Taguchi Loss Function by Mohamad Hisham Hamdan MBB

In this article I would like to share in brief the Taguchi Loss Function by using an example that relate with our daily life. It is my hope that the explanation in this article can help the readers to understand the Taguchi Loss Function .

This is the common graph to explain the Taguchi Loss Function.  Simply it showed that  when a process output deviates from the target ,although it is still within the limit , a company will suffer loss ,example in this chart the loss is translate into dollar and cent .

Let’s think of a scenario , where a survey was conducted on a group of people ( 50 peoples ) regarding how  the temperature in a room caused “unhappy environment to them “

In this case, let’s fix 22 Celsius is the target temperature where all the 50 peoples are comfortable with, and then the temperature will be lowered down from 22 Celsius to 10 Celsius with 1 Celsius interval and at each interval the experiment will record the number of unhappy people with the lower temperature. Once the lower side was done , the experiment will focus on the higher temperature , start from 22 Celsius up to 35 Celsius and record the number of unhappy people with the higher temperature . From the data , the graph is as below :

Y axis = The number of Unhappy People

X axis = Temperature in Celsius

As the temperature decreased from 22 Celsius to 10 Celsius , number of people felt that the temperature was too cold for them increase , this cause unhappy among these people , the same pattern was observed when the temperature was increased in 1 Celsius step , the number of people felt that the temperature was too hot for them increase thus cause unhappy among these people .

This example clearly demonstrated how the deviation of temperature from the target temperature ( 22 Celsius ) caused a LOSS to the people . In this case the LOSS is the PEOPLE SATISFACTION of the room temperature.

I would like to thank to Mr Larry Smith , one of our associate consultant for above example .