The process capability indices \( C_p \) and \( C_{pk} \) are defined as follows:
\[
C_p = \frac{USL - LSL}{6 \sigma}
\]
\[
C_{pk} = \min \left( \frac{USL - \mu}{3 \sigma}, \frac{\mu - LSL}{3 \sigma} \right)
\]
where:
- \( USL = 120 + 8 = 128 \) mm is the upper specification limit,
- \( LSL = 120 - 8 = 112 \) mm is the lower specification limit,
- \( \sigma = 2 \) mm is the standard deviation of the process,
- \( \mu = 118 \) mm is the shifted process mean.
Step 1: Calculate \( C_p \)
\[
C_p = \frac{128 - 112}{6 \times 2} = \frac{16}{12} = 1.333.
\]
Step 2: Calculate \( C_{pk} \)
For the shifted mean \( \mu = 118 \), the closest specification limit is the lower specification limit:
\[
C_{pk} = \frac{118 - 112}{3 \times 2} = \frac{6}{6} = 1.000.
\]
Thus, the correct answer is (C).