The defect rate is based on the simulated values across the whole of the curve, as you have set all of your values as 'Random Normal' -
it may be useful to set your X values for your curve (which looks to be your left most plot) to 'Random Uniform', this way you get provided a defect rate across your whole range. Another option is to keep it 'Fixed' to provide a defect rate for a specific point within the curve.
“All models are wrong, but some are useful”