Question: Med-Tech. Med-Tech engineers are trying to improve the design of a pump shaft that has an outer diameter specification of 13 inches with a tolerance of \(\pm 0.003\) inch. Available inspection data from the past year indicate that the mean value of the diameter has been 13.001 with a standard deviation of 0.0025 inch. The gear sells for $125. The estimated loss to society is $20 for any gear that has a diameter at the upper or lower tolerance limit, Annual sales of the gear amount to 40,000 units.

1. Calculate the average loss per unit of production.
2. What is the expected loss per year?
3. What happens to the average loss per unit and the expected loss per year if the mean is shifted to the target value of 13 inches?

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