐R charts to make this technique more robust in practice. An example is also provided to illustrate how the improved target costing technique works.
Keywords
Citation
Wu, H. (2003), "An Improvement on Target Costing Technique", Asian Journal on Quality, Vol. 4 No. 1, pp. 191-204. https://doi.org/10.1108/15982688200300013
Publisher
:MCB UP Ltd
Copyright © 2003, MCB UP Limited