EXTERNAL FAILURE COST ESTIMATION USING RELIABILITY MODELS:
AN ALTERNATIVE TO TAGUCHI’S LOSS FUNCTION
Open Access
Author:
Hassan, Jawad S.
Graduate Program:
Industrial Engineering
Degree:
Master of Science
Document Type:
Master Thesis
Date of Defense:
None
Committee Members:
M Jeya Chandra, Thesis Advisor/Co-Advisor M Jeya Chandra, Thesis Advisor/Co-Advisor
Keywords:
Alternative to loss function External Failure Costs Reliability Model
Abstract:
ABSTRACT
Taguchi’s quadratic loss function is used to capture the effect of nonconformance to target values of quality characteristics in monetary values. Despite the merits of its idea, there are major limitations of the quadratic loss function especially its use of a proportionality constant that pools all the effects of external failure costs into a single parameter. Researchers and practitioners alike agree that the proportionality constant of the quadratic loss function is too simplistic in form and extremely difficult to estimate in practice. That is why there have been many attempts to find alternatives to the quadratic loss function.
In this study, an alternative to the quadratic loss function is presented by relating the variance of the quality characteristic as well as the difference between the mean setting and the target to the product’s reliability. Then, using warranty models, the reliability is linked to external failure costs. This is shown for normally and beta distributed N type, S type, and L type quality characteristics. A comprehensive illustrative example is also presented that outlines the methodology of implementing these models in real life problems.
