Taguchi quality loss function - How do I establish the 'Consumer Loss' element?

Geoff Cotton

Quite Involved in Discussions
In simple terms, how do I establish the 'Consumer Loss' element of Taguchi's Quality Loss Function equation?

Thanks in advance


Kevin Mader

One of THE Original Covers!
Staff member
I am not familiar with this item, but here is what I am thinking.

Precise optimization of a process or system is not desireable. At some point, the return on the preventive measures taken to control an item will eventually be too costly to be practical. When one does not consider this, maximization can occur and costs begin to rise. Needless to say, these costs go somewhere, some of which or all of which lands in the consumers pocket.

I hope I haven't muddled the works up.



John C

Like Kevin, I have only a vague idea about Taguchi's work. What little I did know has faded into the dim past but, from what I remember, it is not simple and there is no simple way to deal with it. You may have seen the discussions about 6 Sigma and noted how, out of ten people you can get ten different ideas about what it is supposed to be. Now Taguchi, I would say, was a very clever and experienced person who knew just about everything that had been written about variables. Some of it is sure to be pretty difficult for the layman but, Taguchi, having absorbed all that stuff, rolled it over in his mind for years, and teased it and worried it until he came up with a new way of looking at it. If we can't agree about 6 Sigma, what chance have we with Taguchi unless we begin with an understanding of the theory and thought process that led him to his conclusions?
I suggest you start by reading anything you can get hold of that relates to Taguchi's work. Then, having identified the areas where your knowledge isn't sufficient to take you on, go back and pick up the knowledge you need.
The worst thing you can do is drive on with a smattering of knowledge and expect to achieve anything useful. Most people can draw wrong conclusions from a histogram.
rgds, John C

chris chatfield

Regarding the use of the Taguchi Quality Loss Function good references are:
1) Quality Engineering using robust design,
author: Madhav S. Phadke, Publisher: Prentice Hall, ISBN 0-13-745167-9. Especially Chapter 2
2) Introduction to Quality Engineering,
author: Genichi Taguchi, Pub: Asian Productivity Organisation, ISBN 92-833-1084-5

The Quality Loss function can be used both internally, i.e. to provide motivation for own improvements, and externally, i.e. to motivate improvements to satisfy and keep customers. In the first case one has good knowledge of own manufacturing costs and can readily use the function. In the case of the benefit to an end user one can try to identify benefits from own knowledge of end use if this is sufficient or by asking the customer or by performing a bench marking to see where own competitors stand. It is clear that this is a delicate problem as an over ambitous attempt to staisfy a customers demands can result in own bankrupcy!

Moving to an aspect of the Loss Function I would like to get an answer to. This quantity can be used to motivate investments to improve quality as a cost per unit for poor quality can be calculated. In these days of adherence to 6sigma philosophy this idea should go home with upper management who generally only priority productivity gains when investing. Does anybody know/have references to such a use of this function?
Regards, Chris.

Geoff Cotton

Quite Involved in Discussions

Thanks for your reply.

I think your question is where I'm trying to get to, i.e. how to apply the Loss Function to 6 Sigma. Looking forward to the replies.


chris chatfield

Hallo again Geoff,
Had to start doing some homework on the Quality loss function.
I became aquainted with this topic when I read D. J Wheeler's book "Beyond Capability Confusion: The average Cost-of-use", SPC Press, ISBN 0-945320-51-5.
Essentially Wheeler's message is that this quantity has nothing to do with Conformance to Requirements/Zero Defects/Cost of Quality/Six-sigma/Capability targets/etc. What he is advocating is that this quantity should be minimised by assuring that all processes are on target and have minimum standard deviation. As such any programme that aims at this will reduce ACU, but one formally does not have to adopt such a programme to use ACU. Wheeler recommends the use of standard SPC practices: i.e. process in control, correctly centered and with the correct tolerances. See pages 79 to 106 in the book.
The problems I have run into when trying to convince our economists is that they cannot accept a coupling between quality and production costs. Instead I have been asked to try to estimate and base a calculation on quality control costs.
Regards again,
Thread starter Similar threads Forum Replies Date
A Quality Giant Dies: Dr. Genichi Taguchi: RIP - June 2nd 2012 Philosophy, Gurus, Innovation and Evolution 0
V Quality Gurus Comparison - Deming, Juran, Crosby, Ishikawa and Taguchi Philosophy, Gurus, Innovation and Evolution 1
B WEDM Taguchi and Anova Analysis - L16 array with 5 parameters at 4 levels Manufacturing and Related Processes 9
H Taguchi mixed model DoE [L16 (4^3 2^6): factors interaction and ANOVA calculation Using Minitab Software 3
A Taguchi Minitab - Continuous Data - What should I choose as response variable? Using Minitab Software 3
K Taguchi Experiments for Factorial Design Analysis - Reliability of Minitab Results Using Minitab Software 1
S Taguchi Design with ANOVA - 3 factors each with 3 levels Quality Assurance and Compliance Software Tools and Solutions 13
M Taguchi Loss Function Problem Misc. Quality Assurance and Business Systems Related Topics 2
M Taguchi Signal to Noise Ratios Misc. Quality Assurance and Business Systems Related Topics 3
J F and P-value in L9 Taguchi Design Using Minitab Software 22
E ANOVA for Taguchi method - Four factors and three levels and nine runs (Minitab) Using Minitab Software 6
Y Experiential Design with Taguchi Method Using Minitab Software 2
M Taguchi Analysis of Discrete Factor Using Minitab Software 10
Y Taguchi Design with 6 levels and 3 factors in Minitab Using Minitab Software 11
P Taguchi Logit Transformation in Minitab Using Minitab Software 7
K Taguchi School Assignment using an L8 Orthogonal spreadsheet tool Statistical Analysis Tools, Techniques and SPC 1
P Taguchi Anova Error with Minitab Using Minitab Software 9
R Taguchi design for 3 level 4 factors Using Minitab Software 12
M Taguchi L4 Orthogonal Array Design of Experiments (DOE) in an Excel spreadsheet Excel .xls Spreadsheet Templates and Tools 3
M Taguchi versus fractional factorial: Can somebody check the results? Quality Tools, Improvement and Analysis 3
AnaMariaVR2 How to Make Things Well: Genichi Taguchi, 1924-2012 Philosophy, Gurus, Innovation and Evolution 1
J Taguchi Analysis using MiniTAB Using Minitab Software 1
B Taguchi DOE (Design of Experiments) example using Minitab Using Minitab Software 3
V Using Taguchi method in Minitab for Coil Winding Application Using Minitab Software 11
T DOE Multi level Taguchi - I am doing a Capstone Project Using Minitab Software 10
T Taguchi DOE Analysis - What S/N ratio (Nominal is best or smaller is better) to use? Quality Tools, Improvement and Analysis 5
S Taguchi's "Robust Design" for Services Sector - Experience or Papers to Share? Six Sigma 3
A Taguchi Inner and Outer Array Design for Medical Device Testing Quality Tools, Improvement and Analysis 1
D Mathematical Model of Taguchi L18 Using Minitab Software 7
R Analysis of Welding Parameters - Can Taguchi methods provide equation? Using Minitab Software 11
R Define Data from Taguchi to Response Surface Methodology in Minitab Using Minitab Software 2
R Taguchi Design - Degree of freedom for l27 in 4 factors 3 level (Minitab) Using Minitab Software 15
P Taguchi's Analysis using Minitab 16 Using Minitab Software 25
P Taguchi method using Minitab - DOE (Design of Experiments) Help Quality Tools, Improvement and Analysis 7
Marc Taguchi Loss Function example Misc. Quality Assurance and Business Systems Related Topics 4
C Difference between softwares in choosing correct Taguchi designs Using Minitab Software 16
C DoE and ANOVA - 4 factor and 3 levels Taguchi design with 2 replicates Using Minitab Software 14
G Implementing Taguchi Loss Function in COQ - A Curious Case Misc. Quality Assurance and Business Systems Related Topics 1
M Apply Taguchi method for Web-based application development Quality Tools, Improvement and Analysis 4
T Optimizing Multiple Response Variables Using Taguchi Signal-to-Noise ratios Statistical Analysis Tools, Techniques and SPC 3
C Is Cpm (Taguchi's Index) Superior to Cpk and Ppk? Capability, Accuracy and Stability - Processes, Machines, etc. 1
D Questions about Taguchi style Designed Experiments (DOE) Quality Tools, Improvement and Analysis 6
S Looking for a good Taguchi book-any suggestions? Book, Video, Blog and Web Site Reviews and Recommendations 3
A Shainin vs. Fisher vs. Taguchi DOE (Design of Experiments) Statistical Analysis Quality Tools, Improvement and Analysis 10
L DOE Integrated Methodology - Traditional DOE vs. Taguchi Methods vs. Shainin Techniqu Quality Tools, Improvement and Analysis 7
S Desensitizing to reduce variation - A Taguchi technique? Quality Tools, Improvement and Analysis 3
S How does one calculate Cpm (Taguchi process capability) Statistical Analysis Tools, Techniques and SPC 16
Marc Zero Defects & Taguchi Loss Function - ISO 9000 and the Zero Defects Philosophy Quality Tools, Improvement and Analysis 32
Sidney Vianna ISO 9001 News ISO 9001 Quality Check - spinning facts in LinkedIn ISO 9000, ISO 9001, and ISO 9004 Quality Management Systems Standards 6
S Quality assurance area Manufacturing and Related Processes 11

Similar threads

Top Bottom