Assessment of quality activities using Taguchiʹs loss function

Quality control, quality assurance and total quality management are all concerned with managing and controlling variations. The less variation a system has the better quality it provides. Using the Taylor Expansion Series, Dr. Taguchi (1986) developed a mathematical model in which loss is a quadratic function of the deviation of the quality of interest from its target value. Based on this concept, sound management decisions can be made regarding the true worth of quality improvement efforts. In this article, we compare four quality policies: a “do-nothing” policy, an appraisal policy, a prevention policy and a mix of prevention and appraisal policies. The costs associated with each policy are modelled using Taguchiʹs loss function. To account for the dynamic nature of these costs, the policies are compared over a period of time.