ASSIGNMENT

Examples for nominal the best and average loss function

SUBMITTED BY,

AISWARYA AS

I MBA
 Products that do not meet the specifications inflict a quality loss to the manufacturer.
This loss is visible in the form of scrap or rework in the industry, which the manufacturer adds
to the cost of the product. However, products that meet the specifications also inflict a quality
loss, which is visible to the customer and that can adversely affect the sales of the product and
the reputation of the manufacturer. Taguchi's way of measuring quality loss has the
interpretation that, as the quality characteristic deviates from the target, even though it is
within the specification, the quality loss becomes more visible to the customer. In this paper,
Taguchi's Quality Loss Function (TQLF) is applied to evaluate the quality loss for Nominal-The-
Best (NTB) type of quality characteristic of a rotary driving shaft. 

Taguchi's Quality Loss Function (TQLF) is a graphical depiction of financial loss to the
society resulting from poor quality. Traditionally, companies measure quality by the number of
defects or the defect rate. In this system, defects are identified through inspections of the
materials and products. Upper and lower quality limits are established. Everything that does
not fall within the limits is considered a defect.

This view is referred too as the goalpost view because it can be conformed to the use of
goalposts in football. If the extra point goes between the goal posts it is considered a success. It
does not matter whether or not it is in the center or close to the sides. However, if the ball goes
wide, left or right, it is unsuccessful. Exhibit 1 shows this view.

The quality loss function is based on the work of electrical engineer, Genichi Taguchi.
This view disagrees with the traditional (goalpost) view. The quality loss function recognizes
that products falling between specific limits are not all equal. The four following statements
summarize Taguchi’s philosophy.

1. We cannot reduce cost without affecting quality.

2. We can improve quality without increasing cost.
3. We can reduce cost by improving quality.
4. We can reduce cost by reducing variation. When we do so, performance and quality will
automatically improve.

In Taguchi’s view, quality is not defined by specific limits, but rather on whether or not it
creates a financial loss to society. An example given is a defective automobile exhaust system
creating air pollution. There are many types of quality loss functions. However, in all types, the
loss is determined by evaluating variation from a specific target. Taguchi’s philosophy includes
three general ways to evaluate the relationship between quality and variability.

Nominal is better approach

In this approach, the closer to the target value, the better. It does not matter whether the
deviation is above or below the target value. Under this approach the deviation is quadratic.
The following exhibit portrays the nominal is better approach.

Smaller is better approach

The smaller is better approach is when a company desires smaller values. As the value gets
larger, the loss incurred grows. The following exhibit portrays the smaller is better approach.
Larger is better approach

Larger is better occurs when a company desires higher values of a characteristic. Two examples
given are employee participation and the customer acceptance rate. Under this approach, the
larger the characteristic, the smaller the quality loss function. The following exhibit portrays the
larger is better approach.