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

Authors: Mohammad Zainal

Addresses: Department of Information Systems and Operations Management, College of Business Administration, Kuwait University, Sabah Al Salem University City, Kuwait

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.

DOI: 10.1504/IJBG.2025.145745

International Journal of Business and Globalisation, 2025 Vol.40 No.1, pp.1 - 21

Received: 07 Aug 2021
Accepted: 10 Aug 2021
Published online: 23 Apr 2025 *

Full-text access for editors Full-text access for subscribers Purchase this article Comment on this article