November 20, 2013

Taguchi Loss Function

Today's class led to us getting down with Taguchi and his statistical methods. The Taguchi loss function is one way an organisation can ensure that it meets the customer's expectations. It also means that an organisation that does not necessariy hit its target value can however time after time meet the expectations and needs of the customer provided it falls inside the upper specification and lower specification limit. Therefore, it is a useful tool when looking an organisation's production, and allows to see how much variation occurs in a process (for example, how wide a guitar neck is where it joins the body).

There can however be some drawbacks when using a Taguchi Loss Function. There can be a tendency for organisation's to focus on how much they can away with (i.e. what can we make that will just meet the specification limits) rather than focusing on trying to get closer to the target value and overtime, reducing the variation that occurs around it. However, it is a useful tool that can help to illustrate how much variation there is in an organisational process, and whether the organisation is consistantly meeting the customer's targets or missing them. It is also useful because the further away from the target value, the more economic loss an organisation experiences. Therefore, it can highlight potentially how much financial loss an organisation may experience.

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