LOSS FUNCTION AND

MANUFACTURING TOLERANCES

Guided By: - Presented By:-

Dr. S. G. Jadhav Avinash R. Yewale
(192110019)
 CONTENTS
•Introduction
•Loss Function
•Determining Manufacturing Tolerances
•Manufacturing Tolerance for Mass produced Items
•Summary
•References
 INTRODUCTION
•This chapter presents LOSS FUNCTION, a quantitative statement developed by Taguchi of how off target
production affects consumers and manufacturers.[1]

•Loss functions provide the justification missing in conventional QA about why a manufacturer should
minimize the variability in the performance of a product or a process[1]

•Loss functions also guide the setting of manufacturing tolerances and the allocation of part tolerances
between interacting work centers in a factory, and between suppliers and the consumer[1]

•Any product that fails to perform on target inflicts a loss on society[1]

 LOSS FUNCTION[1]
•Taguchi defined the loss function as deviation as a quantity proportional to the deviation from the target
quality characteristic. At zero deviation, the performance is on target and the loss is zero. If y represents the
deviation from the target value, then the loss function L(y) is:

m = target value for the quality characteristic

K = a constant, dependent on the cost structure of a manufacturing process or an organisation

It is important to note that :

1. The term (y – m) represents the deviation of the quality characteristic y from the target value m
2. The equation for the loss function is of the second order in terms of deviation of the quality characteristic.
•The loss function represented by the equation is graphically shown in the fig
and it posses the following characteristic

1. The loss must be zero when the quality characteristic of a product meet
its target value
2. The magnitude of the loss increases rapidly as the quality characteristic
deviates from the target value
3. The loss function must be continuous (second-order) function of the
deviation from the target value
•There is only one unknown (the constant k) in the expression for L(y)

• k may be estimated if we know the coordinates of any one point on the loss function curve, k may be
found, for instance, if we know what it would cost the customer to rectify a known amount of off-target
performance so that one restores the product to its desired (target) functionality.

•Taguchi made a special point that the value of k should be determined by calculating the loss function as
close as possible to the target m

•The consumer tolerance points are usually the only points available for this purpose

•Then, for customer tolerance one should take the points on either side of m at which 50% customers
would repair or replace what they have bought, or lodge a complaint.
 Example
The following example illustrates the estimation of k, and hence the loss function:

•If a buyer discovers a store-purchased shirt to be too tight (short by, say, 1 cm from true neck size) when he
takes it home, he would have no alternative but to have it adjusted at a cost, or return it to the store. If it is
too loose, it will
have to be similarly adjusted or returned to the store. If it costs the customer $10.00 to get the shirt collar
that is 1 cm off adjusted at a local tailor’s shop, then from equation, we have

k=10.00/(1 cm)2

Therefore, the equation

L(y)=10(y-m)2
defines the loss function for ill-fitting shirts near the true neck size (or target characteristic) m
•A word needs to be said about tolerances at this point. Unlike how designers commonly mark them on
engineering drawings, tolerances need not always be symmetric. A shirt neck that is 1.5 cm too tight very
likely needs an adjustment, whereas that is 1.5 cm too wide does not. Thus, loss functions need not be
always symmetric.

•What use is the loss function? One major use of loss functions is in determining manufacturing
tolerances. Taguchi used cost reasons to show that in most cases manufacturing tolerances should be not
equal to but tighter (narrower) than customer tolerances
 Determining Manufacturing Tolerances[2]
•The determination of manufacturing tolerances comprises two steps. The first step is to obtain the societal
loss function based on customers' tolerances.

•Having determined the loss function, the second step is to determine the manufacturing tolerances based on
the manufacturer's cost of repairing, adjusting or replacing an item (or product)

•Let T± "be the manufacturer's tolerance limits. The manufacturing tolerances are the limits for
shipping the product.

•Let A be the cost incurred by the manufacturer in repairing an item that exceeds the customer's tolerance
limits.

• Figure illustrates the relationship between the customer's tolerance, T ± flo, and manufacturer's tolerance, T
± 8, for a situation in which target is the quality characteristic of interest
We shall illustrate the procedure with an example

Example - Suppose a garment manufacturer's factory cost of setting and stitching a shirt's collar within some target
neck size be $2.0 (i.e. A) per shirt. Usually this includes an extra measurement and adjustment cost
before the garment manufacturer finally stitches the collars. The question is "Where should the shirt manufacturer set
his own stitching size tolerance?" This tolerance is the maximum allowable deviation from the specified target collar
size to be marked on the shirt
If it costs the customer $8 (i.e. Ao) to get the shirt collar that is 1 cm off (i.e. Ao) adjusted at a local tailor's shop,
then the quality loss coefficient or cost constant is given by:
8 = k.(1cm)2
k=8 and L(y)=8(y-T)2
This is the loss to society caused by a shirt when its neck size deviates from the target T by 1 cm. This loss function
represents the loss imparted to society (i.e. customer, manufacturer or anyone else affected by the product).
The manufacturer's tolerance can now be obtained by using equation:
8 = (2/8)1/2 X (1 cm)
i.e., 8 = 0.5 cm.
•It is important to note that this tolerance is tighter or narrower than the customer's tolerance, because
it is cheaper to adjust the collar size while one is manufacturing the shirt than re-stitching by a
customer's local tailor.

•However, manufacturing tolerances need not always be narrower or tighter.

•The magnitude of manufacturing tolerances should be dependent upon the relative adjustment costs
of the customer and the manufacturer
 Loss Function for Mass produced Items
•When performance varies, one obtains the average loss to customers caused by mass produced items by
statistically averaging the quadratic loss. The average loss is proportional to the mean squared error of Y (the
performance characteristic) about its target value r.
•If one produces n units of a product at performance levels y1, y2,…. yn respectively, then the average loss caused
by these units due to their not being exactly on target r is
•This average loss, which is caused by variability, has two components:

•This is contributed by the average performance of production (/j) being different from the target r.

•This results from the performance {y,} of the individual items being different from their own average /i.

•Thus the fundamental measure of variability is the mean squared error of Y (measured from the target r),
and not the variance a 2 alone.
 Summary
•Analysis of society’s overall losses requires the cost of inconvenience, adjustments, or scrapping by the customer.
It also requires consideration of the extra cost the manufacturer incurs — due to returns, repair, and scrapping.

•According to Taguchi, this overall loss increases at a geometric (parabolic or quadratic) rate (= k(y - m)2) as quality
y deviates from the target performance m.

•The constant k in the loss function formula is found by the cost of the countermeasure taken by the manufacturer
(or the customer) to get the product within tolerance.

•The loss function translates the deviation from target into a cost estimate useful in optimizing manufacturing,
marketing, and purchasing decisions in an enterprise.

•Losses to society caused by off-target mass production are a sum of

• (a) loss due to the average quality being different from target quality; and
•(b) the loss due to the item-to-item variability.
•In mass production, therefore, the focus should be on the minimization of two variabilities.
•First, the average quality performance of mass produced items should be on target.
•Second, the item-to-item variability in performance should be minimum
 References
[1] Tapan P. Bagchi, “Taguchi Method Explained (Practical Steps to Robust Design)”, Eastern Economy Edition,
Chapter 11- Loss Funtions and Manufacturing Tolerances

[2] Jiju Antony,Mike Kaye,”The Taguchi Approach to Quality Improvement”, In: Experiment Quality. Springer, Boston,
MA