A framework of setting up goal control limits of target costing for non-normal distributions

Abstract

This study provides a framework of target costing to extend its original scope when the underlying distribution is non-normal. The new specification limits can be derived by listening to the market price from Taguchi loss function. Later, the new specification limits can be linked through the non-normality-based Ĉ _pk value along with non-normality-based $\overline X $-R control charts to derive goal control limits. Moreover, an example is provided to illustrate the usefulness of the proposed framework of target costing by relentlessly reducing cost and improving product quality to gain competitiveness in the marketplace.

Keywords

Target costing / Taguchi loss function / goal control limit / process capability index / non-normal distribution

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