Augmenting the Taguchi loss function with AHP to perform economic evaluation of reducing variations in processes and products

Mohammad Zainal

International Journal of Business and Globalisation, 2025, vol. 40, issue 1, 1-21

Abstract: This study combines the Taguchi loss function (TLF) and the analytic hierarchy process (AHP) to develop an asymmetric function to measure the loss associated with deviations from a target level for a particular quality characteristic (QC). To this end, initially, the domain of the permissible values for a QC is divided into two significant intervals - namely, the customer and manufacturer tolerances. AHP is then applied for obtaining weights for: 1) the quality characteristics; 2) various intervals within the two tolerance domains. An analysis of the cost savings accrued from the process improvement, using the proposed AHP-based asymmetric loss function, is presented to help decision-makers evaluate the viability and economic feasibility of improving a process. An illustrative example demonstrates the application of the suggested methodology and its ease of use and extent of applicability.

Keywords: Taguchi loss function; TLF; asymmetric loss function; quality characteristics; weighted loss function; economic analysis. (search for similar items in EconPapers)
Date: 2025
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