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Taguchi's loss function is a widely researched topic in operations
management and it has given a new dimension to measure loss. It has got wide
industrial application from manufacturing to services industries. In this paper, an
attempt has been made to review the application of Taguchi Loss Function (TLF)
and highlight its advantages and disadvantages.
Customers have always been demanding quality products, and meeting
their expectations has been a challenge for the suppliers. Customers' desire for
quality products created the need for quantification and establishment of
quality standards, which came into picture in the
20th century. Different researchers
have given different definitions of quality.
Crosby defined quality as "conformance to
requirement". According to Feigenbaum, quality can be defined as "the total composite product and
service characteristics of marketing, engineering, manufacturing and maintenance
through which the product and service in use will meet the expectation of the
customer." Quality has been defined as "fitness for
use" by Juran, and as "quality of
product" by Ishikawa. The most interesting definition was given by
Shewhart, who brought into picture both subjective (what the customer
wants) and objective (properties of the product, independent of what the customer wants)
aspects of quality.
Taguchi devised a quadratic function which could quantify the loss to
the society if the products deviate from their target value. This quadratic
function is termed as Taguchi's loss function. He brought into picture the influence
of outside force (termed as noise) on the process and established
`signal-to-noise ratio' to measure the quality of the products. Signal-to-noise ratio measures
the loss in terms of performance, while the loss function measures it in terms of cost. |
