1. Taguchi Loss Function pp. 110-111, 604-607 1

2. Quality is variation from desired mean expressed as an economic loss function 2

3. Function is Loss at measure x = constant times distance from desired measure to x squared. Lx = k((x-T)^2) k is the part of a Parabola equation that controls how flat or vertical the wings are 3

4. Find k with a known cost at some measure, usually cost when out of specification (scrap, warranty) 4

5. Can determine average cost per unit with a process with a given mean and standard deviation expected loss for process with mean x = k times (variance+square of distance from mean to target) 5

6. Can utilize this for one sided situations (better if bigger or smaller) smaller is better than target L at x = k times x^2 bigger is better than target L at x = k time 1/x^2 6

7. Set parameters to make sure to minimize cost to company and customers 7

8. Truncated curves, see accompanying excel sheet 8